Frequently Asked Questions

Q1. What is TOC? How do you define it?

A1. TOC (the Theory of Constraints) is a set of concepts, principles, and tools designed to help people manage systems better. Its whole purpose is to help managers identify the one most important factor that limits the success of their entire business system-the system constraint-and break it. Or, if that is not possible, to maximize business success by managing that system constraint well.

What differentiates TOC from other management approaches, such as Management by Objectives (MBO) or Total Quality Management (TQM), is that it is a "whole system" approach. It recognizes that systems of any kind are really integrated groups of dependent parts that affect one another. Consequently, it is neither wise nor productive to try to manage the system by focusing on its parts. We achieve much more success, more quickly, by managing from a system perspective, rather than a departmental one.

Think about your system as a chain. The goal of a chain is to transmit force from one end to the other. The goal of your system is to transmit work of some kind from one end (input) to the other end (output). With a chain, the amount of force that can be transmitted is limited by the strength of the weakest link. It doesn't matter how strong the other links are. The chain is only as capable as its weakest link. In the same way, the output of a business chain is equal to the output of its weakest part, or link. It's important to know where that weakest link is, because we can waste a lot of time, energy, and money strengthening links that are not the weakest one.

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Q2. What is the starting point and core assumptions of the Theory of Constraints?

A2. There are four underlying assumptions upon which the Theory of Constraints is founded:

1. The first assumption is that every system has a goal and a set of necessary conditions that must be satisfied to achieve that goal. While this assumption is undoubtedly valid in most cases, there are obviously some organizations that have not expended the time or effort to clearly and unequivocally define what that goal is. And even if they HAVE defined a goal, most have not gone the extra step to define the minimum necessary conditions--"critical success factors," if you will-- for achieving that goal.

2. The second assumption is that the sum of the local optima (or local efficiencies) does not produce the system optimum, or best system-wide success. This is an especially critical assumption, because almost every organization in the world operates as if the sum of the local optima will produce the global system optimum. The Theory of Constraints suggests that the linkages are as important, if not more so, than the links. In other words, a system's most serious problems occur at the interfaces between components, not necessarily within the components themselves.

3. The final assumption is that very few variables--maybe only one-- limit the performance of a system at any given time. And we refer to these few critical limiting variables as "constraints."

4. There are valid cause and effect relationships behind any effect on any organization.


Q3. What are the main methods and tools of TOC and what do they accomplish?

A3. The guiding philosophy of TOC is a strategy known as the "Five Focusing Steps." In sequence, these steps are:

1. IDENTIFY the systems constraint.
2. Decide how to EXPLOIT the system constraint. This means to "get the most" out of the constraining factor without spending any more money-just by changing the way we use it.
3. SUBORDINATE everything else to the decision in Step 2. This is the most difficult part of applying constraint theory, because it usually requires us to reject some "traditional" ways of doing things that our experience has told us are equivalent in validity to Biblical scriptures. But the truth is that they are not, and constraint management tools can prove it.
4. ELEVATE the system constraint. This is another way of saying "obtain more" of whatever factor limits the business system. If that limitation is an internal resource (too much work for the capacity that we have), this step tells us to find more capacity somewhere. If the constraint is external (too few sales), this step tells us to find new markets or expand sales in existing markets. But this step is never taken until after the first three steps have been completed. The reason is that this step will usually require an investment of money, so it's better to use the first three steps to be certain that we have first gained all the advantage we can without spending money. You would be surprised at how many businesses skip directly from step 1 to step 4, without ever doing steps 2 and 3!

5. GO BACK to Step 1, but BEWARE OF INERTIA. The Five Focusing Steps are intended to be a never-ending cycle, much like the Shewhart (Deming) cycle of plan, do, check, and adjust. Once a constraint is broken, whether after Step 3 or Step 4, continued effective management demands a return to Step 1 to ensure that:

a. The new constraint actually went where we expected it to go when we first took steps to break it (if not, determine where it actually is).

b. The right exploitation and subordination steps are in place for the system constraint at its newly-identified location. In most cases, the steps we took to exploit and subordinate before will have to change. Most organizations overlook this effect, even if they're smart enough to recognize that the constraint has shifted.

There are three main tools that the Theory of Constraints uses to fulfill it's potential. Goldratt invented each of these tools to satisfy a different need.

The first and most important tool is the logical Thinking Process. This is a group of five logic trees that identify WHAT to change, what to change it TO, and HOW to make a change occur. These are the most important questions that any manager, at any level of an organization, needs the answers to. The thinking process is most important because it tells us what our system constraint is and helps us create strategies to first control it, then to break it. Most often, system constraints are policies, not physical things. The Thinking Process is designed to overcome policy constraints. The other two tools are designed to solve specific internal constraint problems.

"Drum-Buffer-Rope" is a constraint-based method specifically designed to improve manufacturing operations. It has been so successful that one printing company in the United States increased profits 112 times in six months! (That's 112 times, not 112 percent.)

"Critical Chain" is similar to "Drum-Buffer-Rope," but it applies to project situations. It is a constraint-based method of ensuring that complex projects are delivered on time, or even early. Often, this has beneficial effects on the cost of the project and the performance of the final product. Critical chain is especially useful in major construction projects and in new product developments. Intel Corporation uses Critical Chain to develop and produce new generations of computer microprocessors faster than its competitors.

Q4. As Dr. Deming used to say, most executives seem to be in an endless quest for "instant pudding", i.e., ready-to-use, plug-and-use panaceas for their business problems. Because of that, in the past decades many companies have been giving ears to a bunch of buzzwords and management fads, preached by some clever consultant eager to be called a "guru," just to painfully acknowledge later all the harm that such short-sighted approach caused. How can one be confident that TOC is not just another of those fads?

A4. An excellent question! Any new management practice could very well turn out to be a fad. What separates fads from lasting approaches might be called "staying power." Staying power is usually determined by two factors: a demonstrated track record of success and the spread or proliferation of the methodology. TOC has demonstrated both. (See "Success Stories").

TOC doesn't claim to be an "automatic pilot" or a substitute for hard work. The famous cowboy-philosopher, Will Rogers, well loved for his friendly way of imparting wisdom, once said, "Plans get you into things, but you have to work your own way out." In some respects, TOC is like this.

Good application of TOC will point you unerringly toward what is wrong with your system and what needs to be done about it. But it will NOT do what needs to be done for you. You have to do that yourself. The advantage that TOC provides is that will absolutely know for sure exactly WHAT the right thing is to do, and how to do it. If TOC tells me that the right thing is to travel from the Pacific Ocean to the Atlantic Ocean, it will also suggest that I can either travel by land, sail by sea, or fly over it. But none of these are necessarily easy to do. Any one of them would be the RIGHT thing to do, if the goal is to complete the trip.

Q5. Are there any prerequisites to apply TOC, such as size and type of organization, type of business, prior culture change, massive training or the like?

A5. No, none at all. I know people who apply the Theory of Constraints to manage the daily activities of their own lives. You can't get much smaller than an individual person. My daughter, a 23-year-old political science graduate, has successfully applied the Thinking Process tools in achieving her personal goal.

Small companies can usually realize benefits of constraint management very quickly. The "Success Stories" describe companies as small as a family-owned restaurant. Some of the world's biggest companies have successfully applied TOC, too, or are in the process of doing so now--companies such as Lucent Technologies, General Motors, Ford Motors, and Intel Corporation. These all happen to be manufacturing companies, but there are service industries, such as banking, that have used it as well. I've even been teaching lawyers to use some of the tools of constraint theory to improve their negotiating or courtroom litigation skills.

No prior business experience is necessary. Only the desire to improve and the self-discipline to act and persevere. Training is relatively straightforward and not at all "massive," though it DOES require one qualification that some people find very hard to overcome: the ability and willingness to THINK! Henry Ford, the American industrialist, once said, "Thinking is hard work. That's why so few people do it." If you're willing to challenge yourself mentally and examine the underlying assumptions-often hidden or unspoken-upon which you operate, applying TOC really becomes easy to do. I promise you this-with a good exposure to the Theory of Constraints, you will never look at your world in quite the same way again.

Q6. Suppose a very successful company has a refined methodology or process for strategic planning and deployment, carefully developed throughout the years, which is its main driver for business growth and organizational learning. Can TOC be of help or even a substitute for that process?

A6. It could be either--or neither. There's not necessarily a compelling reason to "throw the baby out with the bath water." It might be that combining TOC tools and principles with existing planning and deployment methods might produce more robust results. But it usually depends on how willing a company is to entertain new ideas. Very successful companies are often less willing to explore new ways of doing things. They consider their success the indication that they're already doing things right, so why look for different ways? Of course, such companies might be succeeding in spite of themselves, rather than because of what they're doing. They find this out when results begin to change (probably unfavorably) and they do the same old things with more energy, expecting them to "work," when their accepted ways might not have been the true cause of their success in the first place. TOC, and particularly the Thinking Process, are capable of verifying the sources of success and identifying very quickly when existing ways of doing things are no longer addressing the real root causes of the current problems.

If you're already using a method of strategic planning and deployment that works, the TOC Thinking Process can provide an excellent independent means of verifying that the established method works. On the other hand, if the current strategy development process isn't producing the results the company's owners desire, the Thinking Process can certainly find out why and provide the means to create and deploy effective strategy.

Q7. Talking about organizational learning, Peter Senge's fifth discipline is called "systems thinking", the ability to see the whole picture and the dynamic interrelationship between things. How would TOC help someone go beyond intellectual entertainment or lip service about systems thinking and effectively implement it?

A7. One of the best features of TOC is that it fits very nicely with other philosophies and approaches. Peter Senge's "fifth discipline" is one of them. So does Total Quality Management--or most of it.

TOC, I think, would appeal to someone like Deming, who valued action firmly grounded in theory. How to get into action? First, read and understand the theory itself. There is no shortage of excellent books on the Theory of Constraints. Unfortunately, with few exceptions most of these books are in English. Goldratt's first book, "The Goal," is printed in at least 13 languages. TOC is often written about in professional journals, and there is increasingly more information about it on the Internet. In researching and reading about TOC, the serious student will encounter no shortage of case studies describing actual applications of the theory and the practitioners' success with it. This can often be a reinforcement for the reader to want to learn more, especially if the case study resembles one's own environment.

After reading (or simultaneously with it) some practical experience with the concepts and principles is useful. This can usually be done in a one-day workshop or seminar. After this level of exposure, the serious student is capable of making an informed decision: "Is TOC worth continuing to pursue, or not?"

The last step in turning the "intellectual exercise" into action is to actually apply the principles. This takes courage, especially for people who have only read or attended a seminar. After all, would you go climb into an airplane and try to fly it off into the sky, with no more training than a little reading about how to do it and maybe a one- or two-day seminar? Believe it or not, some people do-and they succeed! The reason is because TOC even done poorly is sometimes better than what's happening now. One precision machine shop owner did no more than read Goldratt's book, "The Goal," and apply its lessons (without any training, just from reading). He said, "I spent $20 dollars on the book, and it made me over $2,000." This was enough to motivate him to learn how to apply TOC principles even more. He doubled his company's profits in about a year. This required about two days of specialized training and several months of independent effort on his part afterward. But now his company is more profitable than it has ever been, and he spends half his week playing golf or at the beach.

Q8. No doubt that TQM, when properly understood and implemented, is capable of doing wonders to a company's performance. But in many cases, people's anxiety (and need) for immediate, high impact results is not satisfied by the traditional TQM approach. Can TOC contribute to overcome that shortcoming? How?

A8. Yes! What makes TOC show results quicker than TQM is TOC's propensity to identify and focus on the system constraint (the weakest link in the chain) that currently impedes overall company success the most. By addressing and breaking THAT constraint, measurable company-level improvement is immediately visible. TQM aims to improve everything at once. Sometimes this can dilute efforts in the areas that currently matter most (the system constraint). As a result, measurable system improvement is often slower to show up. That's one reason why TQM advocates usually warn that it can take years to show significant improvement. But with TOC, it doesn't have to.

In fact, TOC in combination with TQM is one of the most powerful "engines for success" that I can think of. You can't ignore quality, because quality can be a constraint. One way to look at it is like this. Quality could be considered the price of admission to play in the game of business. If you don't produce quality products or services, your competition will eat you alive. But once everyone has the same level of quality, how can you possibly distinguish yourself from the competition, and win a larger share of the market? The answer is: "Find out what NOW constrains you from beating your competition, and capture that as an advantage for yourself. "

One furniture manufacturer in southern California not only found one such advantage, they found three. And they're holding the other two in reserve, so that as soon as their competition matches the first one (which is likely to happen in most businesses), they will be ready to immediately introduce the next competitive advantage-and now they will instantly jump ahead again. They're ready to do this three times! But the key to this strategy is that they already have their quality under strict control.

Q9. What basic implementation steps would you recommend for a company to effectively take advantage of TOC?

A9. I mentioned this briefly earlier, but it's worth reviewing. Research the Theory of Constraints first. Read books, magazine articles or journals, or search the Internet. Learn enough through self-study to determine whether you want to know more.

Attend short seminars, workshops, or other interactive events (1-2 days) that take place near where you are. More and more of these are becoming available as time goes on. You might see advertising for some of these events, but you might also have to search them out.

Find yourself a good mentor or teacher to help you "learn how to fly without crashing." Sometimes the self-taught learner can realize great success on his own. But the bigger you business, and the greater the risks to your future if you fail, the more important it is to have qualified assistance.

Q10. Nowadays a growing number of companies are adopting "Six Sigma", which is Motorola's approach to TQM (despite the effort made by some to sell it as something radically new in the business arena). Can TOC somehow contribute to the Six Sigma focus on radical process variability reduction?

A10. There might be ways that TOC tools might contribute to this kind of effort, but remember: TOC is a "whole system" methodology. "Six Sigma" is an approach to improving only one--though a very important one--of the factors that determine overall business success: quality.

Generally, it's better to let TOC fill the need it was designed to satisfy: Manage overall system success. Let TOC tell you that "quality" is your problem, then go out and apply Six Sigma to fix it. However, if some other factor is limiting your company's financial success (insufficient sales, for example) let TOC tell you what that factor is and suggest ways to deal with it. These ways might have nothing to do with quality or Six Sigma. The bottom line question: Where does your weakest link lie? Six Sigma won't answer that question (it assumes that quality is). TOC will answer that question.

Q11. What one message should people take away about TOC?

A11. If you're not ready to climb on the steamroller, be prepared to become part of the road. As Deming once said, "Survival is NOT mandatory." TOC is the next competitive advantage. If you are using it and your competition is not, they'll be in trouble. If they're using it and you're not, YOU'LL be in trouble. Which would you rather it be?