Catering to Differences within the Private and Public Sector

There are many differences between private and public sector organizations, but they share the fact that there is always a limiting factor-a system constraint-to achieving more goal units and that success is defined by both survival (stability) and growth. The decisions or actions needed to satisfy both the requirements for achieving growth and stability frequently result in conflicts within these organizations. Conflicts such as implementing changes or making decisions to satisfy the short-term needs of stakeholders but which could jeopardize long-term needs for the same or other stakeholders, or implementing changes or making decisions to improve one part of the organization that could result in the performance of other parts (or even the organization as a whole) being compromised. Probably the most important commonality is that both types of organizations, now more than any other time in history, are under incredible pressure to find innovative ways to "achieve more (goal units) with less or the same (resources) in less time."

For private sector organizations, this challenge manifests in the continuous pressure to close the gap between actual and expected short- and long-term returns for shareholders. For public sector organizations, the challenge manifests itself in the ongoing pressure to close the large and frequently growing gap between the deteriorating levels of service delivery and infrastructure and a growing demand for such services in the areas of health, safety, education, energy, and telecommunications-especially in the developing countries around the world.

It is these gaps between the expectations of stakeholders and the current performance of an organization or system that can result in vicious cycles of over- and under-reactions or that can be the catalyst for challenging the status quo and achieving sustainable improvement. These gaps serve as a constant reminder that there must be a simpler, faster, better, and more reliable way to identify where and how to improve our organizations.

However, the realization that a large (and potentially growing) gap exists and that scarce resources should be focused on closing this gap is not sufficient. Management must know what changes are needed to close these gaps and, as importantly, how to remove obstacles and excuses for not taking the necessary and sufficient actions to turn good ideas into sustainable results.

The next section provides the details and lessons learned of how to do a holistic TOC implementation within the public sector (the story of a sustainable cities program for Africa) and the following section provides the details and lessons learned on how to do a holistic TOC implementation within the private sector (the story of First Solar).

Holistic Implementation of TOC in the Public Sector

Over the past 25 years, TOC has helped thousands of for-profit organizations5 improve their performance and decision making. However, despite TOC's universality to help identify and unlock inherent potential within any goal-orientated system, few not-for-profit (NFP) organizations have attempted to apply TOC and even fewer have attempted a holistic TOC implementation.6 Typical reasons include a perception that TOC is probably too complex or sophisticated for their organization, or that since many of these NFP organizations do not have clear goal statements such as "Make more money now as well as in the future," TOC will probably not work for them. In addition, it is claimed that for any NFP to reach consensus that TOC should be implemented on a holistic basis or even just evaluated for implementation is an order of magnitude more difficult than in for-profit organizations due to the large number of stakeholders involved.

In this case study, we want to share the experience and insights gained on how a new simplified TOC holistic analysis, consensus building, and active contribution approach can help achieve the very ambitious target of "doing more with the same or less in less time" even in NFP organizations. This new simplified win-win-win approach is based on combining TOC's enabling paradigms (discussed later) with its Five Focusing Steps (5FS) and Thinking Processes (TP), as well as the simple planning and execution rules recommended by the logistical solutions of TOC, to help all stakeholders identify and unlock inherent potential within the "system" for which an NFP organization is responsible.

Background

In January 2007, Mr. Michael Funcke-Bartz of InWEnt-Capacity Building International, Germany, in the framework of the German Development Cooperation requested the assistance of two TOC experts (Dr. Alan Barnard, CEO of Goldratt Research Labs and Professor Antoine van Gelder, Head of the Department of Internal Medicine University of Pretoria) with the objective to test whether a simplified TOC constraint analysis and strategy development approach (Barnard, 2003), could be used to help cities close the growing gap between demand and supply, especially for basic services. By 2007, InWEnt already had a few successful TOC-based projects from the public (improving management capacities in water utilities) and the private sectors (strengthening of small- and medium-sized enterprises) in developing countries (Funcke-Bartz, 2006) but indicated they wanted to test the impact of a more holistic approach to using TOC to supplement and potentially focus their own capacity-building efforts.

InWEnt suggested that this could be done with African cities from UN-HABITAT's Sustainable Cities Programme, which had applied for capacity-building assistance in the field of municipal solid waste management, because of its potential contribution to city sustainability and poverty alleviation.

To ensure the best possible start to such an initiative, InWEnt required these cities, to organize a one-week Strategy Workshop with representatives of all-important stakeholders such as national and local governments, public and private service providers, the community and academic institutions.

Invited stakeholders were informed that the objective of the workshop was first to work together to develop a common understanding around the cause-effect relationships between the various challenges faced by each of the stakeholders in dealing with the causes and consequences of the large GAP between the amount of waste created versus the amount of waste collected on a daily basis. Second, the aim was to agree on which critical few changes and contributions by each stakeholder, could help overcome capacity and policy constraints to close this large and growing gap now and in the future.

This opportunity not only provided a way to test whether a holistic TOC constraint analysis and strategy formulation workshop with all the stakeholders was the best possible kickoff within the public sector for a holistic TOC implementation, but also to validate whether (even for NFP organizations and their stakeholders) that TOC could be used to help achieve more with the same or less resources in less time. This could be done by helping stakeholders identify and challenge assumptions that are potentially limiting their ability to see and/or unlock inherent potential within themselves, their organizations or even their cities. Such limiting assumptions especially if held by key stakeholders in any system, can jeopardize the ability of that system to achieve the desired or required growth and stability.

Four African cities were selected for a TOC-based capacity building process starting with a Constraint Analysis Strategy Workshop focused on solid waste management: 1. City A-population of over 3 million people 2. City B-population of over million people 3. City C-population of over 2 million people 4. City D-population of over 2 million people

Designing the Five-Day TOC Workshop and Implementation Process

Complicating Factors within the Public Sector

Prior to the start of this initiative, the TOC expert team members were warned that the public sector is much more "complicated" than private sector organizations. Those knowledgeable in this arena warned that normally there are no clear goals and the system is full of bureaucrats which Dr. Russell Ackoff (2006) defines as someone with the power to say "No" but not the power to say "Yes". Also, that frequently there is a high level of distrust among the groups, higher resistance to change due to awareness that the wrong policies or decisions could have catastrophic consequences, many and sometimes conflicting objectives (which makes "focusing" difficult), and little tolerance for "business principles and best-practices," especially for a business method called Theory of Constraints.

The team was also informed that although there is excellent work being done by the many international donor and capacity-building organizations within developing countries, many of these initiatives struggle to resolve the underlying conflicts and to really secure the full consensus, contribution, and commitment from all stakeholders to ensure that initiatives do deliver the desired results in a sustainable way.

The next step in the design process was to use the TOC Change Management Questions to provide the agenda for the five days and to design a process around these five questions (stated below) to achieve the desired outcomes of the workshop in a way that would overcome both generic and specific obstacles in achieving consensus on where to focus scarce resources.

Simplified TOC Analysis and Implementation Roadmap

The proposal to InWEnt by the TOC Expert process design team was that the best possible start (Barnard, 2008) would be a 5-Day Constraint Analysis Strategy Workshop. The process would follow a simplified and improved version of the traditional TOC Analysis Roadmap (which only covered What to Change, to What to Change, and How to Cause the Change) and which should include the following steps: Step 0: Introduction to TOC's Systems Approach, Processes, and Paradigms Step 1: Consensus on Why Change?

Step 2: Consensus on What to Change?

Step 3: Consensus on to What to Change?

Step 4: Consensus on How to Cause the Change?

Step 5: Consensus on How to Measure the Change and Achieve Ongoing Improvement?

This roadmap, also serves as an agenda for the five days.

Day 1 aims to cover Steps 0 and 1-to get agreement on the new systems approach (transition from limiting to enabling paradigms) as well as to answer "Why Change?" for the system and its stakeholders being analyzed by identifying the gap in goal units, the consequences of not closing this gap, and what makes it difficult for each stakeholder to contribute to closing the gap (the UDEs).

Day 2 aims to cover Step 2 by helping stakeholders answer "What to Change?"-identifying the core conflicts for each stakeholder and the underlying assumptions and associated "local optima" rules and measurements that must be challenged to remove the UDEs (to close the gap).

Day 3 is dedicated to Step 3, answering "to What to Change?"-identifying the new win: win contributions, rules or measurements (the injections) that will break the core conflicts, remove the UDEs, and close the gap without creating new UDEs.

Day 4 is focused on completing Step 4 by answering "How to Cause the Change?"-identifying the possible risks (such as the injections that are not detailed enough to provide actionable information, the injections that have potential negatives or could be blocked by implementation obstacles) and how to overcome these, sequenced in an implementation roadmap.

Day 5 is focused on Step 5 to answer "How to Measure the Change and Achieve Ongoing Improvement?"-identifying the prime measurements for each stakeholder's required contribution, allocating responsibilities, and (if time permits) converting the roadmap into a buffered but aggressive Critical Chain plan and sharing basic TOC Critical Chain Project Management (CCPM) insights for managing the implementation as a portfolio of pipelined and buffered projects.

Proposed Changes to the Traditional TOC TP Analysis Roadmap

The original TOC TP Roadmap as taught in the TOC Thinking ("Jonah") and "External Constraint Analysis" programs or the "4 4" Holistic Approach has proven to be an effective analysis and strategy development toolset. However, TOC practitioners that have used this TP roadmap know that there are a number of problems with the traditional process which focused on answering only the three change questions as first formulated by Goldratt (1990)-What to Change?, to What to Change?, and How to Cause the Change? Problems frequently experienced with the original TP Roadmap include the following (Barnard, 2003): 1. Starting a TOC analysis without sharing the fundamental TOC principles and paradigms of TOC needed to change the behavior of the various stakeholders such as the beliefs in inherent potential, inherent simplicity, win-win, "good enough," and that people are good (but sometimes have bad assumptions that drive bad behaviors) as per Table 16-1.

2. Sometimes wrongly assuming there is already agreement by all stakeholders on the need for change (i.e., starting with "What to Change" rather than the gap in goal units and constraint performance and consequences for each stakeholder if this gap is not reduced to get agreement on "Why Change?").

3. Starting the analysis simply by asking stakeholders to list their UDEs (what bothers them) rather than by asking stakeholders to contribute a short list of those few UDEs that make it difficult for them to help close the gap in goal units and constraint performance (with respect to the goal), which provides a much more relevant list of UDEs to start the TOC TP analysis with and effectively links the TOC's 5FS with the TP.

TABLE 16-1 Improvement Challenges and the Related Limiting versus Enabling Paradigms 4. Asking stakeholders to verbalize any conflicts associated with their UDEs rather than giving specific instructions to verbalize both the symptomatic conflicts they experience in having to deal with their UDEs and the systemic conflicts of the part they are blaming for causing their UDEs as per the dual cloud process (Barnard, 2003). Not verbalizing both conflicts has two major negatives. The distrust between those blaming and those being blamed will continue and it will not be possible to find the "core conflict" for each stakeholder when systemic and symptomatic conflict are mixed together. Figure 16-2 shows the separation between the systemic and symptomatic conflicts in the dual cloud approach.

FIGURE 16-2 Systemic versus symptomatic conflicts related to an undesirable effect.

5. Assuming that there is always only one core conflict for a system, when in fact there is one core conflict for each stakeholder. This is the conflict that most contributes to blocking that stakeholder from contributing in a way that can help better exploit or elevate the system constraint.

6. Attempting to break conflicts using the traditional TOC TP approach of identifying and challenging all the many assumptions associated with the core conflict rather than focusing on finding and challenging only the one or few "conflict assumptions" using the four methods7 as proposed by Barnard (2003) that if removed, will "evaporate" the core conflict.

7. Not ensuring the injections needed to break the conflicts have been defined as "Actionable Information," which means each stakeholder can clearly verbalize how they will contribute to implement the injections agreed upon to break the core conflicts blocking better exploitation, subordination, or elevation of the system constraint.

8. Not having a simple and fast mechanism to enable stakeholders to raise both types of "Yes, buts..." that can block each stakeholder from making the contributions needed to improve the system. The first "yes, but..." relates to concerns about significant predicted UDEs that could impact one or more stakeholders if the agreed injections are implemented. The second "yes, but..." relates to concerns about significant implementation obstacles that must be overcome to implement the agreed injections. Frequently, these two types of concerns or reservations are not dealt with or confused during the analysis resulting in significant rework later or even project failure.

9. Not agreeing on what the prime measurements will be that must be implemented to validate whether the gap in goal units (e.g., between demand and supply) is really closing and the secondary measurements to validate whether each stakeholder is able to make their agreed contribution.

To ensure that organizations can get all the stakeholders together to do a TOC analysis on their "system" can get the best possible start by not making any of the mistakes listed above (especially when in most cases we will not get more than one attempt at it), a new TOC TP Roadmap was needed.

As a result, a new simplified TOC TP Roadmap was designed (see Fig. 16-3) to address each of these nine problems in a way that would rebuild trust and ensure the active contribution of all stakeholders and which can be completed (with an experienced TOC facilitator) in only five days (one day for getting agreement on each of the five change questions provided previously in Steps 15).

The next section provides a detailed example of how the new simplified TOC TP analysis process was used in the five-day workshop to get full agreement on the necessary and sufficient changes that must be implemented by the various stakeholders (to help close the gap) and in what sequence they have to be done.

Detailed Case Study: Analysis on Solid Waste Management in City A

This section provides an overview of how the simplified 5-Day Constraint Analysis Process was tested in the first cities (A and B) as well as providing a summary of the outcomes achieved and generic lessons learned from the application of this process with other cities.

FIGURE 16-3 Barnard's new simplified TOC analysis roadmap.

FIGURE 16-4 Typical buildup of solid waste due to service delivery gap in informal areas.

Current Reality within the Management of Solid Waste in City A

In most African cities, local governments are responsible for ensuring that garbage (solid waste) is collected, transported, and disposed of in a safe and environmentally friendly manner. Common practice is for private contractors to collect waste from private businesses and households in formal areas and for Community-Based Enterprises (CBEs) to collect waste from informal areas. However, often in developing countries these services do not cope with the demand (even in the formal parts of the cities) and generally do not reach the very poor because they live in areas that are difficult to access or they cannot pay for the service.

The results of this gap in service delivery can be seen everywhere in these "un-serviced" or informal areas (Fig. 16-4). Huge piles of garbage (solid waste) can be found throughout poor settlements, making poverty, persistent ill health, and low environmental quality part of everyday life.

In view of this, the City Council in conjunction with InWEnt, organized a strategic Constraint Analysis and Planning Workshop with the invitation to stakeholders listing the following objectives of this workshop: 1. Joint analysis with involved stakeholders for a better understanding of the complex relationships between the different problems related to waste management services and their causes.

2. Identification and prioritization of capacity constraints and/or policies, measurements or behaviours that prevent the improvement of solid waste management (SWM) in the city.

3. Agreement on the critical contributions and capacity-building strategy to cope with the identified problems.

All stakeholders representing the different points of view and interests involved in this matter were invited to attend the workshop that was facilitated by Dr. Alan Barnard and Professor Antoine van Gelder (both TOC Experts)8 and supported by the InWEnt team of Michael Funcke-Bartz and Maria Sague as well as the Kenyan project coordinator Stanley Mbagathi.

Step 0-Creating the Shift to a TOC/Systems Approach Paradigm

The workshop is opened by the most senior representative of the City Council (normally the Mayor or Town Clerk) to share the objective of the workshop and why they have invited all stakeholders to contribute to the analysis and solution development (to ensure it is a winwin-win). Then a representative from InWEnt shared why they have selected TOC as the approach to do a holistic analysis on the system and why they partnered with the TOC experts to facilitate the workshop (to establish credibility).

FIGURE 16-5 Example of the solid waste management chain/system.

During the morning session, the TOC facilitator introduces TOC as a simple and powerful way to overcome the five challenges listed in Table 16-1, faced by all stakeholders in both private and public organizations (constraints, complexity, conflicts, uncertainty, and bad choices/behaviors). To show the magnitude of the inherent potential that can be unlocked if the right "limiting assumptions" are challenged and replaced with the right rules (that enable better exploitation of the system constraint), the TOC expert can use an interactive simulation game such as the "multitasking" game9 that shows how, by just changing from a rule of "multitasking" (based on an assumption that the earlier we start the earlier we finish) to a rule of "no multitasking" (based on a realization that the later we start the sooner we finish) we can do double the amount of projects in half the time with the same resources.

The simulation game also provides an opportunity to introduce TOC's 5FS and TP analysis process of defining the goal, gaps, consequences, UDEs, core conflict, injection, and associated actionable changes in the rules, and potential negatives, and how to prevent these and implementation obstacles and how to overcome these. The introduction part ends with relevant success stories of where TOC has been applied and introduces the roadmap and desired outcomes for the rest of the five days, inviting everyone to contribute actively. An example of the slides used for such an introduction can be downloaded at www.goldrattresearchlabs.com (in the "Downloads" section).