A Brief Introduction to TOC and its Thinking Processes

The Theory of Constraints (TOC) applies the thinking processes used in the hard sciences – cause-and-effect – to understand and improve systems of all types, but particularly, organizations. The process a clinician applies to treating a patient is an excellent analogy for explaining how TOC goes about solving a systems problem. If we were to describe the overall process used by a clinician treating a patient it would look something like:

1. Diagnosis: Knowing the futility of treating the symptoms, a clinician begins with a list of observable symptoms and uses cause-and-effect to seek out the underlying common cause for all of them, the “disease” or core problem.

2. Design of a Treatment Plan: Considering the uniqueness of the patient and his/her diagnosis, a treatment plan is developed that first and foremost treats the disease (e.g., surgery), but also suggests what other things must be done alongside that “cure” to ensure the treatment will work (e.g., pain relief and bed rest) and that the best possible health is restored to the patient (e.g., physical therapy). In this process, potential side-effects of the treatment are identified and the means for preventing or mitigating them are determined, becoming key elements of the treatment.

3. Execution of the Treatment Plan: Taking into consideration, again, the uniqueness of the patient’s situation, a plan is developed for how to implement the treatment (e.g., surgery and pre-op work are scheduled, arrangements for transportation to and from the hospital are secured, hospital beds to be used at home are ordered, etc.)

The process used by TOC to improve the health of an organization (or solve any problem) is almost identical to what the physician does, but the terminology is changed to better suit the language of problem-solving in organizations. In TOC, the process is described via the use of three questions:

1. What to Change?
   From a list of observable symptoms, cause-and-effect is used to identify the underlying common cause for them all, the core problem. In organizations, however, the core problem is inevitably an unresolved conflict that keeps the organization trapped and/or distracted in a constant tug-of-war. This conflict is called a Core Conflict. Due to the devastating effects caused by Core Conflicts, its common for organizations to create policies, measurements and behaviors in attempts to treat those negative effects (often bandaids) that, when treating the Core Conflict, must be removed, modified or replaced.

2. What to Change to?
   By challenging the logical assumptions behind the Core Conflict, a solution to the Core Conflict is identified. This is only the starting point for the development of a complete solution – a strategy – for resolving all of the initial symptoms, and many others, once and for all. As in the Design of a Treatment Plan above, the strategy must also include the changes that must be made alongside the solution to the Core Conflict to ensure that that solution works and that the organization is restored to its “best possible health.” Respectively, these are often the changes to the policies, measurements and behaviors identified in What to Change?, as well as the organization’s strategic objectives. Lastly, the strategy is not complete until all potential negative side-effects of the strategy have been identified and a means for preventing or mitigating each is determined, becoming key elements of the strategy. Trimming these negatives side-effects allows an organization to intentionally and systematically create strategies that are a win for all those affected by the strategy.

3. How to Cause a Change?
   Taking into consideration the unique culture which exists in every organization, a plan is developed to transition an organization from where it is today to realizing the strategy. In other words, a plan for successfully implementing the strategy is created, including what actions must be taken, by whom and when. Because resistance to change can block even the most perfectly laid strategies and plans, crucial to such a plan is building active consensus and collaboration, or buy-in. TOC has developed a process based on the psychology of change that acknowledges and systematically addresses the questions people intuitively ask when evaluating a change:
   1. Is the right problem being addressed - mine?
   2. Does the general direction that the solution is heading make sense?
   3. Will the solution really solve the problems and what’s in it for me?
   4. What could go wrong? Will anyone be hurt?
   5. How are we going to implement this solution?
   6. As an organization, are we really up to this? Do we have the leadership and the commitment to pull this change off successfully?

If these questions aren’t answered frankly and effectively with the people who must implement the change, and those who will be effected by it, the proposed change will not have the buy-in and support to succeed, and like most changes, will fall by the wayside and fail before it begins.

These three questions provide the framework for what’s called the TOC Thinking Processes. The Thinking Processes are a set of tools and processes that allows an individual or group to solve a problem and/or develop a holistic, integrated strategy using the rigor and logic of cause-and-effect, beginning with the symptoms and ending with a detailed action plan that coordinates the activities of all those involved in implementing the solution/strategy. For each question, there is a process and/or tool associated with it:

What to Change?
• Identifying the Core Conflict
• Current Reality Tree (a cause-and-effect analysis of today’s system)

What to Change to?

• Future Reality Tree (a cause-and-effect analysis of the solution, strategy or desired future system)
• Negative Branch Reservations (preventing negative side-effects)

How to Cause the Change?

• Prerequisite Tree (overcoming the obstacles to implementation - the milestones to get from the current to the future system)
• Building a Project Network (a detailed, manageable action plan)

As a result of applying TOC’s Thinking Processes to countless organizations over the past three decades, generic TOC solutions have emerged that have applicability across all (all!) organizations - be them for-profit or not-for-profit alike. These generic solutions create significant, sustainable “bottom line” improvements, no matter how the bottom line is defined, e.g., dollars of profits, number of students truly educated, the improved health of a community - some are just more challenging to measure than others. How can any generic solution have such broad applicability? It turns out that, no matter what is being processed, how to effectively and efficiently manage those processes and the resources involved is basically the same. To use another powerful analogy: just as every chain has only one weakest link that dictates the strength of the entire chain, every process has only one constraint that dictates the performance of the entire process. Recognizing this, the resulting steps to maximizing the performance of a process is obvious:

1. Identify the system’s constraint.
2. Decide how to exploit the system’s constraint.
3. Subordinate and synchronize everything else to the above decisions.

4. Elevate the performance of the system’s constraint.
5. If in any of the above steps the constraint has shifted, go back to Step 1. WARNING: DO NOT LET INERTIA BECOME THE SYSTEM’S CONSTRAINT.

These are called the 5 Steps of TOC and provide the foundation for all of TOC’s generic solutions, which include, but are not limited to, the management of processes, inventory, supply chains, product development, projects (single and multi), personnel and decision-making.

Although the 5 Steps of TOC can be applied to every process at every level in an organization (which is how TOC is frequently implemented), the true power – and results – come from:

• Understanding the interdependencies between and across processes that contribute to delivering a product or service,
• Understanding the impact that those interdependencies and normal variability have on their combined, overall performance, and
• Appropriately buffering that impact so that that performance can be predictably and consistently high.

These are the things that allow the 5 Steps of TOC to be not just a process for managing processes, but a methodology for enabling organizations to maximize their global performance at any given point in time while providing a stable, reliable high-performing platform from which the organization can easily move in whatever direction its leadership decides. How does leadership decide what direction to take the organization? The TOC Thinking Processes provide the means to develop strategies of all kinds that are only limited by how big its users dare to think. Imagine!