Ideally, therefore, the objective is to integrate marketing perspectives and activities into all aspects of a company's business strategy. The benefits are several. First, the customer, without whom the business cannot exist, has representation whenever strategic decisions are undertaken. Second, companies are more likely to avoid making important marketing mistakes that are costly and detrimental to the company's financial position. Third, marketing gains a better understanding of the capabilities and limitations of other functional areas. Fourth, other functional areas are apprised of market demands and competitive actions that affect the company's overall performance. Many other benefits accrue from cross-functional integration as well.

Sales and Strategy

Sales is a subset of marketing. It is the personal promotion function within the firm's total business strategy and the operational arm of marketing (Perrault et al., 2008, 10). In many (or most) organizations, sales is treated as a separate function from marketing and is managed separately. This approach, of course, breeds a number of difficulties, not the least of which are the tensions that arise between marketing and sales. Sales should be an important set of implementation activities within the scope of the company's total business strategy. Unfortunately, silo effects often render null the benefits a well-managed sales function can bring to an organization.

Challenges for Strategy and Execution

A well-executed strategy is the ideal, but the ideal is often far from the reality. A number of potential problems occur that can derail a good plan, much less a plan that has flaws attached to it from the outset (e.g., Colgate and Danaher, 2000). Further, strategy experts themselves admit that few executives are satisfied with the state of strategy knowledge and capabilities currently available (Campbell and Alexander, 1997). As much as 70 percent of business strategies fail to get implemented (Corboy and O'Corrbui, 1999). Beer and Eisenstat (2000) coined the phrase the "silent killers of strategy implementation and learning" and note: . . . senior managers get lulled into believing that a well-conceived strategy communicated to the organization equals implementation . . . [T]hey approach change in a narrow, nonsystemic and programmatic manner that does not address root causes. (2000, 29) In this section, some well-documented reasons for strategy failure are cited, including the two central problems mentioned by Beer and Eisenstat-lack of implementation capabilities and failure to address root causes. The TOC body of knowledge directly addresses these and other problems associated with successful strategy implementation. Some of the contributions made by TOC that address these problems are noted in the following sections.

Inadequate Planning

Strategic planning can be a tedious process, particularly annoying to those types of managers who prefer a more intuitive style of managing, those found, for example, in the design and entrepreneurial schools of strategy. In addition, a formalized process of planning often holds little allure for more action-oriented managers, such as may be found in manufacturing, or people-oriented individuals, such as salespeople. Certainly, good planning demands time, attention to detail, and good communication as well as a willingness on the part of all employees to identify and solve impediments to implementation, negative effects from possible actions, and current practices that block a successful strategy.

However, research indicates that planning does tend to lead to superior performance (Armstrong, 1982; 1991). Because of extensive research on successful strategic planning, Armstrong (2005) identified a five-step program for corporate planning: (1) determining the firm's long-range objectives, (2) generating alternative strategies, (3) evaluating alternative strategies, (4) monitoring implementation and outcomes, and (5) gaining commitment from those who will be affected by the plan. However, a significant difficulty for companies is not only how to complete these rather obvious steps but how to do so using tools that lead to actionable and realistic outcomes. For more information, see Chapters 18 and 19 in this Handbook.

Although planning does not rule out the need for flexibility and creativity, some may view the planning process as stifling to innovation. However, planning is an important and useful aspect of strategic management, and has been developed to a very high level by practitioners of TOC. Embedded in the Thinking Processes (Scheinkopf 1999) resides a detailed roadmap for strategic planning. These processes include a set of logic tools that address the critical questions "What to Change?", "To What to Change?", and "How to Cause the Change?" (Originally presented in Goldratt 1990; See TOCICO Dictionary (Sullivan et al., 2007) for the change sequence and each question. ( TOCICO 2007, used by permission, all rights reserved.)

Inability to Analyze the System

The system of interest might be a supply chain, members of an industry, or an entire economy. In fact, the system could even be the global economy. However, for the sake of simplicity, one may assume that a system is a company made of up subsystems, such as functional areas. Because of multiple interdependencies between resources within functional areas and between functional areas as well as the impact of the marketplace and environment, cause-and-effect relationships are multitudinous and complex. Often, decisions made in one part of the organization have serious impact on what happens in other parts of the organization and, eventually, on its customers. When localized objectives, power structures, and policies are pitted against one another as each tries to satisfy its responsibilities in strategy implementation, conflict, chaos, and complications result. To develop and implement a strategy that takes these interlocking relationships into account and intentionally limits the conflicts, one must have a method for analyzing the "what if's" and understanding the inevitable results of various decisions and moves.

Hamel put his finger on a serious problem with the following: "The dirty little secret of the strategy industry is that it doesn't have any theory of strategy creation" (quoted in Mintzberg et al., 2005, 5). Standard strategy textbooks are largely composed of long lists of things strategists must take into account (e.g., Barney, 2007; Hill and Jones, 2007), but offer virtually no mechanism for conducting a useful analysis or-as Hamel implies-a mechanism for using the analysis to arrive at a plan. Perhaps this is one reason that well-intentioned but highly analytic approaches have not heretofore met with much success. A detailed method to help identify potential setbacks as well as the root causes for some knotty problems have been lacking. For example, SWOT (strengths, weaknesses, opportunities, and threats) analysis, widely used and taught in business schools, has almost no analytical value.

The TOC TP, as explained by Scheinkopf (1999), provides a methodical tool for conducting a thorough analysis of a company's situation to define the root causes of its problems, verify that the hypothesized root causes are, in fact, the true causes, and complete a plan for changing the direction of the company. Included in these tools are methods to identify new marketing opportunities and to apply rigorous analysis to the proposed solution. Methods to promote problem solving and better communication are also included, although it must be admitted that the administrator's skill in using these tools is a critical factor in their success.

No Theory of Implementation

One of the most ignored yet crucial aspects of strategy is the implementation process. In fact, "Execution is the great unaddressed issue in the business world today. Its absence is the single biggest obstacle to success and the cause of most of the disappointments that are mistakenly attributed to other causes" (Bossidy and Charan, 2002, 5). Put simply, the management discipline has no robust theory of implementation.

A theory of implementation would necessarily require (1) policy and procedure alignments that encourage each subunit to act in ways that support the overall business strategy; (2) performance assessments and reward systems that, likewise, encourage behaviors that are consistent with the overall business strategy; (3) methods of communication that promote cross-functional coordination of work toward a common objective; (4) real-time, reliable mechanisms to order the tasks and priorities of each individual, each subunit, and each functional area in accordance with the overall objectives of the company's strategy; and (5) ongoing marketplace research, feedback, and communication loops that provide guidance and course correction for strategic initiatives.

TOC shows more progress in meeting these criteria than any other theory of business strategy currently being advocated and taught. First, TOC formally recognizes the need for these criteria. Second, the TOC applications and tools are designed explicitly to address these issues. For example, the TP (see Chapters 24 through 26, this volume) identify the sources of undesirable effects in the system and uncover ways to resolve these problems, which often occur cross-functionally. The TP also suggests methods of communication to facilitate better managerial control of implementations. The TP also provides a basis for evaluating the ongoing marketplace research and feedback so critical to maintaining a high level of customer responsiveness.

Originally developed by Dr. Eli Goldratt, TOC's Strategy and Tactic (S&T) trees3 (see Chapters 18 and 25, this volume) offer the sort of detailed implementation instructions necessary to keep a strategy focused and ensure that everyone involved in the implementation is following a coordinated implementation plan. The S&T trees are also helpful in sequencing necessary events in a strategic implementation. The S&T trees at an appropriate level of detail stipulate which application implementations are critical (e.g., Drum-Buffer-Rope [DBR], Critical Chain, etc.), in the order they should be applied, and with details of the operational means of putting them into action.

Conflicts within the System

Although the management literature recognizes several types of intra-organizational conflicts, one of the most disruptive types of conflict, the cross-functional conflict, is very common in organizations. For example, marketing managers perceive great dependence on manufacturing, but manufacturing managers perceive significantly less dependence on marketing (Kahn and Mentzer, 1994). Kahn and Mentzer point out that lack of reciprocity thereby inhibits a collective orientation toward an effort to serve the customer (1994, 117). Further, manufacturing managers perceive themselves as more like marketing managers than vice versa on dimensions of work, customer interaction goals, employees, and reward structures, suggesting additional opportunities for misunderstanding and conflict to erupt.

Resolving conflict means that problems that arise during cross-functional integration, which involves different work units interacting and marshalling work, resources, and mutual assistance (Ruekert and Walker, 1987), are minimized (see Chapter 33, this volume). Yet cross-functional relationships must flourish if companies are to compete successfully in today's very competitive marketplace. In the context of strategic management, cross-functional relationships have been found to be integral to Porter's (1985) value chain, to internal marketing (Ballantyne, 1977), to maintaining a true market orientation (Kohli and Jaworski, 1990), to achieving seamless customer relationship management (Ryals and Payne, 2001), and to aligning marketing and manufacturing strategies with market conditions (Berry et al., 1999).

The challenges entailed in achieving alignment between marketing and manufacturing (viz. Shapiro, 1977; Crittenden, 1992; Crittenden et al., 1993; Hill et al., 1998; Cooper, 2002), marketing and sales (Massey and Dawes, 2007a; 2007b), marketing and engineering (Shaw et al., 2003), marketing and information systems (Cooper et al., 2008), and marketing and project management (Cooper and Budd, 2007) have been explored throughout the business literature (see also Chapter 33, this volume). TOC's TP help identify the core conflicts that exist as generic conflicts between these functional areas and assist in selecting solutions from the TOC array of applications that address these conflicts. The TP can also assist in identifying and resolving idiosyncratic conflicts for which generic solutions are inappropriate.

Conflicting Standards of Performance

A number of academic articles point out the difficulties that arise from conflicting standards of performance. For example, manufacturing may prefer large production runs to lower their cost of production. Marketing, on the other hand, calls for smaller quantities of a variety of products to satisfy the heterogeneity found in differing consumer preferences (Ghose and Mukhopadhyay, 1993). Conflicting standards of performance are a direct contributor to cross-functional conflict, since, inevitably at one or many functional interfaces, these standards clash with the overriding objectives of the company's strategic focus4 (see also Chapters 13, 14, and 33, this volume).

Dysfunctional Compensation and Reward Policies

In the introduction to Steven Kerr's classic article on reward behavior, he states, Whether dealing with monkeys, rats, or human beings, it is hardly controversial to state that most organisms seek information concerning what activities are rewarded, and then seek to do (or at least pretend to do) those things, often to the virtual exclusion of activities not rewarded . . . Nevertheless, numerous examples exist of reward systems that are fouled up in that behaviors which are rewarded are those which the rewarder is trying to discourage, while the behavior he desires is not being rewarded at all. (1975, 769) For example, management unintentionally causes inflated project task estimates by relying on on-time task completion as a performance measure. This expectation, in turn, incites project team members both to select unrealistically high task completion time requirements and to extend estimates of completion times. Similarly, shortsighted marketing objectives sometimes drive premature commitments by sales staff to delivery of products and capabilities based on schedules that could not possibly be met by developers and engineers.

Kerr's observation focuses attention on a pervasive problem in strategy implementation: poorly aligned performance evaluation and reward systems. Regardless of the extent to which a strategic initiative is on-target and well-thought-out, to the degree to which the system continues to reward behaviors that are contrary to the desired outcomes of the strategic plan, the plan will be sabotaged and rendered ineffective. McAdam and Bailie (2002), for example, found that not only were performance measures linked to strategy more effective, but also the alignment between the measures and strategy must be continually reviewed and treated as a dynamic and complex issue. TOC not only suggests some measurements that are more directly tied to desirable outcomes in various applications, for example, DBR and Critical Chain Project Management (CCPM), but also the TP, used creatively, can suggest customized measures for specific localized and corporate situations. See Chapter 14 of this Handbook.

TOC Contributions

Throughout this Handbook, more detail is provided concerning specific TOC applications and how they contribute to the effectiveness of a firm's strategy. DBR establishes order out of chaos in production, serving to bring reliability, order accuracy, and predictability to the company's production outputs. CCPM not only shows managers how to achieve the same order and dependability in project delivery that DBR has brought to the production floor, but also CCPM and S&T trees are invaluable tools for the implementation of the overall strategy, itself a project or series of projects. The unrefuseable offer (URO), sometimes referred to as the "Mafia Offer," is designed to uncover unique, creative marketplace offers that companies are unlikely to consider under normal strategic planning methods. The buy-in process addresses the need to present the URO to the customer or prospect in a manner that is believable and compelling. Sales force engineering demonstrates how an application of DBR to sales force deployment gives a boost to Throughput of a magnitude not usually associated with sales force training and management. TP and S&T trees have already been discussed in context. The synergy in strategic management generated by the knowledge and proper utilization of these tools is unprecedented in the strategic management literature.5 Chapters 12 and 16 (this volume) present case studies of holistic implementations of TOC strategies.

Future Research Opportunities

The development of TOC since the initial publication of The Goal (Goldratt and Cox, 1984) represents significant progress toward a comprehensive theory of business strategy creation and implementation. Many others have also added to the TOC body of knowledge since that time, many of whom authored chapters for this Handbook. In particular, for more perspectives on TOC and strategy, one might view Chapters 18 and 19 by Kendall and Dettmer, respectively.

Nevertheless, since strategic management still lacks a comprehensive theory of strategy creation, and since management similarly lacks a theory of strategic implementation, opportunities for future research abound, especially if one uses the TOC body of knowledge as a theoretical underpinning for future work. One area of particularly significant challenge involves cross-functional integration. Although the literature abounds with evidence of conflict, the solutions are shallow and have not proven effective. Another area is the application of sales force engineering principles to actual sales force deployment (see Chapter 22; also, Klapholz and Klarman, 2004; Roff-Marsh, 2005). Although literature on team selling exists, the recognition that principles applied in the manufacturing arena could be successful in managing sales forces is yet to be discovered. The use of CCPM in the development and implementation of business strategy is not well known, nor, with a few notable exceptions, is it well documented in the academic literature. The question of performance measurement and how to devise appropriate measures that support strategic objectives have been explored in general, but tying those measurements to each functional area has not been done well. These are only a few areas in the strategic management field that could benefit from experimentation and reporting of TOC applications and methods.

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