Undesirable Effects & Core Problems

Is the term firefighting familiar to you?  The sort, that is, where you always seem to be solving the same problem, solving it for this week and then re-solving again next week also.  When we do this we can be fairly sure that we are addressing the symptoms and not the underlying core issues or drivers of the problem.  Let’s repeat a quote from the introduction to this section; “Our nonsystemic ways of thinking are so damaging specifically because they consistently lead us to focus on low-leverage changes: we focus on symptoms where the stress is greatest.  We repair or ameliorate the symptoms.  But such efforts only make matters better in the short run, at best, and worse in the long run (1).”

We need, maybe desperately need, a way to “drill down” past the surface symptoms into the deeper underlying issues.  Tools for doing this have been very limited indeed.  However the current reality tree is a methodology that allows us to do exactly that.  We start with the symptoms and build back to the core issues.

Looking at it another way, a current reality tree is a statement of an underlying core problem and the symptoms that arise from it.  It maps out a sequence of cause and effect from the core problem to the symptoms.  Most of the symptoms will arise from the one core problem or a core conflict.  Remove the core problem and we may well be able to remove each of the symptoms as well.  Operationally we work backwards from the apparent undesirable effects or symptoms to uncover or discover the underlying core causeee is a methodology that allows us to do exactly that.  We start with the symptoms and build back to the core issues.

Looking at it another way, a current reality tree is a statement of an underlying core problem and the symptoms that arise from it.  It maps out a sequence of cause and effect from the core problem to the symptoms.  Most of the symptoms will arise from the one core problem or a core conflict.  Remove the core problem and we may well be able to remove each of the symptoms as well.  Operationally we work backwards from the apparent undesirable effects or symptoms to uncover or discover the underlying core cause.

Structured Nemawashi

There is a concept in Japan known as nemawashi which you will see mentioned in Western books on Japanese business.  I read nemawashi to mean the suggestion of an idea by the leadership that percolates down through the company, is made workable, and then floats back up through the management for approval by the leadership.  Sometimes nemawashi is presented as a very Japanese approach.  Well, it is.  But we poor Westerners can emulate this Oriental social norm in a structured way with equal skill.  We have the structure within the existing Thinking Process.  What we have been missing to date is the method to sow the germ of the idea that we wish to develop.

I would have liked to have introduced this thought much earlier in the page on agreement to change or in the page on leadership and learning.  In fact it is still too early because the extra piece that we need is called an Intermediate Objectives Map.  Dettmer shows how to use an intermediate objectives map to set the direction of a company when determining a company’s strategy (13).  The intermediate objectives map can also be used equally to set the objective for tactical problems.  It is a “stripped down” pre-requisite tree of the goal or objective and some pre-requisite necessary conditions.  It allows the leadership of the organization to sow the germ of the idea that they want the organization to develop.  The remainder of the Thinking Process tools allow for that development of the idea to take place.  Indeed this sequence provides for something that I will call structured nemawashi.  This is the development of true consensus by the internalization and socialization of a leadership idea until it is owned by the whole organization.  Dettmer’s constraint management model for strategy is structured nemawashi.  We will discuss this further in the strategy section on the constraint management model for strategy.

The ownership in structured nemawashi comes about through an understanding of the explicit cause and effect between the solution that is developed by the organization and the objective that was originally proposed by the leadership.

This procedure, although somewhat different from the normal methods of analysis, is so

practical, that it can be applied to any problem anywhere at anytime. According to Goldratt [1992-

b], you start with an effect in reality. Then hypothesize a plausible cause for the existence of that

effect. Since the aim is to reveal the underlying causes that govern the entire subject, try to validate

the hypothesis by predicting what else this hypothesis must cause. Once such predictions are found,

concentrate efforts to verify whether or not each prediction holds water by asking questions. If it

turns out that one of the predictions doesn't hold up, find another hypothesis. If all of them hold up,

continue until the entire subject is understood through the bonds of cause and effect.

Bob Fox [1989], (past) President of the Goldratt Institute, states: I do not believe any longer

that the challenge is the technology of what to do. That has been well developed - maybe not

disseminated very well yet, but developed. The issue is the resistance to change once we know what

to do, and I believe there is a solution to that. This method of problem solving requires ability that

everyone has and stems from the systematic methods and thinking processes. It provides you with

the framework necessary to direct these efforts and to verbalize your intuition to gain a better

understanding of managements "intestinal sensations."

Everyone has self-doubt. This self-doubt makes it very difficult to use the scientific method

of analysis. Goldratt [1992-b] reveals, the scientific method involves reaching into the unknown;

speculating a cause and determining predicted effects probably requires an awkward personality that

thrives on the unknown. But we are dealing with the known, with current reality. There must be an

equivalent method, a thinking process that facilitates building a current reality tree within the known,

and we can effectively use it on any subject that we have intuition for and care about. This cause and

effect approach is used in many areas of science and math. The demonstrated thinking process is

what managers need the most. To carry out a successful process of ongoing improvement there is

nothing more important than the ability to answer: What to change, What to change to, and How to

cause the change. The results are well worth the required investments.

Verbalizing Intuition

If we were to limit ourselves in using the Thinking Process to recording cause and effect which is already explicitly understood, albeit separated in space in time amongst individual members, we would in effect be doing “process mapping” which was common while business process re-engineering was popular.  The real power, however, comes from verbalizing our intuition – our tacit knowledge – that which is not yet explicit.

“We grossly underestimate our intuition.  Intuitively we do know the real problems, we even know the solutions.  What is unfortunately not emphasized enough is the vast importance of verbalizing our own intuition.  As long as we will not verbalize our intuition, as long as we do not learn to cast it clearly into words, not only will we be unable to convince others, we will not even be able to convince ourselves of what we already know to be right.  If we don’t bother to verbalize our intuition, we ourselves will do the opposite of what we believe in (4).”

The Thinking process meshes well with the concepts of tacit and explicit knowledge developed by Nonaka and Takeuchi.  Specifically “…tacit knowledge contains an important cognitive dimension.  It consists of schemata, mental models, beliefs, and perceptions so ingrained that we take them for granted.  The cognitive dimension of tacit knowledge reflects our image of reality (what is) and our vision for the future (what ought to be).  Though they cannot be articulated very easily, these implicit models shape the way we perceive the world around us (5).”

Let’s repeat that; although they cannot be articulated very easily, these implicit models shape the way we perceive the world around us.  This is why it so important to verbalize these factors and the Thinking Process gives us just the structured methodology to articulate these ideas that we have been lacking before.

However, there is a further equally important aspect to the verbalization of tacit knowledge – during the process organizational knowledge is created.  “... the subjective and intuitive nature of tacit knowledge makes it difficult to process or transmit the acquired knowledge in any systematic or logical manner.  For tacit knowledge to be communicated and shared within the organization, it has to be converted into words or numbers that anyone can understand.  It is precisely during the time this conversion takes place ‑ from tacit into explicit, and... ... back again into tacit ‑ that organizational knowledge is created (5).”  The trees that are the product of the Thinking Process allow us to convert individual tactic knowledge to explicit group knowledge.

In effect the following is occurring;

(1)   Individuals verbalized their own tacit knowledge as explicit knowledge.

(2)   The group internalizes this explicit knowledge as shared tacit knowledge.

(3)   Organizational knowledge is created.

Let’s not underestimate the importance of tacit knowledge as leverage against constraints.  We will develop the idea further in the section on strategic advantage, but let’s add quote from David Hurst to underline the importance of the issue; “The most dysfunctional constraints are usually those that are tacit rather than explicit.  Elements of formal organization such as restrictive rules and policies are at least easily identified and can be changed.  The more insidious constraints are the strictures imposed by … the almost invisible influence of culture, and the pervasive effects of growth in organizational size (6).”

Indeed it has been said that the Thinking Process “may be the most important intellectual achievement since the invention of calculus (7).”  High praise indeed, but like all things it requires proficiency, and proficiency in this case comes through practice.  However, there should be no lack of examples to practice on.  There are several very good books available to guide you step by step through the construction of your own trees in much more detail than can be attempted here (8-12).  The following pages are really a concise introduction or a ready reminder depending on your familiarity with the subject.

The Thinking Process is integral to the systemic nature of Theory of Constraints and allows not only analysis of problems, but also the construction of solutions and the communication and effective implementation of those solutions.  Over the following pages we will examine 4 different tools, the current reality tree, the cloud, the future reality tree, and the pre-requisite tree.  We will also examine some derivatives, the negative branch reservation, the 3 cloud approach, and the communication current reality tree.  We have seen some of these trees already, now we will learn the basics of how to construct them.

The Thinking Process

The Thinking Process is a set of tools; graphical “trees,” which enable us to drill down into our intuition to verbalize the cause and effect relationships that we observe in our businesses day-to-day,  but which are difficult to capture in reports, graphs, accounting statements, and project plans.  It allows us to capture those non-obvious leverage points which are separated in time space and to portray their relationships in a simple and straightforward manner.

It is easy to consider the Thinking Process as an adjunct to the Theory of Constraints, something that is useful for overcoming initial resistance and ensuring buy-in.  However this is not the case, the Thinking Process is absolutely integral to Theory of Constraints.

The Thinking Process allows us to work through the sequence of;

(1)   What to change.

(2)   What to change to.

(3)   How to cause the change.

The Thinking Process performs a number of functions often simultaneously.  It allows us to interrogate the situation in a systematic and logically rigorous way, allows us to analyze and synthesize, communicate the situation, and to generate organizational knowledge.

The Thinking Process enables us to work through the sequential layers of agreement to obtain an implementable solution.  We do this using the intuition of the people involved – remember some of the cause and effect relationships will be separated in time and space, but if we include the critical people we will develop an understanding of the whole problem we are dealing with.  Let’s look at verbalizing our intuition and organizational knowledge creation.

The Principle of Leverage

Theory of Constraints is a systemic/global optimum approach.  Another systemic approach is known as Systems Thinking.  Systems thinking developed as a methodology for understanding dynamic complexity.  Dynamic complexity is a short-hand term for dependent cause and effect separated in time and space.  Of course dynamic complexity is the sort of thing that we have come to expect to occur in the novel serial processing systems that have developed since the beginning of the industrial revolution and that today we call business.

Systems thinking is also the 5th discipline of Senges’ book by the same name.  This work, and the work of others such as The Living Company by Arie De Geus, have helped bring into focus a refreshing view of business organizations as organic, dynamic, learning and composed of people.  This view rejects the older notions of mechanistic models, reductionist/local optima approaches, and that particular being known as homo economicus.  “Whereas the management curriculum had no place for human beings, the workplace was full of them (1).”

Underlying the concept of systems thinking is the concept of leverage; “seeing where actions and changes in structures can lead to significant, enduring improvements.”  “Tackling a difficult problem is often a matter of seeing where the high leverage lies, a change which – with a minimum of effort – would lead to lasting, significant improvement (2).”  It should be a simple matter then to locate the leverage points?  Unfortunately not.

If it was a simple matter of seeing where the high leverage lies then we would surely be doing it.  The problem is “that high-leverage changes are usually highly nonobvious to most participants in the system.  They are not ‘close in time and space’ to obvious problem symptoms.”  ”Our nonsystemic ways of thinking are so damaging specifically because they consistently lead us to focus on low-leverage changes: we focus on symptoms where the stress is greatest.  We repair or ameliorate the symptoms.  But such efforts only make matters better in the short run, at best, and worse in the long run (2).”

Clearly we need a methodology that allows us to identify leverage points.  Certainly we have used the language of leverage points to date as synonymous with constraints, but we must be careful to distinguish between physical constraints and policy constraints.  In an early section we quoted Goldratt; "We very rarely find a company with a real market constraint, but rather, with devastating marketing policy constraints.  We very rarely find a true bottleneck on the shop floor, we usually find production policy constraints.  We almost never find a vendor constraint, but we do find purchasing policy constraints.  And in all cases the policies were very logical at the time they were instituted.  Their original reasons have since long gone, but the old policies still remain with us (3).”

Thus even if a physical constraint is looking us in the eye, it is very likely that within one or two iterations of the 5 focusing steps we will be dealing with the intangible policy constraints that give rise and find expression as these initial physical constraints.  We need a method to find leverage points which may well be non-physical.  The 5th Discipline although aware of the problem of finding the non-obvious high leverage points didn’t offer much in the way of a solution.  However Theory of Constraints does and the methodology is called the Thinking Process.

Throughput accounting provides a very useful additional concept to the array of cost accounting techniques. It provides a sound basis for focusing on the focal-point of a proc­ess and eliminating too much detail. Within the factory environment, it supports the move away from a mentality which, when there is no demand, produces for stock in the forlorn hope that sometime this production may be sold. Idle time is cheaper than the cost of producing and holding unwanted inventory.

FOR MORE INFORMATION REFER TO:

THROUGHPUTACCOUNTING.BLOGFA.COM

Breaking Constraints, Organizational Change, and Human Behavior

Virtually all business systems can be characterized as a pie with three major

slices.

One slice of the pie is activity. This encompasses technology: thehardware, facilities, equipment, and the nature of the task and interactions among these elements as they perform well-defined functions in pursuit of the system’s goal. The second slice is human factors. This includes the physical,mental, and psychological capabilities and limitations of the people who are part of the system. A third slice might be called context, which is another way of saying the policy, procedures,  training, measures of success, or other rules that are established (or not) to regulate the interaction between the other two slices.

The individual slices will differ in magnitude within different organiza-

tions, but these three elements are common to all business systems, whether

for-profit or not.

Undesirable effects— those indications that the system’s goal or necessary

conditions are not being satisfied— can appear in any of these slices. The real

system constraint can lie in any one of these areas as well, even if it shows itself

through undesirable effects that seem to be in another. If we consider the term

“policy” to include traditional ways of doing—  or not doing—  things, even so-

called external constraints (a market constraint, for example) are really rooted

inside the system: in our decisions (or lack thereof) to do business in a certain

way.

Feasibility of Change

Our success in re-engineering our systems is a function of the feasibility of the change we want to make, and feasibility is also threedimensional.

For a change to have a realistic probability of success, it must satisfy three requirements. It must be 1) technically feasible,

 2) economically feasible, and

3) politically feasible.

A change is techniclly feasible if we have the skills, hardware, and knowledge to do a

job. It’s economically feasible if we have the financial resources needed.

And it’s politically feasible if we can persuade all the people whose coop-

eration is required to go along with it. Failure to meet any one of these

criteria is enough to sink an idea.

Combining the conceptual slices of the system “pie” with the feasibility criteria, we come up with a cross-interaction matrix .

Understanding Psychology.

People are the most difficult element of any system for management to

deal with. Because of a human’s capacity for independent thought and action,

the door is open to wide variability in system performance. Sometimes people

seem to be rational, other times not. Sometimes they seem emotional, other

times logical. Nobody is completely consistent and predictable all the time. In

the old Star Trek television series, Mr. Spock continually complained that

“humans weren’t logical”. What he meant was that human behavior wasn’t

logical.

repetitive patterns, and some prediction of behavior is, in fact possible. If it were

not, the psychologists and psychiatrists of the world would be out of business.

The difference between the actual logic of human behavior and its frequently

illogical manifestation lies not with the human doing the behaving, but with our

understanding of psychology. In the same way that some fields of scientific

research are poorly understood (i.e., still developing), so, too, is human psychol-

ogy a continually evolving and maturing discipline. Engineers and physicists

might say that the study of human behavior isn’t yet developed enough to be

considered a science, but it is certainly a mature enough field that certain rules

and principles can be inferred and consistently applied in a large majority of

circumstances. Much of the inaccuracy inherent in predicting human behavior

is undoubtedly due to our inability to completely identify all the relevant

variables in any given situation.

Since we might never be able to identify all the variables, psychology may

never achieve the level of scientific precision of mathematics or physics. But

that doesn’t mean that we can’t apply some logical rigor to the area of human

behavior, especially in organizations. No, anyone who has ever been in a group

work environment for any length of time would probably disagree with Spock:

human behavior is logical to a significant degree. That it may appear illogical is

more the result of our failure to understand the psychology behind it. The

logical thinking process can be a particularly useful tool in “managing the

unmanageable”—  the human element—   as we’ll see in a moment.

One of W. Edwards Deming’s most significant contributions to modern

management is the concept of profound knowledge.

Deming suggested that real understanding of any system depended on how much we knew about four basic interdependent disciplines: understanding of systems, the theory of knowledge, psychology and variation. The Theory of Constraints (TOC) and the

logical thinking process directly improve our understanding in three of these four areas. In this paper we’ll examine the ways in which ُTOC thinking process can be combined with an understanding of psychology to provide a powerful tool for change agents.

Philip R. Elder once made the observation that the TOC thinking process

“is like a giant pegboard upon which we can hang and arrange knowledge.”

This is an excellent analogy. The thinking process permits us to arrange our discrete

pieces of knowledge in a way that enables us to see the interactions and logical

connections— what causes what. This capability increases the power of our

knowledge dramatically.

THE CONCEPT

If we want different outcomes from a situation, we have to change the system that underpins the situation in such a way that it delivers different outputs.

In other words, we have to deal with things systemically.

We can’t deal with the parts of a situation in isolation; we have to deal with them in concert. We have to deal with both the elements of a situation and how they interact with one another.

• Creativity and lateral thinking: Dr Edward de Bono (generating alternatives, thinking as a skill

• TOC – The Theory of Constraints: Dr Eliyahu Goldratt (The “3-cloud” method and the single constraint)

• TRIZ – The Theory of Inventive Problem Solving: Dr Genrich Altshuller (patterns in problems and solutions)

• ST – Systems Thinking: Joseph O’Connor & Ian McDermott et al (system interactions)

• NLP – Neuro-Linguistic Programming: various (mental modelling)

• Creativity and lateral thinking: Dr Edward de Bono (generating alternatives, thinking as a skill

• TOC – The Theory of Constraints: Dr Eliyahu Goldratt (The “3-cloud” method and the single constraint)

• TRIZ – The Theory of Inventive Problem Solving: Dr Genrich Altshuller (patterns in problems and solutions)

• ST – Systems Thinking: Joseph O’Connor & Ian McDermott et al (system interactions)

• NLP – Neuro-Linguistic Programming: various (mental modelling)

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