Sanjeev Gupta of Realization hosted a great conversation, describing his perspective on "what is TOC" (always an entertaining discussion) and what might be needed to improve the adoption of Theory of Constraints in business. It's inspired a lot of hallway conversations already.
As is often the case with these conversations, it starts with the observation / complaint that there are so many awesome stories of success with TOC, but why isn't it more well-known? Why don't people in business call for TOC by name? (Like they do with Lean or other well-known approaches.)
Sanjeev's perspective is that there must not be a need in the market for "Theory of Constraints." There is no pull from the market. Sure, there is great value in using TOC in its various forms. Sanjeev claimed that the "value" conversation is all about the seller trying to convince the buyer. It is a push conversation. On the other hand, what to customers "pull"? What do they ask for? They ask for things that meet their needs. Quite often this sounds like they are looking for specific solutions: MRP, ERP, PM software, portfolio management software, etc etc. Sanjeev's suggestion is to move to their needs. If you happen to use TOC within your solution and THEN it provides superior value / service / speed, all the better. But it is not TOC that the customer wants out of the box.
“If you can’t explain it simply, you don’t understand it well enough.”
There were some entertaining comments about mistakes and challenges of marketing and selling in Sanjeev's past. The clearest thing that came from these stories is that if you cannot describe your product / service in a 15-minute meeting with a potential customer, you probably don't understand it well enough. Or it is too complex. Another aspect of this same conversation is that the seller does not create the categories in which they sell. The market creates those categories. They buy what they understand - and what they understand fits into the categories they have created.
Out of this came Sanjeev's claim that TOC presents too many tools and options to the market. You classic jack-of-all-trades problem. This creates confusion, and it leads to the "what is TOC" conversation. Is TOC just the logistical applications? Does it include the Thinking Processes? What about the TOC-for-XYZ applications (sales, healthcare, education, ...) that have been developed and shown excellent results? Sanjeev suggests trimming it back to just those things related to operations. The other things should be changed or renamed some other way, such as "Goldratt's Thinking Processes". For those that follow these things, there is a lot of conversation coming from this suggestion. Not everyone agrees. I don't (yet) have an opinion.
So what is the core? Sanjeev went back to The Goal, the classic TOC book. And he framed it very nicely. The central idea in The Goal is that "All operations have finite resources, dependencies and variability." This is the realization that Alex Rogo has watching his scout troop and Herbie and then seeing it in his business. And this seems to make sense to most people - they get it. But from this central idea ("central axiom" in Sanjeev's words), spawn three theorems (all Sanjeev's words):
- On optimization: Local optimization does not lead to the global optimum.
- On planning: Balancing capacity, time, inventories, etc. with demand is impossible.
- On coordination: Detailed schedules and priority lists cannot be followed.
Sanjeev suggests that anything that fits the central axiom and these theorems IS Theory of Constraints. So, Agile (done right) fits and can be considered TOC, as an example. And if the approach violates them, then it is not TOC.
The challenge is that these theorems are counter-intuitive. And for some (most?) people, they are counter-instinctive. Meaning that no matter how deeply they understand the implications, they cannot get over their instinctual responses. Even Sanjeev admits that he reacts if he sees people "sitting idle" in his company, even if he knows they are not the constraint of the business.
His suggestion is that it is not the job of TOC to "change culture." Rather than worry about "the culture", focus on bringing this operations management system to operations (projects, production, supply chain, services, hospitals, office work, etc). And in bringing these theorems, put them into action. Mechanize them. Turn on the specific techniques and reinforcing loops required of the operation in question - including those borrowed from other disciplines and approaches.
TOC is not a philosophy. It is an operations management system based on three theorems.