By correctly identifying the constraint (bottleneck) of our organization, we can manage its inherent complexity with greater precision and predictability.

As we saw in the last entry of this blog, every human process, from getting to work in the morning to sending a man to the moon, is affected by variation. In other words, a process can never be repeated in an identical way.

We know that it’s impossible to eliminate it completely due to the existence of entropy, which means that all systems tend towards disorder. This phenomenon that we learn about in physics lessons matters for our enterprises.

Variation is a fact of life, and unless we learn to manage it, its impact can be costly and destructive. For example, if we do not manage variation correctly in manufacturing, this inevitably leads to scrap, waste and lost revenue.

As we have already described, we can manage variation effectively by learning the statistical methods that allow us to understand it, measure it, and most importantly, take the correct actions to reduce it.

Once we have achieved statistical predictability in our processes, we need to synchronize them and protect them from disruption. The brilliance of Goldratt’s contribution to management was to understand how to do this simply: by identifying the constraint (or bottleneck) of the system, i.e. the element in the system that determines the pace at which the system generates units of the goal.

A useful way of thinking about this is the analogy of a chain. The strength of the chain is dictated by its weakest link. No matter how strong the other links are, there is now way to escape the limitation place on the chain/system by the weakest link. Every organization/system has its own constraint, and we have to figure out what it is.

Goldratt’s fundamental insight was to understand that we can manage a system by focusing on the constraint, i.e. subordinating the other processes of the system to it to ensure it works to the maximum. We protect the constraint from the impact of variation affecting the other processes by placing a buffer before it. The entire system is scheduled around the constraint using a very precise finite capacity based algorithm.

All that matters for the success of the organization and those who work within it is speed and reliability. Our goal, therefore, is to create and manage a systemic organization based on process predictability and high synchronization of these processes. The only way to achieve this is to have an organizational structure that is built for and consistent with that very purpose. It is a structure where:

• interdependencies are clearly laid out through detailed mapping of the processes within the organization
• variation is understood and managed through relentless application of statistical methods
• a physical constraint has been identified
• a subordination process (to the constraint) is created
• a buffer is placed in front of the constraint

The constraint dictates the performance of the entire organization, therefore a minute lost by the constraint is a minute lost by the whole system. The purpose of the buffer in front of the constraint is to absorb the cumulative variation generated by the system and to prevent this variation from generating disruption to the constraint.

Dealing with our cognitive constraints to get to breakthrough

A major stumbling block to growth for organizations lies in the ‘cognitive constraints’. In other words, there are mental models, or, more simply, limiting beliefs that prevent us from seeing solutions.

In the Decalogue approach, we have worked over the last 15 years with hundreds of top and middle managers to build custom made implementations of the Decalogue and the starting point has always been to dig up, challenge and break through their limiting beliefs.

We do this using the powerful Thinking Process tool called the core conflict cloud. A group of managers sits for two-three days in a room starting with a “bitching and moaning” session where all their Undesirable Effects (UDEs )are verbalized. This first phase is a very “feel good” one, everybody agrees that the company is plagued by these effects. These effects are and feel “real” and everybody would like to get rid of them.

Summarizing all the Undesirable Effects (UDEs) in one single statement is normally a little cumbersome but it is generally done in few hours. The end result is normally welcomed as a breakthrough. How does that happen?

The Conflict Cloud helps to sharpen our intuition. The group of managers in just a few days has moved from an often disparate set of non-verbalized hunches to a clear cut picture of the forces that keep them from achieving their goal. Moreover, a precise description of the needs that craft the psyche of the organization goes a long way in helping to understand the “why” we are trapped in this conflict, the reason for it. No top management strategic retreat session delivers a tangible and operational output like this one. Now that the intuition is strong we can make it stronger.

What transforms a core conflict into a full-blown picture of our current reality is a disciplined, orderly elucidation of all the mental models that give birth to the conflict. These mental models are deeply rooted images that we have of ourselves and the world around us.  We may also call these mentai models “assumptions" .  They are the cognitive lenses through which we perceive reality.

Assumptions are, like any other mental construction, the result of external (the environment, education, experiences, values, etc.) and internal (the chemistry and physics of our mind) factors. The difference between an assumption and a statement of reality is only the realm of validity, determined often by cultural circumstances. (If you want a practical example of this last statement, take a sentence like “in a democracy every citizen is entitled to decent, affordable and reliable healthcare” and ask for a comment from a statistically representative sample of individuals in the US, Canada, and Europe).

We must never be slaves to our assumptions. They must be challenged so we can find ways ahead. The Core Conflict Cloud, when correctly used, allows us to engineer into our organizations not just continuous improvement, but continuous innovation.