Step 1: Establish the goal of the System, the units of measurement and the operational measurements

In order to implement change in a system, 3 questions must be addressed:

1. what to change
2. what to change to
3. how to make the change happen

In the Decalogue approach, a practical application of logic tools (known as the Thinking Processes Tools) is used to establish the goal of the System. If there is no goal, there is no system. This is a long-term goal aimed at continuous improvement.
Measuring the system is all about the ability to make the right decisions. Therefore, the units of measurement and the operational measurements use a throughput reporting rationale. Throughputput accounting does not have the goal of calculating the cost of a product. Its aim, instead, is to support, strategically direct, and monitor the decision-making processes connected with generating cash.
It is used alongside and complements tax, legal, community, financial, and general regulations and requirements of any country where it is implemented.

Step 2: Understand the System

• A system is a network of interdependent components that work together to achieve the goal of the system
• To understand the system (the way it functions now and in the future), we have to understand the interdependencies within the processes
• The simplest way to understand a process is to draw it. For this, we use deployment flowcharts.

A flowchart:

• Describes the flow of materials, information, and documentation
• Shows the various activities included in the process
• Explains how the activities transform input into output
• Indicates the decisions that have to be made along the chain
• Highlights the critical interrelations and interdependencies among the various phases of the process
• It reminds us that the strength of a chain depends on its weakest link

Step 3 : Make the System stable

• The ability to predict is fundamental
• If we want control over our actions, we must make sure the system in which we operate is stable
• Therefore, we want the system to produce predictable results
• Measurement through statistical control reduces variation, improving stability and predictability

Step 4: Build the System around the constraint

The constraint determines the pace at which the system can generate throughput (cash)
Five Focusing Steps for managing systems:

• Identify
• Exploit
• Subordinate
• Elevate
• Repeat steps 1-4

Precise algorithms, based on TOC, exist to address constraints in different areas:

• Drum Buffer Rope (DBR) - for production and logistics management
• Distribution - for supply chain management
• Critical Chain - for project management and product development
• "Unrefusable Offer" - for marketing and sales

Step 5: Manage the Constraint

• Once the constraint has been identified, it needs to be protected
• Protection begins with identifying the areas that are not in control
• The control mechanism is called a buffer, and the unit of measurement is time
• The buffer protects the constraint from the variability of the processes that feed it
• The more variability we find in the processes that impact the constraint, the greater the buffer will be.

Step 6: Reduce the variation of the constraint

When we reduce variation, we can expect greater reliability, dependability, consistency, Quality, and performance, from the constraint to its related processes.
Inevitably, when change is enacted, there are those who resist it. We have to understand why, and a solution should be developed that:

• corresponds to people's logic
• step by step, involves everyone in its construction

Goldratt has distinguished 6 layers of resistance to change, each of which can be approached practically with its own thinking process tool:

1. Disagreement about the problem
2. Disagreement about the direction of the solution
3. Lack of faith in the completeness of the solution
4. Fear of the negative consequences generated by the solution
5. Too many obstacles along the path that leads to change
6. Reservations about our ability/will to implement the solution (and about other people's)

Step 7: Create a suitable management structure

The traditional hierarchical model of an organization is limited.

• The customer is missing
• Interdependencies are not shown
• There is no feedback mechanism that allows the organization to capitalize on the actions to be taken

Deming's model shows the interactions and interdependencies within the various parts of the system. We can also see the two areas that are missing from a hierarchical model: the external supplier and the customer.

Step 8: Eliminate the external Constraint

If a company is not able to sell everything it could realistically produce, then its constraint is the market.
Common problems:

• We don't know which aspects of our product/service our clients perceive as having the greatest value
• We do not know what our potential market is or how big it is
• We are not able to establish the maximum price our client is willing to pay
• Management accounting supplies us with a minimum price that we cannot ignore
• We do not know how to make our solutions unique
• We do not have sufficient time or resources to adopt a policy that is different from the one we are using
• The success of a commercial relationship depends solely on us and our client

Decalogue solution: use the TOC Thinking Processes Tools to create an irrefusable marketing offer which:

• addresses a core problem of the customer
• does not demand them to change - the supplier changes
• ideally, it breaks a policy constraint of the supplier
• it provides the supplier with a potential price increase

Step 9: Bring the Constraint inside the organization and fix it

Types of constraints:

• Resource and capacity constraints
• Time constraints
• Policy constraints
• Sales constraints
• Marketing constraints
• Organization (structure) constraints
• Human behavior constraints

Simply put, an organization will always have a constraint. An internal constraint is easier to manage and within our control.

Step 10: Create a Continuous Learning Program

• Continuous learning fosters continuous improvement
• Our reality changes at a hectic pace, and we must ensure that the system is working and achieving its goal
• Therefore, we must have a mechanism in place that allows us to generate and update knowledge within the system