Goldratt’s Thinking Process and Systems Thinking

1. Goldratt’s Thinking Process and Systems Thinking

2. THEORY OF CONSTRAINTS: GOLDRATT 1. Identify the system constraint(s) 2. Decide how to exploit the system constraints 3. Subordinate everything else to that decision 4. Elevate the system constraint(s) 5. When this creates new constraints, go back to step 1

3. Reference(s) • Dettmer, H. William, Goldratt’s Theory of Constraints, ASQ, 1997.

4. THE ISSUES ARE: • What to change? • {What is the core problem?} • What to change to? • {Where to look for the breakthrough idea?} • How to effect the change? • {How to bridge from a breakthrough idea to a full solution?}

5. Goldratt’s TP (Thinking Process) • An excellent methodology to facilitate sessions during the initiation phase (definition and conceptualization stage) of a project

6. Strategy for change • Create the tree • Critique the tree

7. Why trees?? • To get a complete picture of what is going on • To model all of the causation involved • To see what is related to what • To identify the core problem • To validate a proposed injection

8. What to change? • Team constructs a current reality tree (CRT) • Team starts by listing all undesirable effects (UDE’s) • Team inter-relates these by use of a tree, called a CRT • In the current reality tree, the team traces UDE’s back to a core problem (CP)

9. EXAMPLES OF UDE’s • Due dates are often missed • It is difficult to respond to urgent demands • There is too much expediting • Inventory levels are too high • There are frequent material shortages • Safety stocks are inadequate

10. Example Current Reality Tree Managing Software Development Projects Is rarely successful Software Development Projects take too long Software Development Projects cost too much Software Development Projects have quality problems

11. Software Development Projects take too long Software Development Projects cost too much Fixing changes takes time There are many late- breaking changes to requirements Fixing changes costs money

12. There are many late- breaking changes to requirements The technology is changing rapidly Users do not know what They want There is much un- discovered work Change in the business World is rampant

13. Core problems are studied further by use of an evaporating cloud • Evaporating clouds (EC) will surface assumptions • Breaking an assumption leads to a breakthrough called an injection • At this point the team is unconcerned with the practicality of the injection

14. What is an injection? • a solution to the core problem • a strategy that will mitigate all of the UDE’s • Injections that appear impossible to achieve are called flying pigs

15. What to change to? • From the CRT and ECs, a Future Reality Tree (FRT) is constructed • One purpose of the Future Reality Tree is to validate that the injection will achieve the desired effects (DE’s)

16. Due dates are rarely missed Demands are met 99% of the time There is little expediting Inventory levels are low There are no material shortages Production lead times are short or satisfactory Due date perf. is high Customers rely on quick responses There is little expediting Inventory levels are reduced significantly Material is available when needed Customers rely on quick responses Examples of UDE’s and DE’s

17. Building the Future Reality Tree • Start by turning the UDE’s around and writing them with a positive tone as DE’s • Place DE’s at the top of the limbs in the FRT • At the bottom of the FRT place the injection • Building the FRT is a two-phase process • Build considering only positive, ideal links, and assuming win/win strategies • Add negative loops later

18. What to change to, Cont’d? • The idea here is to get a picture of how an injection (a breakthrough) might affect the overall performance of the system. • The Future Reality Tree is the validation that a collection of injections will turn all of the UDE’s into DE’s

19. How to cause the change? • The prerequisite tree • The transition tree • These help to get buy-in • These help us to develop a strategy for achieving a flying pig (an injection that appears impossible to achieve or implement)

20. The Prerequisite Tree • Place INJECTIONS at the top • List the obstacles that are expected • For each obstacle that is overcome, an intermediate objective is achieved • Each obstacle gives rise to an intermediate objective • The intermediate objectives need to be sequenced

21. The Prerequisite Tree, Cont’d • Takes an impediment or obstacle approach • This approach enables dissection of the implementation task into an array of interrelated, well-defined, intermediate objectives

22. The Transition Tree • We know where we stand • We identified the core problem • We found an injection (one or more) that produces the desired effects • We found the milestones of the journey--the intermediate objectives (IO’s) • The question now is What specific actions must we take?

23. The Transition Tree, Cont’d • We must focus, not on what we plan to do but on what we plan to accomplish • For each IO, a specific action or set of actions are determined and initiated • Causing a specific change in reality is the imperative • The transition tree provides a ROAD MAP for getting from here to there!

24. That’s it for GCT • To get the full version, you have to go to New Hampshire (Goldratt Institute) , spend two weeks and $10,000

25. Let's Transition to Systems Thinking

26. Systems Thinking vs. Goldratt Thinking Process • System Thinking is good for dynamical situations • Goldratt is good for surfacing underlying beliefs, assumptions that are incorrect • There is some overlap between the two methodologies

27. Why systems thinking? • Because our logical deduction mechanisms are trained to induct linearly, not cyclically • We don’t see the feedback loops • Consequently, we don’t comprehend the opportunities for reinforcement or the consequences of limitations/constraints • Forrester: every decision, every action is embedded in an information feedback loop

28. More motivation • We are immersed in and victims of structures that we have little awareness of • Causes and their effects are often spatially and temporally separated • Today’s problems are yesterday’s solutions • To make good decisions we need to understand dynamic complexity, not detail complexity

29. Still more motivation • The integration that comes from the application of information technology is creating complexity at a frenetic pace • Out of the complexity comes the potential for chaos and catastrophe • To understand and cope with the complexity requires causal models provided by systems thinking

30. Key Benefits of the ST • A deeper level of learning • Far better than a mere verbal description • A clear structural representation of the problem or process • A way to extract the behavioral implications from the structure and data • A “hands on” tool on which to conduct WHAT IF

31. Senge’s Five Disciplines • Personal Mastery • because we need to be the very best we can be • Mental Models • because these are the basis of all decision-making • Shared Vision • because this galvanizes workers to pursue a common goal • Team Learning • because companies are organized into teams • Systems Thinking • because this is only tool for coping with complexity

32. We are creating a “language” • reinforcing feedback and balancing feedback are like the nouns and verbs • systems archetypes are the basic sentences • Behavior patterns appear again in all disciplines--biology, psychology, family therapy, economics, political science, ecology and management • Can result in the unification of knowledge across all fields

33. Recurring behavior patterns • Do we know how to recognize them? • Do we know how to describe them? • Do we know how to prescribe cures for them? • The ARCHETYPES describe these recurring behavior patterns

34. The ARCHETYPES • Provide leverage points, intervention junctures at which substantial change can be brought about • Put the systems perspective into practice • About a dozen systems ARCHETYPES have been identified • All ARCHETYPES are made up of the systems building blocks: reinforcing processes, balancing processes, delays

35. Before looking at the ARCHETYPES we need to understand simple structures • The reinforcing feedback loop • Exhibits exponential growth behavior • The balancing feedback loop • Exhibits goal-seeking behavior

36. ARCHETYPE 1: LIMITS TO GROWTH • A reinforcing process is set in motion to produce a desired result. It creates a spiral of success but also creates inadvertent secondary effects (manifested in a balancing process) that eventually slow down the success. • All growth will eventually run up against constraints, impediments

37. Management Principle relative to ARCHETYPE 1 • Don’t push growth or success; remove the factors limiting growth • [This is equivalent to Goldratt’s Theory of Constraints]

38. Reinforcing Loop: Structure

39. Reinforcing Loop: Behavior

40. Balancing Loop: Structure

41. Balancing Loop: Behavior

42. ARCHETYPE 1: LIMITS TO GROWTH • Useful in all situations where growth bumps up against limits • Firms grow for a while, then plateau • Individuals get better for a while, then their personal growth slows.

43. Structure growing action state of stock slowing action Balancing Reinforcing

44. Understanding the Structure • High-tech orgs grow rapidly because of their ability to introduce new products • This growth plateaus as lead times become too long for development of enhancements to existing products • {have you considered what happens as software becomes more complex???}

45. How to achieve Leverage • Most managers react to the slowing growth by pushing harder on the reinforcing loop • Unfortunately, the more vigorously you push the familiar levels, the more strongly the balancing process resists, and the more futile your efforts become.

46. Leverage, Continued • Instead, concentrate on the balancing loop--changing the limiting factor • This is akin to Goldratt’s Theory of Constraints--remove the bottleneck, the impediment, the Constraint!!

47. Applications to Quality Circles and JIT • Quality circles work best when there is even-handed emphasis on both balancing and reinforcing loops • THERE WILL ALWAYS BE MORE LIMITING PROCESSES • When one limitation or impediment is removed, another will surface • Growth eventually WILL STOP

48. Create your own LIMITS TO GROWTH story • Identify a limits to growth pattern in your own experience • Diagram it • What is growing • What might be limitations • Example--the COBA and University capital campaigns • NOW, LOOK FOR LEVERAGE

49. Test your LIMITS TO GROWTH model • Talk to others about your perception • Test your ideas about leverage in small real-life experiments • Run and re-run the simulation model • Approach possible resistance and seek WIN-WIN strategies with them

50. ARCHETYPE 2: shifting the burden • An underlying problem generates symptoms that demand attention. But the underlying problem is difficult for people to address, either because it is obscure or costly to confront. So people “shift the burden” of their problem to other solutions--well-intentioned, easy fixes that seem extremely efficient. Unfortunately the easier solutions only alleviate the symptoms; they leave the underlying problem unaltered. The underlying problem grows worse and the system loses whatever abilities it had to solve the underlying problem.