TOC is now at a cross-road. On one hand we have well-defined methodologies for improving the flow of products and services, also making the delivery reliable. On the other hand, Goldratt taught us the use of cause and effect tools for diagnosing the current blockages to success, pointing to future ramifications, challenging assumptions and coming up with a winning strategy plan. The critical blockage, by the way, does not necessarily delay the flow of products. Many times it is being in the wrong market, failing to see the right needs of the market or de-motivating the employees.
We have a conflict: do and sell what we know well versus trying to shoot to the sky, using the variety of the TOC tools, and maybe other tools, to solve the real problems that block the organization from achieving much more.
Here is the conflict – the way I see it:
The well-known TOC methodologies are DBR,SDBR, buffer-management, Replenishment, CCPM and possibly throughput accounting. The full scope would include also the TP, the six questions, S&T, SFS, the pillars, the engines of disharmony and many other insights that are not well integrated into coherent BOK.
The cloud, one of those tools which are not part of the “well known and effective TOC methodologies” represents a wicked-problem in the TOC community. The upper leg expresses the notion of a “small-TOC”, which is proven to give excellent results and can be nicely sold (when the focus is on it), while the bottom leg, the “big-TOC”, brings higher value as it integrates the functional results to bottom line improvements and is more universal, but is also more difficult to sell.
What is not mentioned is my additional observation of an undesired-effect (UDE):
There is growing competition on improving flow of products, services and projects from other methodologies.
The point is that those new competing methodologies are not superior to TOC, but they are superior to the current practices, so they compete on the mind of potential clients, including The Goal readers. These methods compete with Small-TOC, but not with Big-TOC. Let me just mention Lean, DDMRP and Agile as such methods. If you agree with this assumption than the advantage of selling Small-TOC is threatened and could be temporary.
Most of Small-TOC implementations are functional, and thus do not need the full support of top management. Big-TOC should be sold and addressed to top management as its advantage is integrating the whole company to the desired state of growth coupled with stability.
How can we evaporate the above cloud?
We certainly have difficulty in selling Big-TOC, but selling Small-TOC is also far from being trivial.
A potential solution, challenging the above critical assumption, is to present TOC as a method to answer two critical questions, as verbalized by Dr. Alan Barnard:
- How much better can you do? In other words, what is limiting the performance of the organization from achieving much more?
- What is the simplest, fastest, low cost and low risk way to achieve that?
These questions are holistic and generic and they apply to the top management of the organization. While the two questions can be easily translated into actual value to the client organization, they raise the issue whether the client trusts that TOC can lead to effective and safe answers to the questions. More, letting “consultants”, with all the connotations it raises, lead the strategy of an organization generates fear, which is also personal (what it might do to ME?)
The obstacles for convincing executives who have some idea of TOC, like The Goal readers, are much better handled when the clients see a large organization of truly experienced TOC experts, who closely collaborate to achieve the most effective answer to the second question.
Currently there are two relatively large TOC consultancy companies who do well, even though their growth in not spectacular, and they are not truly large compared to several non-TOC consultancy companies. Having several high level consultants be involved in every implementation provides an opportunity to quickly identify unexpected signals and draw the right response, and by this reduce the risk – and this is also what the client expects from an array of highly experienced people.
TOC Global is a new TOC non-profit organization aimed to solve wicked-problems that limit the performance of organizations, by combining the experience and knowledge of diverse group of TOC experts. TOC Global is an international network of top consultants, coaches and practitioners who are ready to contribute time and efforts to improve the awareness, adoption, actual value generated and also the sustainability of TOC implementations. There are three major routes that TOC Global is determined to take:
- Supporting new and ongoing TOC implementations to achieve very high value. This means guiding local consultants and practitioners through active dialogue to address the specific issues, challenge hidden assumptions, and deal with the fears of managers, which block them from moving. In other words, help those who are ready be helped to deal with their wicked-problems of specific implementations. A free service of Ask-an-Expert is an initial step in this direction (write to info@toc-global.com).
- Choose challenging wicked-problems and run projects to analyze, carry careful experiments and eventually complete an effective solution, which would add huge value to the specific organization and similar ones.
- Improve the awareness to TOC through investing in marketing efforts.
This activity would lead to another desired effect: Turning the current TOC BOK to be more complete and more effective. Being a non-profit organization allows sharing the lessons and the new knowledge with all the TOC community.
Big-TOC always looks for possible negative branches of any new exciting idea that solves a problem. The grouping of specific people in the TOC Global naturally generates concerns of possible competition with other TOC experts. The only way to trim that negative branch is by instituting very strong ethical codes, and by being ready to collaborate and join forces with others. The real competition of TOC is not Lean or Six Sigma, it is the big consulting companies. Big-TOC offers leaner and more collaborative process based on focusing on the truly critical issues, helping the organization to verbalize their valuable intuition, and achieving huge value based on simplicity and reliability. One might say this is the right way to become more antifragile.
Eli Schragenheim 
Some of the real problems faced by the publication of the theory have touched and solve the problems of some individuals like me to desire to know about how to apply what they have learned about the theory
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Eli,
I read Sanjay’s article and I”m in full agreement of the ‘dilution’ of the TOC definition. IMHO, it should be focused on achieving operational excellence, and marketed to those organizations that believe they can achieve a decisive competitive edge through operational excellence (not everybody believes this).
If TOC were marketed this way, perhaps it would be clearer to the mind of (new) customers what TOC is. Also, through operational implementations of TOC, quick gains could be achieved and customers could see huge value. As huge value is obtained, they might be open to talk about the bigger questions (‘what markets should we play in’? ‘do we have the right products?’ etc)
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Thank you Santiago. You describe the upper side of the cloud. Here is the problem: if you start in Operations without everybody being aware that you look on the whole strategy and Operations are just the first step, then you create the image of being “operations expert”, meaning Marketing and Sales, as well as R&D, are NOT your expertize. If you come from the start with the wide vision, and suggest to start by improving operations and how it would link later to the other major areas, then you give Big-TOC the chance of bringing the real-value. We can always use the know power of TOC in operations as a differentiator, but the goal is to grow while keeping safety and stability.
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Let me clarify. My point is, what happens if TOC designs all its marketing to companies that want to obtain Operational Excellence, and truly believe this is the right strategy to compete?
Surely we have ‘solutions’ for Marketing/Sales/Change Management, but the real power lies in improving operations.
If everything is marketed this way, then you can always address the conversation from that perspective, from the top level (with senior management) and from divisional levels (operations, project management).
This would also limit the overall focus of the TOC movement. For example, we would not go into any company, only those that have severe performance problems and want to become the truly best (at deliveries, new product development, etc ).
I know it might be similar to current implementations world wide, but I believe a slight adjustement in the ‘message’ to company owners could help increase TOC promotion.
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HI Eli. Whom are the parts involve in the conflict? Can you illustrate me with the one real case you use to build the cloud? Thanks
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Eli,
is the TOC Global initiative an idea or has it now been launched? If it is a new, real, initiative, why can’t it be a division of the TOC ICO organization?
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TOC Global is ready to be launched. It could take 2-3 months to be properly registered as a non-profit organization, but the network is ready for any coming request or challenge. The website, http://www.toc-global.com, would be operational in a week or two.
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Thanks Eli. If this was a true conflict (focused v broad application), then surely the big consultancies would also have the same issues. But do we see this?
From what I can see, the McKinsey’s of this world cover a wide range of topics of relevance to running large organisations, and they sell this at the most senior level. An obstacle of focusing is not just being branded as a pure niche player, it is also a risk of not having access to the “c-suite”. How likely is it that a delighted operations director would knock on the CEO’s door and suggest ‘hey you need to meet these folks who sorted my factory, and let them look at the whole company’?
Why is this a true conflict, and does it need to be either/or, at least from the perspective of managing the TOC BOK, and running conferences for those who want to learn about the variety of tools in the toolkit? I dont see how this is at odds with an TOC-aware individual or company focusing on one aspect when looking to sell consulting services, or learn how to improve a part of operations. I think focus is key to selling anything. McKinsey’s practice areas focus just on their niche, and if they do pull on other areas of expertise, I sense it happens behind the scenes, so clients only see the part that interest them.
I think most people will come to TOC with a specific need (manuf/dist/project/etc), but some will be looking for a generic method. TOC ideas need to be able to be found by both groups. I like the idea of TOC Global, but I’m not yet clear how it will resolve this issue. I think “branding” also has a big role to play here, and whilst I am more than happy using the traditional terminology amongst TOCICO memebers, I dont think it is good enough as a brand to entice people to try it. For example Focused Manufacturing, Focused Distribution, Focused Projects & Focused Problem Solving ….would be easier to pitch than sDBR, Buffer Management, TOC Replenishment, CCPM, TP, etc. Isnt that all the work “Lean” does, acts as a recognisable label?
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Ian, I see the conflict within TOCICO as well as within many TOC consultants, companies or individuals. In order for TOC to pull organizations and people to know more and to adopt it, we need to radiate a message about what TOC is. From that need the conflict arises – do we radiate Operations, Strategy, Problem Solving? If we like to present the Big-TOC – how do we define it? Some people, including Justin Roff-Marsh and Sanjeev Gupta think it is impossible to market Big-TOC. I admit it is tough – but I think it is possible.
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Eli,
It continues to be encouraging to hear healthy dialog about this topic. Kiran Kothekar’s TOCICO presentation highlighted the need for Big-TOC based on the necessary condition of top management understanding and leadership style to sustain the Small-TOC successes.
In preparing to lead a government agency (national defense) through a TOS implementation, it seems there are numerous sustainment obstacles within top management that require the guidance of the broader strategic elements to penetrate the culture.
There seems to be plenty of room in the tactical-to-strategic layers and small-to-large organizations for teams of experts to bring sustainable implementations. Would an implementation S&T map help to identify gaps and network complimentary experts together? Would a sales and marketing mafia offer for TOC implementation help clients navigate the steps toward sustained success?
At times during the TOCICO Conference, I wondered why the TOC experts had not used the full scope of the TOC methodology to create the solution. I am perhaps too inexperienced and naïve about the difficulty in finding the inherent simplicity contained in the conflict much less in arriving at the generic Big-TOC management breakthrough trees.
It seems Dr. Goldratt mentored aggressively to help develop the brilliance seen within the TOC experts. Perhaps they could use this conflict as an opportunity to aggressively mentor the next generations of experts. There will always be a need to integrate more TOC solutions so long as there are underexplored industries (public and private) and emerging challenges within them in a world of Big TOC. Is Big vs. Small the core conflict? With time, one of them could prove unsustainable due to insufficiency, but the real difficulty may be how the failure of lack of focus of one or the other will harm the long-term TOC reputation. It seems the Big TOC has the process to address the UDEs.
Perhaps the “Small TOC” camp has the greater difficulty in this regard. When TOC implementations in one area of operations (project, management, manufacturing, sales, etc.) generate solutions that spark parallel thinking and development of solutions in another area seems to challenge a “Small TOC” view. In the end, the Big TOC paradigm not only includes all of the benefits of Small TOC, it also enables the continued pursuit of TOC applications/solutions to further the holistic paradigm of managing in reality. Perhaps a Change++ is possible.
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Bob, nicely put. I guess you came to TOC directly into the Big-TOC picture. Many people came through DBR and CCPM, have seen the huge positive effect and are frustrated that those practices are not more spread.
The difficulty is defining the boundaries in order to radiate to potential clients what TOC is really good at, and then be really good in meeting the prior expectations. It is a real challenge. Thus, I think that wide collaboration is required to truly meet the challenge.
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Eli, this is indeed a thought provoking article. I myself am keen on engaging potential clients at the generic level (at the enterprise level) for uncovering hidden value within their processes (not just limited to operations) and do feel the need for getting through the initial hesitation in letting an ‘outsider’ see/study the internals of their company. Although we can of course assume that there is plenty of hidden value (either in process velocity or simply inventory buffers in non constrained points) it is generally not that easy in my experience to break down the first cynical barrier without some concrete data points that are directly from their space.
Would love to hear from you and others as well on those thoughts. I look forward to interacting with toc-global.
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I have to admit that I do not stay in the described dilemma and that I also do not understand the whole discussion.
TOC provides a basket of proven methodologies mainly to improve operations related activities. That’s the upper leg of the cloud. Furthermore TOC provides thought provoking tools. In combination with the upper leg this gives the opportunity to dive also into other application areas / market segments (bottom leg). Is it really a conflict?
I don’t think so, because it is finally the decision and responsibility of a TOC practitioner in which market segment and which customer group he wants to ‘attack’. He can pick whatever he wants from the basket. TOC itself can not deliver the answer. Of course we have to admit that TOC is not a MAFIA OFFER by itself. But this fact does not limit the necessity for a practitioner to decide in which direction he wants to go. Fortunately he can apply the thought provoking tools for himself.
Furthermore I do not understand the running discussion about a needed “TOC LIGHT”. There is no reason to downsize or downgrade TOC. What is needed is an improved marketing strategy and if there is someone who can not discuss DBR with the top manager of a small enterprise, then he should tell him the “Boy Scout Hike” story at first and afterwards he can challenge the thoughts of the manager in a different way.
What has to be done is a revisit and perhaps update of the “well known and effective TOC methodologies” to tackle the undesired-effect (UDE):
“There is growing competition on improving flow of products, services and projects from other methodologies. ”
This is where we should focus on.
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Jurgen, for a TOC practitioner to chose from the TOC basket he/she needs to know what is in the basket, how effective it is, what are the boundaries of this effect and what is the expertise of the consultant, or internal champion, offering the implementation.
Problem is: it is not trivial to define the basket as such.
Add to it another effect: managers overloads their attention capacity. We claim we know how to exploit management attention, but most managers do it their way. One of their means is to comprehend every issue in a matter of seconds. Thus, to give them a basket, without clear sharp and very concise description, does not usually work. This is the UDE and we need to find an effective way for Big-TOC, while it is easier to get the attention for Small-TOC.
Regarding the UDE of competing methodologies. The essence of TOC, certainly for Operations, has been described in the Goal 30 plus years ago. Some, like Lean, came to similar understanding from different angle, others learned some of the TOC insights and came up with something that do part of the job, meaning bring value, but maybe not the full value and without the overall understanding. The practical effect, to my mind is: when we have a potential client that has already implement one of the competitors solution, then probably his current core problem is no longer at that area. Thus, TOC does not need to start by doing somewhat better job at that are – but identify and solve the current key problem. Maybe later the next key problem would be back to that area, because it could be handled better.
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Eli,
I think the content of the basket is defined for TOC practitioners since the Theory of Constraints Handbook. Only a few tools have been added after book release like “Standing on the Shoulders of Giants”. By the way this tool in combination with the Thinking Processes and the book “The Choice” are my preferred tools in the basket.
Other practitioners may choose different tools, but it is necessary to be aware about all TOC tools.
You are right to say “…the expertise of the consultant, or internal champion…” is crucial. Again he/she has to decide in which direction he/she wants to go.
There is another issue I want to share with you. I have to admit that I do not feel comfortable with the TOC statement “Management attention is the ultimate constraint of the organization”. I can only reflect on it based on my more than 30 years experience in management positions in Europe and the US. Since I have heard it the first time, my emotion – intuition – logic tells me these consultants have never been in a management position and they simply do not know what are they talking about. Perhaps the TOC Community is right, but I don’t want to hear from a consultant what is wrong in my area of responsibility. I would always agree that a lot of things can be improved, but to say that my attention capacity is not sufficient sounds like “a kick in the teeth”. So, my advice to the TOC Community is, please be careful with this statement.
You are right, it is not very smart to give the TOC basket to managers. But I am still convinced that managers are open to discuss at first the TOC philosophy and later on selected tools from the basket. How to start? Well, give them “The Goal” or another book as a gift in their own language. As an example German SME owner / top managers are not interested in reading a book in English language. This might be valid also for other countries.
Regarding the UDE of competing methodologies I fully agree with your statement. But I have to emphasize that Eli Goldratt gave us the “Standing on the Shoulders of Giants” process before he passed away. My interpretation of this act is that we should never forget to improve and I believe this is also valid for the content of the TOC basket.
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Hi Eli, the cloud reminds me one that I made in some Goldratt’s conference, and after the conference pride I showed to him and his commentary was the cloud is totally wrong. After this shocking observation he ask me in what specific real case were I thinking on. In that moment I understand the difference between an academic job and a scientific process.
I would like to know the history behind the cloud. Your article show some consultants doing what you call small TOC, and some doing big TOC, I think there is not conflict between them, or maybe just when they meet and try to show who is the best.
Goldratt wants to make the world a better place, and he thinks that making TOC the way to manage the companies was the best tactic for that. My question in this moment is how are we measuring that the world is a better place? Is just matter of make more money today and in the future? If with a small or big TOC job we help a weapon’s factory or a coal supply chain, or companies that have slaves in some continents, are we contributing to that purpose?
How can we with the power of TOC tools can really contribute to make the world a better place.
As always the best is have the specific case to avoid the academic world of speculation.
Thanks for give us this space.
Regards, Hernán
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A realistic case: A consultancy company of several TOC experts think about how it should market and sell its services. Should the company offer focus on flow improvements? Or should it market its capability to lead the organization to develop a strategy plan for significant growth with low risk?
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Is a new consultancy company or is one established? If is one established, what is it’s actual offer?
If this company has several TOC Experts, why don’t offer both, flow improvements and strategy plan for significant growth with low risk?
What is the significant need of it’s clients that is going to satisfy “to an extent that no significant competitor can”?
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Eli
I think the cloud can be simplified, somewhat.
Here’s how I see it from my perspective.
http://tinyurl.com/jp6vbla
Justin
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Hi Justin
I really like your simplified cloud and was wondering if you came up with an injection that ‘evaporates’ the cloud and if so, what was the incorrect assumption the injection addressed?
Alan
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Hi Eli,
I think DDMRP is not a competing methodology of small TOC but a variation of small TOC. It has a potential to give a bridge to Large TOC through DDS&OP route.
It might be worthwhile to explore the success stories of DDMRP for Large TOC in collaboration with DDI.
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I fully agree that DDMRP is a variation on Small-TOC. It still competes on the management attention of companies who like to improve their operations. This is very legitimate competition. I claim that the decisive competitive edge of TOC is the wider picture focused on improving the bottom-line, rather than focusing on flow improvement assuming the bottom-line improvements would come without any other move.
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Yes, there is hesitation caused by fear. Going into ways that are partially unfamiliar seems risky. My suggestion is to overcome the fear by offering collaborative efforts of experienced people, and by developing the way to carefully test and check any surprising signals. To me this is the main legacy of Goldratt: be ambitious and careful at the same time. Goldratt used to say “Be paranoiac, but don’t be hysterical”. I think that by collaboration between different experts this ambitious target can be achieved.
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I totally agree with @hdsodano and @juergenkanz. I fail to see the conflict between D and D’ in practice. Why do you think D and D’ cannot both be done?
There are multiple consultants, and multiple clients, yes? Month after month? So this is not a conflict, it is a design for experimentation. Which will work best, for this consultant, this client, this month? Do the experiment!
Doing FOCUSED (not “little”) ToC, takes nothing away from doing COMPREHENSIVE (not “big”) ToC, and vice versa. Don’t most big ToC efforts begin with a small ToC implementation? Don’t most small ToC implementations try to follow up with more ToC?
I don’t see any connection between the challenges of (1) selling ToC, (2) implementing ToC, and (3) locking-in ToC [preventing the implementation from “evaporating”] and how “big” your efforts are. Some big implementations are successful and stable, and some small implementations fail on all three counts.
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A consultant has to decide what services he offers. The choice itself has the conflict embedded in, but for certain consultants who anyway like to focus on one or two areas where they have the expertize, experience and confidence, the choice is clear enough. Others, who like to follow the fuller vision of Goldratt and help the client to achieve the maximum value, certainly feel the conflict: should they radiate the wider approach that is harder to sell because the reputation of TOC still lies in the DBR/CCPM/Replenishment area, or they should focus on what TOC has evidence to work at. Consultants need to develop there own strategy to gain the trust of many clients. Even those who already have gained good reputation need to consider the risks in the future: would there be enough demand for Small-TOC and whether they are able to promote the bigger value of Big-TOC.
For the TOC community as such, certainly for TOCICO, the conflict is clear – as the question “What is TOC?” is being asked and a clear answer needs to be given. The current confusion causes the TOC community a lot of damage.
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I’m sorry, I still don’t see any conflict. For an individual consultant, this is a choice, not a conflict. A matter of focus… And for the “community”, let each make their own choice — why is it a conflict if they choose differently? This is not conflict, this is freedom. And for “what is ToC?”, if this is a growing, thriving body of knowledge, then the answer will also be growing and changing. New knowledge and understanding replaces the old — this is how it has always been, in any area of serious inquiry. Damage? Really? You would prefer the clarity of stagnation?
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Hi Eli, Thank you for another thought provoking blog. I can relate to small TOC / big TOC dilemma , yet grappling with how to define big TOC. (Small TOC is flow improvement… as per me flow improvement is classical S&T steps).
I agree in certain environments, flow improvement by itself is not sufficient to deliver significant improvement in profits or at times flow improvement requires additional injections than just classical S&T steps. For e.g If one implements injections of product rationalization, measurement changes, changes in channel partner policies as part of flow improvement, will that tend towards Big TOC OR
is Big TOC really an ongoing journey where the management of the company is able to build, capitalize , sustain one DCE after another . (something on the lines of Strategy FRT described by Eli Goldratt in the Strategy Goldratt Satellite Program)
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My own answer is the latter – Big-TOC is an ongoing process looking for answers for “What limits the goal units now?” (could be capacity, capability, a flawed assumption or the limited value of our products in the eyes of the market) and “What is the way that is simple, effective and low risk to achieve more?”
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