Tuesday, 4 March 2008

Heroes of our time - Eli Goldratt

Eli Goldratt is best known for his book The Goal which described in a compelling way the struggle of a plant manager to improve his plant's performance to the point where the parent company would keep it open rather than close it.

You may think this is a bit of a niche book, because manufacturing industry involves relatively few people these days, and even when a story is built using corporate politics, family stress, and personal stubbornness, few people are likely to get excited about handling the technical constraints in production organisation. However, within its niche, the book has been outstandingly successful since its first publication in 1984.

Goldratt had previously written regular textbooks about the new ways of managing business which he had invented - or perhaps discovered. None of the books had been very successful, and 'The Goal' was a departure: instead of explaining his thinking, he illustrated it by revealing the causes and the effects, never actually spelling out the details of what he called 'Theory of Constraints' or TOC.

TOC is set of managerial techniques built on two foundations, the 'Five Focusing Steps', and the 'Cloud'.

The Five Focusing Steps

The Five Focusing steps is a method for improving any system which produces a flow of output. It has four key ideas:

1. Any system which is about flow - flow of parts through a manufacturing plant, or flow of tasks through a service business - must be subject to at least one constraint.

2. In almost all practical situations one of these constraints is dominant over all the others.

3. In order to improve the flow of the system we must focus on that dominant constraint.

4. Work on anything other than the dominant constraint cannot improve the system.

These key ideas may seem blindingly obvious (except 2, which is clearly an assumption), but what for me is special about Goldratt is his determination to follow the logic wherever it leads, whether to the seemingly obvious or the seemingly far-fetched. From these simple foundaations he builds a simple universal system for continuing improvement, which when applied to any practical environment, gives rise to thinking and actions which are far from obvious.

The Cloud

The Cloud is a method of analysing and creatively resolving conflicts. Its basic template is that one party proposes to take an action, and the other party proposes to take an action which is in conflict. The Cloud is based on these key ideas:

1. Although many conflicts a can be dealt with effectively by walking away, or by agreeing a trade-off compromise, or by a unilaterally imposed result, there are many conflicts where none of those approaches will lead to a good solution, and we need to apply a more creative result.

2. When parties to a conflict are bound by an overriding common objective, there is always a good solution to be found, in terms of that common objective.

3. The visible conflict between the incompatible proposed actions is driven by an invisible conflict. Each party has chosen its proposed action for a reason, because in some way it supports the common objective. The visible conflict arises when the two sides embrace different reasons or different values, which are themselves in (invisible) conflict.

4. Creative and lasting solutions are to be found by putting the conflicting proposals and the values which drive them 'on the table', and seeking creative reconciliation among the values and the overriding common objectives, rather than by trading off the conflicting proposals.

These ideas are not quite obvious, but they do fit in with a common insight, that in some conflicts both parties are actually right, and attempts to resolve them by a compromise or an imposed solution very often prove short-lived.

The Five Focusing Steps and the Cloud together

When we attempt to improve a situation, we will propose to change some aspect of the status quo. Usually, the status quo exists for a reason - good, bad or forgotten. When we propose a change we are therefore likely to initiate a conflict. usually, then, in order to apply the Five Focusing Steps we have to apply the Cloud as well. Individually these tools are powerful, together they enable a methodical process of improving almost anything.

©Steve Roberts 2008

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