It is not easy for TOC people to evaluate ideas created outside the TOC community, because of three interconnected reasons.
The first is the damaging tendency to assume that TOC challenges everything that is not part of the TOC BOK. I hope we get over this reason.
Another reason is the specific terminology used in TOC, which can be different from the use of those terms elsewhere. Just think of the term ‘constraint’ and how the use of it in TOC is different than the rest of the world.
The third reason is that the TOC school of thought implies a certain sequence of analysis. It always starts from the goal or an important objective and asks the question:
What prevents you from achieving more?
It is a must to create enough bridges and dialogues with other sources of relevant managerial knowledge into TOC to expand its scope and also its power.
Let’s check the relationships between TOC and SWOT analysis. SWOT, the acronym of Strengths, Weaknesses, Opportunities and Threats, is basically a marketing picture of the organization, brand or just a product. The objective of SWOT is to lead the mind to improve the impact of the strengths, noting the potential opportunities and grabbing the best of them, reducing the damage from weaknesses and becoming more careful from threats. The idea is that every part of SWOT impacts marketing, so the appropriate planning would take it into account.
SWOT starts with the Strengths assuming they are the key to identify the target markets and to emphasis these aspects in the marketing campaign. TOC, on the other hand, starts its analysis with the weaknesses of the organization as a whole. These weaknesses are the key reason to the current state of the organization. TOC uses several types of weaknesses – constraints, core problems, flawed policies (policy constraints) all lead to identification of flawed assumptions that can be challenged.
The basic assumption behind this part of TOC is that the core weakness, in capacity, capability and possibly in the market perception, is the key leverage point, the most immediate opportunity to do much better in relatively short time.
It took time for TOC to recognize the role of the strengths in outlining the way to vastly improve the future of the organization. I see the insight of defining the Decisive-Competitive-Edge (DCE) a key development of TOC. Goldratt defined DCE as “Answering a need of potential clients in a way that no competitor is able to.” A TOC way to spot a need of the potential market, its pains that are taken now as “natural” or “part of reality”, is to look for possible UDEs of the market, by developing a branch of a current-reality-tree starting with the products, services and delivery. But, in order to be able to solve an UDE certain key capabilities are required to provide the development of an answer to that need.
So, the unique capabilities of the organization, like fast, yet reliable, flow of products, are the key strengths of the organization. These capabilities are the source of new opportunities, which means the ability to combine an unanswered need in the market with the ability to answer that need. The logical cause-and-effect branch can start with the unique capabilities and then deduce the undesired-effects in the market that could be solved by those capabilities.
For example, fast and reliable flow could solve urgent situations of potential clients badly needing the products, when the current standard of delivery is too slow to solve such an urgency. The next step in the analysis is estimating the value for the potential clients receiving quick and reliable delivery and whether this solution could provide new business for such a client knowing there is a satisfactory, even if somewhat more expensive, answer to such emergencies. Such an analysis should come to the conclusion that the organization should not “waste” the unique capability by selling the fast-response to everybody, even when no urgency exists, without charging more for it.
The usual SWOT analysis looks on the strength of a product or service from the perspective of the market. These strengths are all due to certain capabilities of the company. Knowing better the unique capabilities, coupled with sensitivity to the pains and needs of the market, are critical for identifying new opportunities. Strengths and opportunities have to be bundle together to get the full effect.
The last part of SWOT is threats. From marketing perspective threats can be competitors who might find better ways to compete. Another type of threats is economic and cultural happenings that might negatively impact future sales. These are mostly external events, where the company might not be prepared to handle.
There is a definite need to look not just for external threats, but also to internally developing threats. For instance, the retirement of a key professional whose unique capabilities are behind some of the current strengths. Another one could be turning cash to become a constraint when too high long-term investments draw too much of the current financial assets.
TOC has, generally speaking, neglected the issue of threats, both external and internal. The notion of an UDE is the closest signal that TOC might note and lead the user to draw the fuller cause-and-effect picture. UDE is defined as well-known undesired-effect. The missing part in the current TOC BOK is constantly monitoring for new emerging effects that have the potential of becoming most undesired, sometimes even disastrous. I have already written a post about “Identifying the emergence of threats” (https://elischragenheim.com/2015/09/24/indentifying-the-emergence-of-threats/).
SWOT in general encourages detailed definition of market segments, those that enjoy the strengths and care less about the weaknesses. TOC did not fully developed, to my mind, a technique to develop clever market segmentation where features, delivery service, variety of the product mix, are all used to define the clients that should get the best value, and by that define the targets. It is not too difficult to develop such TOC-influenced tools.