“The Goal” by Eliyahu M. Goldratt was published some 20 years ago. A best seller, in the book Goldratt sets out a systemic approach towards the improvement of business organisations, which he called the “Theory of Constraints” (ToC).
Most improvement theories and approaches tend to focus on the improvement of individual processes. The underlying assumption is that if you improve each process, then the system as a whole will be improved. Such approaches ignore the links that exist between processes and the emergent properties of the system.
Goldratt’s Theory of Constraints, taken as a whole, is a collection of system principles, tools and techniques for solving problems and improving overall system performance, principally in the context of manufacturing. Here we are only concerned with the general theory itself, and then only really those elements that extend existing ideas surrounding Systems Thinking, as applied to organisations.
The Theory of Constraints is framed around the achievement of the goal of the organisation, or system. Its starting point is the assumption that managers and/or organisations know what their real purpose is, what goal they are trying to achieve as an organisation; where they stand in relation to that goal and the magnitude and direction of the change needed to move from the present state to where they want to be.
Different stakeholders may have different views on what the purpose of the organisation is and the necessary conditions to achieve that goal. Goldratt asserts that there is no interdependence between the two. Whatever you select as the goal, all the other factors become ‘Necessary Conditions’ in the achievement of that goal. For example, profit, customer satisfaction and a satisfied workforce are interchangable as goals or Necessary Conditions.
Working on the assumption that an organisation is not presently achieving its goal, the question to ask is what is constraining it from achieving its maximum potential? The chances are that everyone in the organisation will have a different view. Who’s right and how would you know if they are right?
The Theory of Constraints views systems as a series of chains, or networks of chains. Like a chain, the system’s performance is limited by the performance of its weakest link. The weakest link is the system’s constraint. There is only one constraint in a system at any given time. To improve the system it is necessary to focus on this. Once improved, the system will be stronger, but limited by the next order of constraint from the point of intervention. And so the process continues until the system is optimised, at least for a given set of external conditions.
This has implications for improvement initiatives that involve numerous improvement teams and/or projects. If we accept Goldratt’s theory, then even if these teams are well focused, then only one will be working on the weakest link. The others are unlikely to deliver significant benefit unless they happen to coincide with the 2nd,3rd…order constraints, which seems unlikely. In addressing the first constraint, the system has changed sufficiently to undermine any previous analysis.
Local vs. System Optimisation
Goldratt contends that if a system is performing as well as it can, not more than one of its component parts will be. If all the parts are performing as well as they can, then the system as a whole will not be. Within a system there are trade-offs – overall system optimisation requires a trade-off between various parts of the system.
An optimised system deteriorates over time, as the system’s environment changes. A process of continuous improvement is necessary to update and maintain the efficiency and effectiveness of a system.
Physical vs. Policy Constraints
System constraints can be either physical or policy. Physical constraints are relatively easy to identify and eliminate. Policy constraints are usually much harder to identify and even harder to eliminate, but removing them normally results in a much greater improvement in system performance.
Eliyahu M. Goldratt , The Goal: A Process of Ongoing Improvement
Last Updated: 28/02/2012