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About the Author.

Marjorie J. Cooper received her PhD from Texas A&M University and spent four years on the faculty at the University of Texas at Arlington. She has been on the faculty at Baylor University since 1984 and has held positions as Research Director and Executive Director for the Center for Professional Selling.

Dr. Cooper is author or coauthor of five books-including Introduction to Marketing published by HarperCollins Publishers in several countries-and seven book chapters as well as published online course materials for retailing and advertising. She has published more than 100 articles in trade publications, such as Association Management, Counselor, Promotional Products Business, Inside Impact, Imprint, Spiritual Fitness in Business, Business Press, Sacramento Business Journal, and others, including a number of cover stories. She has also published 10 business cases, which were used as the bases for national student competitions. Her academic publications include more than 50 journal articles and published papers with placements including the Journal of Marketing, Journal of Advertising, Journal of Advertising Research, Journal of the Academy of Marketing Science, Journal of Personal Selling & Sales Management, Industrial Marketing Management, Journal of Business Research, Business Horizons, Journal of Promotion Management, Journal of Marketing Education, Journal of Hospital Marketing, Journal of Business & Industrial Marketing, Psychology & Marketing, and others. Dr. Cooper's work has received "Best Paper" awards from the Journal of Marketing Education and the Southwestern Marketing Association.

Her current research interests focus on customer/company identification and the impact of practices in operations management on a company's ethical climate and productivity. She has published several papers on the Theory of Constraints, including three on Critical Chain Project Management.

Her consulting and research background includes 26 years of working with the promotional products industry. She is internationally recognized as the foremost academic authority in the promotional products arena and is the principal researcher and a coauthor for Counselor's Annual State-of-the-Industry issue. For 17 years, she was also the principal researcher of the sales volume estimate for the entire promotional products industry.

She has an active consulting practice with a variety of clients and previously served on the Board of Advisors for an Internet start-up in Silicon Valley, California. She is a Jonah and has been an Academic Associate of the Goldratt Institute in New Haven, Connecticut. She was also a member of the Institute's Joint Executive MBA Alliance Team, and is a founding member of TOCICO, the international certification body for the Theory of Constraints.

CHAPTER 18.

Theory of Constraints Strategy

Gerald Kendall

Introduction-What Differentiates a TOC Strategy?

Over the past 20 years, some remarkable leaders have shared a wealth of knowledge on strategy. If you have read bestsellers such as Bossidy and Charan's (2002) Execution, Collins' (2001) Good to Great, or Kotter's (1996) Leading Change, you may wonder what the difference is in a Theory of Constraints (TOC) strategy. To understand it best, consider this example. A Canadian manufacturer had taken several years to achieve a due-date performance (DDP) on custom orders of close to 80 percent, better than average for their industry. Within 3 months of implementing a TOC strategy and tactics, their DDP jumped to the high 90s. What made the difference, in one word, is focus.

TOC strategy is as much about choosing to not do many things as it's about focusing on the single biggest leverage point of an organization. TOC assumes that within every complex system, there is "inherent simplicity." This implies that there are very few constraints (leverage points) that determine the performance of a system.

The key to driving success with a TOC strategy is to keep an executive team focused on their single biggest leverage point long enough to sustain results. The most recent TOC strategies are designed to drive exciting, measurable results within a few weeks. Without such an effect, it's easy for any team to lose energy and readily choose diversions.

This chapter explains the two main formats of strategy that TOC uses to create quick, measurable success. It also describes the generic focus points identified and suitable for many manufacturing, distribution, and project environments. The Strategy and Tactic Tree (S&T) knowledge shared in the figures throughout this chapter would not have been possible without the generous agreement of Dr. Eli Goldratt to make this content available throughout the Handbook.

Chapter Overview.

TOC's strength in organization strategy is bringing focus with a holistic approach. However, the TOC contribution to the science of strategy goes well beyond that. There has been a profound level of thinking and a masterful set of experiments conducted to bring improvement levels and speed of implementation to new heights. One CFO, who had been part of a venture capital firm responsible for billions of dollars of investments, told me that he had never seen such a comprehensive S&T document for any business.

Copyright 2010 by Gerald Kendall.

This chapter summarizes the current knowledge, which is applicable to any organization (for profit or not-for-profit, government, etc.) in any industry (manufacturing, distribution, retail, service, etc.). To help you quickly grasp what I have learned in 15 years of applying TOC to strategy and tactics, I have organized this chapter into ten distinct sections: Introduction-What Differentiates a TOC Strategy?

Chapter Overview.

Definitions and Foundations of TOC Strategy

Overview of TOC Strategy Applications in Manufacturing, Projects, and Consumer Goods Distribution/Retail Organizations Four Generic Prerequisites/"Injections" for a Lasting Competitive Edge Desirable Effects of a Good Strategy Two Forms of Strategy and Tactics-TP and S&T Trees Integrating Other Methodologies, such as Lean and Six Sigma Dealing with Human Behavior in a Strategy Summary

Definitions and Foundations of TOC Strategy

Strategy defines what we want to achieve. Tactics describe how we plan to achieve the strategy. If the two become separated, it's easy to go astray and fail. TOC strategy comes with proven tools, which clearly link strategy and tactics for all levels in an organization. These tools are the key to success because people resources are scarce and management attention is limited. Simply put, the tools are designed to prevent rework.