Continuing the discussion: Where is the Big Value of Applying TOC?

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James Powell and Kevin Kohls conducted an interesting discussion about marketing TOC and the way for success. I like to follow up and make some generic observations and conclusions from my perspective.

Every TOC consultant has the goal of making more money now and in the future. In order to achieve as much of the goal the use of at least some of the TOC techniques could be beneficial.  If TOC as a brand name for a superior effective managerial approach is very strong then the consultant would include TOC in his own marketing and sales efforts.  Thus, the reputation of TOC could be a major marketing vehicle, but not every time and not for all consultants.  This is because when the competitors also use TOC as a brand name then maybe some other aspects of the offering become more dominant.

What we all miss here?

I think that we miss the big promise for HUGE value. In my original post I wrote a common belief (no hard proof yet) that all TOC practitioners have:

TOC has the potential to bring HUGE value to the vast majority of the organizations

If this is true then TOC can do much more than fix the current core problem and achieve many desired-effects. TOC is able to guide the managerial thinking to ongoing growing success, while keeping the organization from trouble.  If this is true, and if we find a reliable way to achieve and prove it, the personal goal of the TOC consultants would go up, no matter how good it already is.  In such a case, the TOC consultant would gain a real decisive competitive edge.  When an organization, or an individual (a consultant or a lawyer), has a decisive competitive edge it does not mean that there is no competition. It means that the competition does not truly diminish the results!

What many successful consultants do is to establish themselves within a niche. There are two meanings to that niche. One is the group of organizations the consultant feels he knows well the cause-and-effect and has already a certain reputation with them.  The other is that within this group of potential clients the consultant offers a certain mix of services that give good value for that group.

For instance, several key TOC consulting firms focus on medium and large retail chains, and within the retail chain they considerably improve the availability and also keeping excellent control on the assortments to ensure effectiveness.  This is certainly yielding excellent value.

But, within Retail there are other areas that could be vastly improved. Many times the availability and assortment control are, at the time, the core problem.  Sometimes (not every time) improving those aspects create a certain decisive-competitive-edge for the retail chain, even though without advertising the superior availability I suspect the value to the customer would take very long time, and most TOC consultants do not go into the advertising campaigns of the retailers.  Advertising, the definition of the specific market segments, the choice of products to display, the placing of the assortments within the store and the human relationships with the agents are just sporadic examples of areas that need to be part of the overall Strategy – if we truly mean to give HUGE value.

No person can be expert in everything. I watched Eli Goldratt very closely how he reacted to a new environment.  As Goldratt was unbelievingly brilliant he could see signals and drew the cause and effects very fast.  Many times he was right on.  Many times he was mistaken, but I’ve realized it only later because of his extraordinary charisma people tended to agree with him, even when they did not.

How can we compensate ourselves for being not as brilliant and not experts in ALL areas?

By being confident enough to ask questions and judge the quality and relevancy of the answers, and by being able to collaborate with others that have somewhat different experience and knowledge and again be able to judge the quality of the answers by the use of cause-and-effect logic.

My suggestion aims at the ambitious target of establishing TOC, all over the world, as an international, holistic and powerful managerial approach that brings HUGE value to any organization.  The key idea is collaboration between experienced people, from various geographical locations, who have wide and varied experience and share the passion to make it happen.

Should the consortium be not-for-profit? How should (or not) the consortium recommend consultants? How should the communications between local consultants and more than one experienced-international-TOC-consultant be effective from a distance?  These are part of the issues to be analyzed and agreed upon.  Certainly a group of experienced TOC experts can come to an agreement how to start working and be flexible enough to introduce changes when reality shows it is necessary.

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Eli Schragenheim

My love for challenges makes my life interesting. I'm concerned when I see organizations ignore uncertainty and I cannot understand people blindly following their leader.

5 thoughts on “Continuing the discussion: Where is the Big Value of Applying TOC?”

  1. Eli, I will thank you again for spearheading this dialogue and continuing to prod us with important questions and compelling ideas. My comment here is to the subject of TOC adoption as a whole, and not this specific post so much.

    I wonder if the question itself “marketing the value of TOC” is actually masking the real issue. This assumes that value should be the focus, or at least that value is the problem. After 30 years of wrestling with this, I am skeptical that value and how well it is communicated is the issue. I am increasingly convinced that the real obstacle is the perception of risk associated with TOC. Or said more precisely, there is a lack of confidence in TOC, confidence sufficient to prompt movement in many cases.

    The changes of TOC are already seen as significant deviations from common practice (big movements if you will). By itself this connotes greater risk to most people because of the many triggers that go along with such a perception (more unknowns, more moving parts, more challenges I will face, more people to change or bring along, etc) But the risk grows greater as you learn more about TOC–

    – it flies in the face of conventional wisdom (“so now I have to disregard what I have learned and know after all these years?”),
    -it’s is too good and too simple to be true (mentally we have to accept that the complexity we “see” around us really isn’t complex, it’s as simple as focusing on the one constraint–tall order),
    -it goes against the grain of what everyone else is doing (remember the old adage–no one ever got fired for hiring McKinsey)
    – it’s a holistic thing, uh-oh so that means I have to do it big, I can’t try it in a little corner and not worry if it bombs on something trivial, I have to push all my chips in
    – A little change is darn difficult, but this is a big change and it involves paradigm shifts for lots of people

    I could go on and I am sure you can add your other perceived risks people feel around TOC. The point is that I wonder if rather than shouting the value of TOC louder (yes I have long been one to tout the value of more successes) we should be 100% focused on how to reduce the risks of moving. I worry that continuing to focus on value is like speaking English to someone who only speaks Swahili and believing that you need to raise your voice to be understood.

    I do believe there are many effects that support this hypothesis. I will share one for now as this comment is already too long. If perception of risk is a significant cause of more companies not moving on TOC than we will see that many of the companies who did move perceived a much lower degree of risk. I suggest that the many companies who went on TOC when they were desperate for any solution (eg. UniCo and Alex Rogo), and the many executives who after one TOC success took it to each successive company where they worked, are two significant validating effects.

    I would love to hear what others think.

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    1. Kevin – totally and absolutely agree. I’m afraid that shouting the value louder, is in fact useless. Are we not all pre-programmed to resist hyperbole? “Kevin made $146,432 in one hour using our new top-secret mystical management formula!! Click here to find out how! This secret will be revealed to only the first 234.432 people to click! Don’t miss out!!!”

      And the idea that all we need is more compelling logic and a few case studies. I just cannot get with that thinking. If that were true, we would all be thin, fit, and well-read. Humans just don’t make buying decisions that way.

      Pain inflation and risk-of-change-reduction (both perceptions) are the only way to explode TOC marketing. Marketing the Value comes AFTER the paradigm shift, not before. Consider the TOC community: we are all convinced about the HUGE value. AFTER our paradigm shift.

      If we focus on promoting the huge value of TOC, we are literally preaching to the already converted. To get new converts, this strategy flies in the face of human nature, and 30 years of in-our-faces evidence from within our own TOC lives.

      So, Eli is right that we need both. But i believe we must teach TOC consultants to inflate pain and reduce risk, to get clients to move (and how to make that move fast and relatively painless). and THEN we must show immense value, to allow our clients to accelerate on a journey of ongoing improvement.

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    2. Kevin, I realize the flaw in my communication is not clarifying what I call “value.” Goldratt defined the goal as growth (red curve), while keeping stable (green curve), which I understand as safety. However, fear of risk, real or not, is based also on irrational thinking and it is definitely our responsibility to reduce the fear. I thought it is mentioned in my summary CRT and I certainly wrote about fear (organizational and individual) in my previous posts.

      I think that offering value without risk analysis is very poor value. I like to emphasize the message that we have to look for the immense value when we also put effective risk control in place. I like to talk about it in the next TOCICO conference.

      Reducing fear has to address both the rational potential threats and also the irrational fear of the unknown. I think that the general direction of solution I suggest does something to reduce fear by offering that an international group of international experienced people would audit the S&T and warn from possible threats.
      Anyway, we cannot sell just safety, we need also to show what we can reach, while handling the threats.

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  2. James,
    I like the promote pain, reduce risk approach! I did this (inadvertently, as are most of my best successes) at GM, going to plants that were already in Pain and giving them a low risk, no cost solution. Crisis, it turns out, is a great Pain maker. A couple of other things I learned along the way that might apply to some of the comments:
    • Start Small, Think Big – WE know that the holistic view will bring more value, but the size of the scope of the work is intimidating. We can keep the holistic view (think of it as a “buffer” of TOC solutions) in our own head until we need it.
    • Planting a seed in one area of one plant was often the best way of spreading the solution. It would go from area to area, plant to plant. Until it reaches a Tipping Point.
    • The idea of bring in TOC is their idea, not yours. Expose the Pain, show the low risk solution. If they are not interested, then you have probably avoided a failed implementation.
    • We had a saying at GM which might have some truth, “You can get anything you want done (at GM) if you are willing to give someone else the credit.” We emphasized the success of the forward thinking of the plant leadership, and how we were happy to play a small part.
    • Should we as a TOC “movement” try to focus more ourselves? Where would it be?

    Thanks for keeping this discussion going forward, Eli.

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  3. Kevin I absolutely agree to all your insights, maybe with one minor exception. Planting one seed in one area usually does not spread to other functions. At least this is my experience and I can understand how the “strange seed” has a certain appeal, but then everyone goes back to the common paradigms.

    We definitely need to focus more. I suggest to focus on Strategy. It always addresses the Pain and it creates hope when a new insight to gain much wider market is presented, especially when the insight can be carefully checked without big risk.

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