TOCICO 2011 Conference

Copyright © Eliyahu M. Goldratt 2011

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March 4, 1991Throughput With a Capital T

Beware of the "green curve." Get onto the"red curve" as fast as possible.

That's the advice that Dr. Eliyahu M.Goldratt has for executives who want to seetheir companies survive and prosper.

Schematically, the green curve representssudden, dramatic improvement – whichflattens out as momentum is lost. Theresulting stagnation, coupled with misguidedmanagement policies, can lead to thecollapse of a plant or a business. Incontrast, the red curve is a parabolic oneand represents ongoing improvement andcontinuing success.

Red Curve represents Ongoing Improvement

Green curve represents Stagnation Choose the Red Curve, Get off the

Green Curve

1990’s – mid 2000’s

Red Curve represents Growth

Green curve represents Stability

Neither can happen without the other, we need them both

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∼2007 - present

The bigger (the stronger) the base, the higher the jump

The Green Curve is the base

Harmony (communication, collaboration, people’s personal & professional growth, …) causes the base to be bigger and stronger

May 2011

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1. Identify a “giant”, not a chupchick◦ Intuition will guide you – important enough subject for you

2. Identify the enormity of the area not addressed by the giant.◦ Reality gives the signals that so much more can be done. ◦ You are aiming for a broader, not a more confined area than what was addressed

by the giant.3. Get on the giant’s shoulders

◦ Gain the historical perspective - understand the giant’s solution better than he did.

4. Identify the conceptual difference between the reality that was improved so dramatically by the giant, and the area untouched.

5. Identify the wrong assumption6. Conduct the full analysis to determine the core problem, solution, etc.

If I have seen further, it is by standing on

the shoulders of giants.

Intuition will guide you – important enough subject for you

Reality gives the signals that so much more can be done. You are aiming for a broader area than what was addressed by the giant.

RetailSales

Marketing

Do you agree that this is a MUCH bigger area than what the existing TOC solutions have affected so far?

We will now study together Eli’s recent guidance in communication, collaboration and synchronization The Engines of Disharmony Turning the Engines of Disharmony

into Engines of Harmony Creating the Tangibility of The Green

Curve

Gain the historical perspective - understand the giant’s solution better than he did.

TOCICO 2011 Conference

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Every manager, especially a top manager of a large engineering basedcompany, is well aware of the impact of increasing the motivation,initiative, synchronization, willingness to collaborate and communicationamong his people. All those “soft” issues are actually the hardest, mostimportant ingredients that determine the capabilities of the company.Unfortunately, the prevailing approach to improving these issuesrevolves around dealing directly with the people. Let’s take motivationas an example. As long as we think that the way to increase a person’smotivation is to talk with him, don’t we actually assume that the causefor his lack of sufficient motivation resides with the person himself?

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June 8, 2009. A letter from Eli Goldratt…

From my experience, I’m convinced that the root cause for insufficientmotivation (or communication, or synchronization etc.) is the existenceof engines of disharmony. One type of these engines of disharmony isthe existence of conflicts. Of course, putting a person under a conflictdoesn’t contribute much to his motivation. Critical Chain removes threeof those conflicts* and therefore every time that CCPM is implementedthe result is not just better performance but also a considerable increasein motivation and collaboration. See, for example, the quote from themost popular book on CCPM in Japan.

*3 conflicts removed by CCPMEstimation turned into commitment

Priority achieved by pressureProject progress measured by ratio of efforts

Although there are multiple cases documenting "severalhundred million yen profit increase in a few months", many ofthem don’t regard making money itself as the success.Actually, many readers' comments are along the followinglines: “Of course I am surprised and happy with the dramaticprofit increase in such a short time. But far more important forme is people’s personal and professional growth. Widelyspreading teamwork, motivation increasing across thecompany: I have always wanted our company to be like this!”(CCPM, by Yuji Kishira)

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Unfortunately, not only in every organization is there likely to be manymore conflicts, but there are other (not less powerful) types of engines ofdisharmony.

1. What is my contribution? Many people don’t really know (cannot clearly verbalize) how what they are doing is essential to the organization. Would you be motivated if you were in that position?

2. What is my peer’s contribution? Most people don’t really know how what many of their colleagues are doing is essential, or at least contributes to the organization. Would you be collaborative if you where in that position?

3. Conflicts. People are operating under conflicts.

4. Inertia. Many people are required to also do tasks for which the reason no longer exists. People’s intuition is always strong enough to feel it, but not always is it strong enough to convincingly explain it to their superiors.

5. Gaps between responsibility and authority. You, like any other manager, know firsthand how frustrating it is to have something you are responsible for accomplishing, but you do not have the authority for some of the actions that must be taken.

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The experience gained in removing (even partially) those types ofengines of disharmony is more than enough to realize that if wesystematically remove the above engines, we are bound to get thedesired culture change. The huge positive ramifications are obvious.Moreover, such effort will augment and expedite the initiative to changethe prime operational measurement (inventory) and institute the rightprocedures (CCPM).

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1. What is my contribution2. What is my peer’s contribution3. Conflicts4. Inertia5. Gaps between responsibility

and authorityWa … Harmony

1. What is my contribution2. What is my peer’s contribution3. Conflicts4. Inertia5. Gaps between responsibility

and authority

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Unspoken Conflicts

Turning 1 & 2 into Engines of

Disharmony

Jacques-Louis David [The Death of Socrates], 1787 Metropolitan Museum of Art, New York

Socrates

Socrates

Plato Xenophon

Cyrus the Great

Xenophon

AnabasisJourney of the 10,000

Phalanx

Alexander the GreatAlexander of

Macedon

The Greek Catapult

Philip of MacedoniaAlexander’s father

Alexander the GreatAlexander of

Macedon

Augustus

Roman Legions Against the Greek Phalanx

Roman Legion

What I want to show you is, this notion of doing it bythe book is not stupidity, it’s almost the ultimate! Theproblem is that it’s so overwhelmingly effective, that Iwill obey the machine without scrutinizing it nomatter what. That’s the problem.

An alarm sounds when “doing it by the book” is becoming a disadvantage.

All we have to do is listen, and know what to do when someone hears it...

And we must do so in a way that does not jeopardize “the book” or overwhelm the system with noise

A person sees an UDE, or must do things that don’t make sense to him.

It bothers him enough that he thinks a change is warranted.

Eventually, he brings the subject to his boss.

What is the typical response?

Be a Good Manager

Motivated Employees

Seriously consider every idea presented

Conserve Management

Attention

Don’t seriously consider every idea presented

Because as presented, most of the ideas appear to be not (yet) important enough to command management attention

The Solution Was First Tested at the Odyssey Alumni

Program 2010

“If you care, when you see something that iscausing problems or believe something can bringbenefit, you will feel pressure to make a change.However, this desire frequently puts you in aconflict with those whom you need theircollaboration from or their buy-in from.Of course we want to ensure that we do properpreparation, but how frequently, despite thispreparation, you do put yourself and them in aconflict.”

Identify a specific case from your personal or professional life that fits the criteria - your good and well intended solution was rejected.Describe the situation with just Four sentences1. Describe the Environment which triggered your

proposed change. Why did you want the change?2. What did you want the change to be?3. Who resisted this change?4. How do you feel about it/them now…and they about

you?

https://www.toc-goldratt.com/TV/video.php?id=427

1. What does the change mean for you?◦ Fill in the template, identifying the 4 viewpoints of

change from your perspective. 2. What does the change mean for them?

◦ Fill in the template, identifying the 4 viewpoints of change from their perspective.

Partner Up!After you have completed the template, review with a person sitting next to you. You will find this to be a big help in the case you have difficulty identifying one of the viewpoints. The discussion can lead to deeper insights regarding the situation and the process.

Positive (+) Negative (-)Your View Their View Your View Their View

Chan

geD

on’t

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ge

When you want to “challenge the book”1. Answer the questions

◦ What is it about the situation / environment that is triggering your desire to change? Why do you want the change?

◦ What do you want the change to be?◦ Whose approval and/or collaboration do you

need for the change?2. Fill in the template – for you, and for

each person from whom you need approval and/or collaboration.

3. Communicate your understanding with the other person(s).◦ Your view and your understanding of their

view, assuring you reach common understanding.

4. Construct and break any clouds or NBRs together.

Making the Change

Not Making the Change

Your View

Their View

Your View

Their View

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From Engines of Disharmony to Engines of Harmony

4. Organizational S&T

1. Transformational S&T

What is my contribution?

What is my peer’s

contributionConflicts

2. Four Viewpoints of Buy-In

Inertia

3. Lieutenants

Cloud

Gaps between authority and responsibility

Time

March 4, 1991Throughput With a Capital T Today, nearly every manufacturing company

has embarked on some sort of improvementprogram--often emphasizing the adoption ofworld-class methods. But, after, achievingearly success, many such programs run intoa brick wall of stagnation, Dr. Goldbrattwarns. The stagnation can be avoided, he'sconvinced, if companies learn how tounleash intuition--that of managers andworkers alike. However, a major problem inmost industrial firms is that conditioned-reflex thinking stifles intuition. Another isthat outdated policies clash with currentreality.

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Process Article

1. Identify a Giant2. Enormity of unaffected area3. Getting on the giant’s shoulders4. Conceptual difference5. Wrong assumption6. Full analysis

1. TOC2. The people aspect of organizations3. Red curve / green curve; analysis of

inertia (doing it by the book)4. Green curve as the bigger and more

solid base5. If it can’t be measured, then it’s not

tangible (or important)6. Resulting in the overall approach and

process for turning inertia into an engine of harmony.

What insights did we gain?What must be done to turn our expanded

knowledge into “the book”?