Since the S&T contains all the objectives that have to be achieved (strategies or "know-what"), and the necessary changes that have to be implemented (tactics or "know-how") at each level and within each part of the organization, as well as all the related assumptions ("know-why"), the S&T can be used as a primary auditing tool. Are we achieving our objectives? Have we implemented the agreed tactics? If not, which of the assumptions that were made are no longer valid and how can or should this be corrected?

Using the S&T to Identify and Systematically Remove CI Conflicts

Anyone who has tried knows the challenges in creating an S&T. There is the challenge of knowing which questions to ask to identify the necessary and sufficient changes and the sequence in which these changes must be implemented, the challenge of answering these questions (using solid cause-effect), and finally the challenge of verbalizing the answers in a way that will ensure that the proposed changes are communicated clearly as "actionable information." However, can we use the other TOC TP to help overcome some or even all of these challenges?

Over the past two years, a new process to use traditional TOC TP (such as UDEs and the Conflict Cloud) has been tested as part of a CI and auditing process to validate or even create new S&T blocks (Barnard, 2009). Figure 15-20 shows this new process applied to managing projects. The process can be initiated at any level within the organization where a clear gap in performance exists that currently limits the achievement of the higher-level goal for the organization.

Step 1 involves identifying this performance gap, validating the extent and consequence of not closing this gap in relation to the goal of the organization (e.g., using the impact of the gap on the organization's Throughput, Investment, and Operating Expenses), and finally identifying the major UDEs (independent causes that contribute to the gap). In the example that follows, these UDEs reflect the six most common causes of projects being completed late, over-budget, or under scope. Step 2 involves defining the subordination conflict that blocks removal of each of the most significant UDEs (in terms of their contribution to the performance gap). The example shown in Fig. 15-20 shows the subordination conflict related to one of these UDEs. Step 3 and Step 4 involve identifying the erroneous assumptions that cause the conflict and identifying the new assumption and related new rule that will break the conflict. Finally, Step 5 converts these insights into the structure of the S&T with the objective of the conflict (A) being equivalent to the higher-level objective of S&T (e.g., "Meeting all project promises"), the necessary conditions (B&C) being equivalent to the strategy, the assumption that was challenged being equivalent to the parallel assumptions, and the new injection (the new rule) to satisfy B and C equivalent to the tactic. The original UDE (bad multitasking) and its consequences are equivalent to the necessary assumption of that S&T block.

Summary of How to Cause the Change

The implementation of a new TOC-based POOGI can be blocked by a number of implementation obstacles. Significant obstacles that will have to be overcome are the typical resistance to change and lack of actionable information, both of which can be addressed by using TOC's buy-in process and generic S&Ts (which describe the recommended change in detail). Another significant obstacle is the organization already investing in another CI methodology such as Lean, Six Sigma, or Balanced Scorecard. A number of organizations have already presented how they have integrated TOC as the focusing mechanism into their existing CI methodology. Another implementation obstacle is the fact that most ERP systems do not (yet) support TOC's BM (TOC experts consider BM a necessary component of all logistics applications), but again, it has been shown that standard ERP systems such as SAP can be modified to provide this functionality. The last implementation obstacle we reviewed is what Goldratt calls "the engines of disharmony." Goldratt proposed that the new TOC TP, the S&T, is the best way to remove these engines of disharmony and we can also use the S&T as a primary auditing tool.

Summary of Continuous Improvement and Auditing the TOC Way

The efforts to improve organizations continuously have resulted in the fact that change initiatives have become a continuous journey in most organizations today. Over the past 100 years, there have been major advances in the development of the mindsets and methods needed to continuously improve and audit organizational performance. Unfortunately, despite these advances, the majority (60 to 80 percent) of change initiatives still fails to meet their original objective and some even cause decay in performance or failure. This high-failure rate frequently triggers a vicious cycle of higher resistance to change and lower expectations that result in many new initiatives not receiving the required support and resourcing that, in turn, increases the probability of failure, which again will result in higher resistance to change and low expectations. But why do people resist change? There are at least five different reasons, each requiring a different solution to overcoming the resistance to change. We resist change when: FIGURE 15-20 Proposed process using conflict cloud to creation/validate new S&T entities.

1. The change (required to solve a problem or break the vicious cycle) is counterintuitive.

2. The change has no perceived benefit or the perceived "cost" outweighs the benefit (to us).

3. The change is not detailed sufficiently to provide actionable information.

4. The change has potential negatives to us or other stakeholders.

5. The change has implementation obstacles.

The mistakes made as a result of this resistance can be classified into errors of omission (not doing what should be done), errors of commission (doing what should not be done or doing the right thing not in the right way), and errors of detection and correction (not detecting or correcting or taking too long to detect or correct despite available data). To prevent these "errors," organizations need to adopt a holistic focusing mechanism to identify when to make changes (and when not) what changes to make (and what not) using TOC's 5FS and TOC's TP, and how to implement these changes in a sustainable way. Organizations also need a decision-support mechanism to judge the impact of decisions on the system as a whole (e.g., TOC's TA) as well as a fast feedback mechanism to reduce the time to detect and time to correct for mistakes made (e.g., TOC's BM). Last, organizations that want to achieve CI have to create a culture that will ensure that fear of failure does not become a major cause of errors of omission and errors of detection and correction.

Henry Ford and Taiichi Ohno provided great examples of how to create such a holistic CI mechanism and the necessary culture (based on the scientific method) to inspire CI at all levels and within all functions but which focused on supporting the overall vision. They both shared a belief that anything can be improved and made sure this belief, together with their vision of where CI would be most valuable to the organization (and other stakeholders), was continuously communicated and practiced throughout the organization. They also knew the importance of creating a safe environment (to reduce errors of omission caused by fear of failure) to encourage continuous experiments to find better, simpler, faster ways of doing things with less waste, and lastly, used continuous "audits" to ensure compliance with the latest best-practices (until these can be improved) and alignment between organizational policies and their vision (to prevent policy conflicts). This is in full alignment with the direction of the solution proposed by TOC today, but TOC has gone one step further to provide a simple yet powerful focusing mechanism to enable management to differentiate between the many things that can be improved and the few that must be improved now as well as a simple conflict resolution process for breaking any conflicts that block CI for the organization as a whole.

TOC's underlying mindsets, its 5FS and TP together with the specific POOGI mechanisms defined for each of the TOC application solutions using two buffer monitoring mechanisms to focus CI efforts. The simplest tracks are where WIP is building up to identify where flow is being delayed (the constraint or CCR). The second use of buffers employs Pareto analysis to identify the major causes of red and black buffer status (buffer diagnostics), which provides an excellent focusing mechanism for the powerful time, waste, and variation reduction techniques of Lean and Six Sigma. Such a focusing mechanism should help to ensure that management can really focus properly, doing what should be done and, more importantly, not doing what should not be done (which should save significant time, energy, and money). This approach should ensure that the organization achieves both growth and stability (from focusing scarce resources on CI of only the few parts or processes that must be improved to increase the flow of goal units).

In order for top management and other stakeholders to contribute actively and get engaged in change initiatives, they need to understand why the change is needed by visualizing the gap between the current state and the desired future state on the system constraint and identifying the consequences (on the system as a whole) of closing or not closing this gap. Only once that is thoroughly understood are stakeholders in a position to fully explore what to change (what to stop doing to address current UDEs) and to what to change (what to start doing without the risk of new UDEs), and how to cause the change using TOC's TP, and (when needed) other root cause analysis tools. The process is complete only once each of the necessary and sufficient changes have been sequenced into an implementation roadmap that will overcome likely implementation obstacles and is defined to the level of detail where it provides "actionable information."

The new TOC S&T provides a structured and systematic way of defining and communicating such an analysis or overall business strategy in a way that will create harmony (by removing the typical engines of disharmony) and, since it makes the assumptions underlying each change explicit, it also provides a practical auditing tool for each level and within each function in the organization.

In summary, remember that your focus will determine your reality. Focus on trying to improve everything or solve all problems and the possible becomes impossible. Focus on improving only the few leverage points and suddenly the impossible becomes possible.

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About the Author.

Dr. Alan Barnard is the CEO of Goldratt Research Labs, a director of Goldratt Group (Africa), Chairman of Realization Africa and acts as project auditor on a number of large TOC projects around the world. One of Alan's passions in life is to apply the same techniques of identifying and unlocking inherent potential within businesses to individuals (he is the lead facilitators of the annual Odyssey Program) as well as to not-for-profit organizations and governments to help them achieve more with less in less time. Alan is also past chairman of TOCICO (20032005), Past President of SAPICS (1998 -2002), Chairman of the TOC Odyssey Institute and has been a serving judge in the National Logistics Achiever awards for Southern Africa for the last 7 years. Alan obtained his BSc Industrial Engineering degree (Cum Laude) in 1991 and completed his MSc and PhD in the management of technology and information at the Da Vinci Institute of Technology in 2009. The title of his PhD thesis was "How to identify and unlock inherent potential within organizations and individuals using the system's approach of Theory of Constraints".

Appendix A-Continuous Improvement Opportunity Templates

FIGURE 15-21 Applying the five questions: Managing finance the TOC way.

FIGURE 15-22 Applying the five questions: Managing marketing the TOC way.

FIGURE 15-23 Applying the five questions: Managing sales the TOC way.

FIGURE 15-24 Applying the five questions: Managing people the TOC way.

FIGURE 15-25 Applying the five questions: Business strategy the TOC way.

CHAPTER 16.

Holistic TOC Implementation Case Studies

Lessons Learned from the Public and Private Sector