Over the past couple of months, I have endeavored to capture the core theory underlying the Theory of Constraints (TOC). My goal is to clarify the foundation of TOC and build a better understanding of the dynamics when applied. And perhaps, armed with a deeper understanding, find ways to improve TOC. I started with a prototype of the …
Effectiveness
Collectively Coherent Transformation
Resource allocation decisions are pervasive in companies, from top to bottom. At the top of the organization, formal processes drive decisions: strategy, capital planning, budgeting, and the like all focus on how best to allocate resources. And at the individual level, we are all involved in a continuous stream of decisions about how we …
De-risk Your Transformation
Big top-down transformation programs rarely succeed. Big projects almost always lead to complete failure or disappointment. Small to moderate-sized transformations are over 11 times more likely to succeed than very large efforts. The key to a better way forward is to embrace the idea that substantial changes can be triggered by small, focused …
Document, Measure, Learn, Improve
Making effective resource allocation decisions is a skill that can be learned and developed through deliberate practice coupled with structured feedback and review. It starts with documenting the standard practice of decision-making - goals, constraints, decision-making process, and simple rules. Define what standard work looks like. In …
Ensure People Know What They Need to Know
When simple rules are well crafted, they carry with them implicit information about what’s important from both a global and local perspective. These rules also help define the minimum information set that people need to know. You need to ensure that people have the information they need to process the rules …
Use Simple Rules to Maximize Throughput Value
When you understand your goals and constraints on realizing the goal, resource allocation becomes much easier. The key question becomes how to use the constrained resource most effectively. How do you maximize the value of the throughput? High-quality decisions can be made using simple decision rules. In practice, you often need three types …
Organize Decisions Around Constrained Resources That Produce Goals
The resource that acts as the governing constraint (a physical or logical bottleneck) for a system limits the system’s ability to produce whatever it produces. The system cannot produce more than the governing constraint. Intuitively we don’t like governing constraints. Our normal reaction is to break them; to find some way to remove …
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Stop Generating Unproductive Complexity
Many resource allocation decisions are made necessary by poorly regulated workflows that saturate resources with work. When a system is saturated with work, every resource becomes a potential constraint on throughput. The saturated condition creates competition for the resource and the variability in the decisions about resource allocation …
Focus on Executability
Management teams are always asking for more money so they can get more done. And they think of money as the constraint on their ability to get things done. As a result, most resource allocation discussions become very money-centric. We create lists of potential projects and rank them based on their financials. However, money is rarely the scarce …
Validate that people understand your strategic priorities
People systematically overestimate their communication effectiveness and overestimate what other people understand, particularly people close to us. As a result, leaders of companies tend to overestimate how well their organizations understand strategic priories and the intent behind those priorities. Executive teams may strongly indicate …
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