Business901                      Podcast Transcription Implementing Lean Marketing SystemsHolistic Approach to the Theory ...
Business901                      Podcast TranscriptionImplementing Lean Marketing Systemsprovide guidance based on their h...
Business901                      Podcast TranscriptionImplementing Lean Marketing SystemsJoe Dager: Thanks, everyone for j...
Business901                      Podcast TranscriptionImplementing Lean Marketing SystemsSocratic manner. In education adm...
Business901                      Podcast TranscriptionImplementing Lean Marketing SystemsJoe: I think you did. This was a ...
Business901                      Podcast TranscriptionImplementing Lean Marketing Systemsstudents. Some are actually stude...
Business901                      Podcast TranscriptionImplementing Lean Marketing Systemscan you cover in enough depth in ...
Business901                      Podcast TranscriptionImplementing Lean Marketing SystemsJim: I think, its interesting you...
Business901                      Podcast TranscriptionImplementing Lean Marketing Systemsthat people within these discipli...
Business901                      Podcast TranscriptionImplementing Lean Marketing Systemsunderstand why, why people dont g...
Business901                      Podcast TranscriptionImplementing Lean Marketing Systemsbe, "Oh yeah, I read the goal bac...
Business901                      Podcast TranscriptionImplementing Lean Marketing Systemsbrings me to another point, one o...
Business901                      Podcast TranscriptionImplementing Lean Marketing SystemsAnd if you look in our book, ther...
Business901                      Podcast TranscriptionImplementing Lean Marketing SystemsWe did a little survey of their 3...
Business901                      Podcast TranscriptionImplementing Lean Marketing Systemsfinished." The bottom line was we...
Business901                      Podcast TranscriptionImplementing Lean Marketing Systemsrealize that their own actions ca...
Business901                      Podcast TranscriptionImplementing Lean Marketing Systemsuniversities? Youre more acclimat...
Business901                      Podcast TranscriptionImplementing Lean Marketing SystemsI think in academia a PhD is very...
Business901                      Podcast TranscriptionImplementing Lean Marketing Systemsand suspenders. TOC wants to ensu...
Business901                      Podcast TranscriptionImplementing Lean Marketing Systemsthat people have to say about wha...
Business901                      Podcast TranscriptionImplementing Lean Marketing SystemsI think there are a number of con...
Business901                      Podcast TranscriptionImplementing Lean Marketing Systems"Theory of Constraints in Prisons...
Business901                      Podcast TranscriptionImplementing Lean Marketing SystemsSo instead of having a counselor ...
Business901                      Podcast TranscriptionImplementing Lean Marketing Systemsto use these tools quite effectiv...
Business901                      Podcast TranscriptionImplementing Lean Marketing Systemsmanaging my time. I swim five hou...
Business901                      Podcast TranscriptionImplementing Lean Marketing SystemsThe story went on, she got the go...
Business901                      Podcast TranscriptionImplementing Lean Marketing SystemsBy laying out a detailed plan and...
Business901                      Podcast TranscriptionImplementing Lean Marketing Systemsabove that. More of a management,...
Business901                      Podcast TranscriptionImplementing Lean Marketing SystemsJoe: Yeah, I think so. I think it...
Business901                      Podcast TranscriptionImplementing Lean Marketing Systemsthat our industry creates so that...
Business901                      Podcast TranscriptionImplementing Lean Marketing SystemsJoe: Well Lisa Langs chapter real...
Business901                      Podcast TranscriptionImplementing Lean Marketing SystemsJohn: Well, I think just a couple...
Business901                      Podcast TranscriptionImplementing Lean Marketing SystemsJohn: And if you havent found it,...
Business901                      Podcast TranscriptionImplementing Lean Marketing Systems                                 ...
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Theory of Constraints Handbook Co-authors Interview

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Transcript of "Theory of Constraints Handbook Co-authors Interview"

  1. 1. Business901 Podcast Transcription Implementing Lean Marketing SystemsHolistic Approach to the Theory of Constraints Guests were Jame s F. Cox III and John G. Schleier, Jr., Co-Editors of the Theory of Constraints Handbook Related Podcasts: Holistic Approach to the Theory of Constraints TOC Thinking Process Discussion The Business901 Podcast featured John G. Schleier, Jr. and James F. Cox III authors of the upcoming book, Theory of Constraints Handbook. In this authoritative volume, the world’s top Theory of Constraints (TOC) experts reveal how to implement the ground-breaking management and improvement methodology developed by Dr. Eliyahu M. Goldratt. Theory of Constraints Handbook offers an in-depth examination of this revolutionary concept of bringing about global organization performance improvement by focusing on a few leverage points of the system. Theory of Constraints concepts and tools are aimed at one overriding objective: bringing about a process of ongoing improvement in enterprises. That said, the purpose of this book is to provide “hands on” guidance from the world’s top experts on how to implement these TOC capabilities. This guidance is buttressed by clear definition on how they work, why they work, what issues are resolved and what benefits accrue. Leading practitioners Holistic Approach Theory of Constraints Copyright Business901
  2. 2. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsprovide guidance based on their hands-on implementationexperience. Academic authors give a review of the wealth ofliterature on why to move from the traditional discipline to eachTOC discipline and a review of the TOC literature in thatdiscipline. Indeed these ideas are of such a scope that thisHandbook required 44 authors to explain them. Jame s F. Cox III, Ph.D., CFPIM, CIRM, holds TOCICO certifications in Production and Supply Chain, Performance Measurement, Critical Chain, Strategy and Tactics, and Thinking Processes. He is a Jonah’s Jonah, Professor Emeritus, and was the Robert O. Arnold Professor of Business in the Terry College of Business at the University of Georgia. Prior to his tenure at UGA, Dr. Cox held the E. L.Lowder Professorship in the School of Business at AuburnUniversity.John G. Schleier, Jr., holds TOCICO certifications inall disciplines. He was President and Chief OperatingOfficer of the Mortgage Services Division of Alltel,Inc., Executive Vice President of Computer Power,Inc., and Director of Office Systems and DataDelivery for IBM, where he directed major softwaredevelopment projects, sales administration, andfinancial functions. Mr. Schleier served on the faculty of TheUniversity of Georgia Terry College of Business Administration asIBM Executive in Residence and as Executive Professor ofManagement. Holistic Approach Theory of Constraints Copyright Business901
  3. 3. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsJoe Dager: Thanks, everyone for joining us. This is Joe Dagerthe host of the Business 901 podcast.Participating in the program today is Dr. James Cox, and JohnSchleier, co-authors of the upcoming book The Theory ofConstraints handbook.I looked at the book and its probably the most comprehensivecollection Ive seen on the Theory of Constraints. It reminded meof a collection of short stories from the best authors, bothacademic and practitioners, on a subject that Ive seen in quite awhile.Few of us really understand how much work is involved to put acollection like this together. I have to ask you, why undertakesuch a project?Jim Cox: Well Joe, this is Jim Cox. Thats an interestingquestion. It goes back a ways. TOC is a holistic philosophy thatoriginally started in manufacturing scheduling and expanded toother functions as the need arose. Goldratt describes this pathhimself in chapter one.John and I have been involved in TOC for over 25 years and havewatched the body of knowledge grow in both breadth and depth.We are fortunate to know a number of the top TOC experts indifferent areas. And we felt it was time to ask them to documentthe body of knowledge.First, the extent of the body of knowledge across a number offunctions exists now. Manufacturing, cost accounting,measurement, distribution, supply chain, project management,marketing and sales, strategy and tactics, human behaviors. Andacross organizational types: for profit, non for profit, government.A number of services: such as professional services, hospitals,medical practices, even prisons and education. In education, TOClooks at behavioral problems of children and how to teach in a Holistic Approach Theory of Constraints Copyright Business901
  4. 4. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsSocratic manner. In education administration, it also coversindividual improvement today, also.TOC has had remarkable results in each of these areas. Yet mostpeople have not heard of its use. They still think of TOC as ascheduling method in production, the Drum-Buffer-Rope situationdepicted in the goal.The second point is we wanted to document the depth ofknowledge in each function in organization type. We wanted aone stop reference to this holistic philosophy that providedenough how to knowledge for one to apply the tools in one area,determine the system results, identify the next constraint, applythe correct tools, and determine the organizational results, and soon.John Schleier: Joe, this is John Schleier. Just to add to that,one thing that Jim and I both wanted to accomplish was to haveabsolutely no spare time whatsoever over the past year and wewere entirely successful with that.But on a serious note we wanted to also, in extending the body ofknowledge, and bringing activity in the field up to date, we reallywanted to get the attention of the academic community. We arereally hopeful that more and more theory constraints content willbe taught in our business schools across the country. Weve seenover the last 25 years, both of us, how powerful the Theory ofConstraints tools are. So that carries with it a certain enthusiasmthat we have for wanting to see The Theory of Constraints appliedand to be helpful in a business community that we think reallyneeds improvement in so many areas.We were motivated much more by those things than we werewith the thoughts of making any money on the book or anythinglike that. We really wanted to get the knowledge out there. Holistic Approach Theory of Constraints Copyright Business901
  5. 5. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsJoe: I think you did. This was a great concept. Do you reallythink that you can treat some of the subjects in depth with thecollection that you put together?Jim: We have divided the book up into a number of sections andhave chosen the top TOC experts in those various areas, andtried to focus them on a how-to approach. Each one of thosechapters is probably 20 to 40, some are 50 to 60, pages long. Wefocus them on the how-to approach. And in each section we havean academic lead off that section, and discuss that topic areafrom first a traditional management viewpoint, then from a TOCviewpoint, and critique the TOC body of knowledge in that area.That ties academia into using the handbook, and use this as afoundation for doing further research in the area. The practitionerauthors, many are consultants, have been in the field 20 years.And weve gone back and forth on a number of reviews with eachone, trying to succinctly put the message down and focus on howto implement these tools.Joe, TOC is a holistic philosophy. Maybe thats one of theproblems in getting it implemented. A person has to take asystems perspective to whether theyre looking at their ownpersonal life. An organization, whether its profit, not for profit,government agency, whatever, but they need to take a systemsperspective. So, its an overwhelming challenge to do that.Joe: I see that throughout the chapters youve done a great job.Youve got some real noted experts in there, Dettmer, Goldratt,Newbold. Names that just pop out at me that I recognize. Howtough was it to get all them to contribute? How long did it takeyou to put all this together?Jim: Joe, Ive known most of these people and Johns knownmost of these people for the 25 years weve been in there. At onepoint I taught Jonah courses, as John did. Some of these are past Holistic Approach Theory of Constraints Copyright Business901
  6. 6. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsstudents. Some are actually students from the University ofGeorgia, PhD students and they did dissertations in this area.There were probably 50 authors that I wanted to go after to getthis. We knew that some would be unavailable, but it seemed likeeverybody wanted to be a part of this book. So it wasnt difficultat all to get them to make the commitment and to be enthusiasticabout it. I think each person wanted to contribute and put a stakein the ground as far as the body of knowledge and what we knowtoday. Hopefully we can move forward from this stake in theground.John: Joe. I would add to that, that all but maybe two. Id sayall but about two accepted and they accepted enthusiastically.They were coming back and thanking us for selecting them to bea part of this handbook. I was really kind of amazing. Theirparticipation as weve gone through the last year or so of puttingthis together has been very responsive.As Jim said, with several of them weve went through three orfour editing iterations, where we felt certain points were not asclear as they could be. They were very accepting of oursuggestions and very responsive in coming back withimprovements that in many cases went well beyond what wesuggested to them. It was a great group of people.I wanted to add one other thing. Jim was talking a minute agoabout the holistic nature of “Theory of Constraints", and wetalked about the problems that emerge at trying to get holisticsolutions accepted. I just wanted to refer to something thatRussell Ackoff, from University of Pennsylvania, at the WhartonSchool said. He said the specific reason that blocks organizationsfrom adopting systems thinking is simply that there is aknowledge and experience gap on the how to."And thats exactly what were trying to address in this book. Andif you were to go, for example back to your question you know Holistic Approach Theory of Constraints Copyright Business901
  7. 7. Business901 Podcast TranscriptionImplementing Lean Marketing Systemscan you cover in enough depth in each of these chapters the howto aspects of how to get up and running with some of theseconcepts, if you were to go for example into the supply chainchapter that was written by Eli Schragenheim, hes doneextensive consulting in bringing up supply chain going frommanufacturer to retail around the world. If you read that chapter,he will tell you exactly what to do, what works. He will bring upthe obstacles. He will bring up the pitfalls along with the concretehow to steps to make it happen.Joe: What I thought was unique about the book was that I couldsit there, and I could go and read in depth about a certain subjectbut you touch so many different parts that you can learn a littlebit about everything. And then theres a way if you really want todig deeper into the subject you have an expert available. Its likean interview with an expert to see if you really like their materialto see if you want to go deeper with that person.John: Yeah, thats very true. And one, along those lines, oneother thing that youll notice is that for example when we talkabout the thinking processes in Theory of Constraints that theiruse is pervasive across the whole application set and so when youread a particular chapter and see how an author arrives at hisexplanation, his or her explanation of solutions, very often thethinking processes are brought into play in that discussion andyou can see how Theory of Constraints itself is a system ofsolutions. But thats made clear in each chapter, in the linkagefrom one facet of Theory of Constraints to another and how eachfacet plays into solutions is brought out.Joe: We are talking about Theory of Constraints, being holistic,system thinking and the big umbrella of everything, but don’t alot of disciplines claim that? I mean doesnt lean kind of claimthat? I wouldnt say so much Sic Sigma but system thinkers,everybody wants to be kind of like the big shot. Why is Theory ofConstraints that way do you think? Or why do you believe that? Holistic Approach Theory of Constraints Copyright Business901
  8. 8. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsJim: I think, its interesting you bring up Lean and Sic Sigma,theres a couple of chapters in the text that talk about themerging of Lean and Sic Sigma with TOC and how to use TOC tofocus improvement using the tools of Lean and Sic Sigma. So Ithink in the longer term well see these three philosophies merge,each offers, brings a different set of tools to the table for amanager. And its time that we bring them together and takeadvantage of the thinking processes in TOC, buffer managementin TOC, the measures in TOC to focus lean improvement atvarious work centers or various functions and to focus Sic Sigmatools where they impact the bottom line significantly.And youre not talking about raw material savings; youre talkingabout increased route to the market. I think TOC brings to thetable that focus that external focus onto the customer and waysto improve the bottom line significantly by using Lean tools or SixSigma tools.So I think thats where the merging is. There are a few roughpoints in merging these philosophies. Lean likes to trimresources, TOC likes to look at that quote, "idle capacity" andrecognize that some is protective capacity and some is excesscapacity. And with the excess capacity, TOCs first focus is onhow we sell this excess capacity to make money. So I think acorrect focus in the long run for an organization and to keep loyalemployees is to put the threat of a layoff as the last resort. Thoseareas there, I think over time will be worked out, and Leanadvocates will recognize that Murphys going to strike and thatyou need protective capacity to eliminate the impact of Murphy,or to take advantage of market opportunities.John: Youll see across the handbook, a strong acknowledgmentof the power of Lean and Six Sigma tools and a discussion of howtheyre synchronized with Theory of Constraints application. Yousee this in hospitals and medical practice. You see it in otherfacets. And one of the things that I find frankly, encouraging, is Holistic Approach Theory of Constraints Copyright Business901
  9. 9. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsthat people within these disciplines seem to be acknowledging thegood points of the other set of disciplines.For example, in the Sic Sigma handbook, on page 127, it says,"While careful planning and management of projects isundeniably important, they matter little if projects being pursuedhave no impact on bottom line, or throughput. If you choose thewrong projects its possible to make big improvements in qualityand productivity that have no impact whatever on theorganizations net profit." The Six Sigma handbook goes on to sayon page 128, "It can be shown that the TOC approach is superiorto traditional TQM approaches to project selection."Thats a pretty powerful statement, I think. I give them greatcredit for recognizing the focusing power of TOC, which whencombined with Six Sigma, can really bring you dramatic results.And again, in the handbook, TOC application people are pointingto Lean and Six Sigma for their qualities that they can bring, thatreally arent covered in Theory of Constraints.Joe: I think that one of the things about Theory of Constraintsthat people really dont realize, I mean the goal was made sofamous and everybody knows who Herbie is and they kind ofunderstand Drum-Buffer-Rope. Herbie is synonymous withmanufacturing anymore, and its kind of funny in that nobody canever name who the main character was, they all know Herbiethough. Maybe Herbie was the main character. By the way, Ithink I can name him, I think it was Alex Rogan or something, if Iremember right,John: Alex Rogo, you got it pretty close.Joe: What I think thats really interesting is where Theory ofConstraints has evolved since that time. The control point andcontrolling throughput, controlling work in process and havingthat hand on that bottleneck of what constrains you is probablythe most important part of your business. I sometimes dont Holistic Approach Theory of Constraints Copyright Business901
  10. 10. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsunderstand why, why people dont give Theory of Constraintsmaybe the credit that it deserves in recognizing that its morethan just finding the bottleneck, its about controlling yourbusiness with it. Am I way off the wall? Or I mean, youre theexperts, you tell me.John: Well the importance of the constraint and the importanceof the ability to buffer work-flow and understanding therelationship between dependent events and statistical fluctuation.How those, and Murphy striking, how that tends to get thingsscrewed up in an operational environment. All of those issues arepretty much the same whether youre looking at a manufacturingplant or a bank or insurance company or a hospital. That, I think,becomes more apparent as one goes through the chapters in thehandbook.Joe: I wonder with the Theory of Constraints, or why isnt itmore popular, lets say? I dont see it being written about inhealth care. I dont see it being, you know you see it in yournormal bottleneck situations and its always part of Lean, alwayspart of Six Sigma that you deal with Theory of Constraints, but Idont see it in other disciplines being written by itself a lot. Am Ijust not reading the right things, or...?Jim: Joe, Ive got a listing of over 125 books that have beenwritten on TOC. Some of those are books in different languages,but Ill be glad to send you a copy of that. I just updated it earliertoday, and sent it out to some people that are interested in TOC.But, I think you have a point there, TOC originally was developedas a production, planning and control technique. And maybe thegoal was too successful, in implanting that idea, and people havenot kept track of it, and thats one of the primary reasons of thehandbook.A lot of times when you talk to a person and you say, "Oh Imvery interested in theory and constraints". And their response will Holistic Approach Theory of Constraints Copyright Business901
  11. 11. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsbe, "Oh yeah, I read the goal back many years ago". And theyretotally unaware that the tool of buffer management has beenused in hospitals in England, in their medical facilities, to movehospitals that ranked 490, 494, in due date performance and leadtime, poor lead time, to number one or two in a period of sixmonths.So various pieces of the Theory of Constraints that arent toopublicized, such as buffer management, are very appropriate tothe service sector, and improvements there, in identifying cause,or eliminate the causes of the lateness. So, those are written,theres a couple of articles written, theres a book by Julie Wrightwritten that I think its called We All Fall Down, her experience inthe UK hospital system. Probably, theres maybe a half dozenreferences to the hospital environment.Probably the best place to keep track of the body of knowledge inTOC is TOCICO, the Theory of Constraints InternationalCertification Organization. They have an annual conference. Lastyear it was in Tokyo, hosted by a large number of well-knownJapanese manufacturers. So thats one place. A couple otherplaces are Realization, ProChain web site, AGIs web site. Theyeach have annual conferences, as does Constraints ManagementGroup, where their top performers have VPs or Presidents of thefirm discussing their results in detail and discussing the neweradvances in the body of knowledge. This is where I thinkacademia has really failed. Theyve not gone on and documentedthese results. Hence, you see little written in the academicresearch, and little written in the practitioner magazines aboutthese successes.John: In the area of hospitals, in our book we have one examplefor the Oxfordshire Horton Hospital in the Emergency Roomfacility. Patients processed in under four hours were at about 50percent, 50-60. In a six month horizon that went from that levelto 80, then to 91, then to 95. Thats a huge improvement. Which Holistic Approach Theory of Constraints Copyright Business901
  12. 12. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsbrings me to another point, one of the tenets of the Theory ofConstraints is that we go after ambitious targets. Were notinterested in a five percent increase. Were interested in 30, 40,and 50 percent.The results that were seeing, whether its in projectmanagement, manufacturing, supply chains, or whatever, tend tobe up in that range. They tend to happen fairly quickly. Then goon upward from there. Julie Wright, Jim mentioned her work, inThey All Fall Down, her book, and her chapter in our handbook.She cites an experience where they were able, in a particularhospital, to triple the patient throughput with only five percentincrease. Triple it, now, with only a five percent increase inresources.Joe: One of the things I always like about Theory of Constraintsis that someone didnt go in and talk about efficiencies or goingfrom two sigma to three sigma. People from Theory ofConstraints always came in and said, "Were going to reduce thisby 50 percent. Were going to reduce this by 40 percent."To me, thats a language that a typical, lets say, from amanufacturing standpoint, a typical manufacturer wants to hear.Youre giving numbers that are realistic to him, and four sigmainto five sigma isnt realistic to him.John: Well, if you look at the work that Mabin and Balderstonedid, looking at manufacturing results with Theory of Constraints,they summarized across... Jim, do you remember how manycompanies? I dont remember that in particular, but there were anumber of implementations that they looked at.The mean on-time delivery improvement went up 44 percent. Therevenue throughput mean increase was 63 percent. Thecombined financial mean increase, including ROI, was 73 percent.Lead times were cut 70 percent. Cycle times mean reduction, 65percent. And inventory level mean reductions, 49 percent. Holistic Approach Theory of Constraints Copyright Business901
  13. 13. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsAnd if you look in our book, there will be some case studyexamples that show similar numbers for particular companiesthat are often named. If you go to the world of projectmanagement, I looked across the literature I found there, lookingat the Realization. Looking at a couple of the major softwareproviders for critical chain software, Realization.com, ProChainSolutions, and then at some other individual examples that I wasable to look up.The cycle time improvement in 19 cases, the minimum was 20percent. That went up to 62 percent, with about a third of thecycle time improvement cases in a range of 50 to 60 percent.On-time delivery improvement increased from 90 to 100 percentfor 11 of 16 cases, and 80 to 89 percent for five of 16 cases.Without continuing to recite all those, but I noticed one thing thatI found kind of interesting. One of the clients for one of thecompanies, I think it was for ProChain Solutions, said that hisexperience told him that traditional project management is a popgun, and we now have a bazooka.Joe: Thats a good line.John: Thats a pretty good line, I thought. And one other thing,just in that area of results: Jim and I have a little first-handexperience with critical chain. We were asked to do and gotinvolved in... What I could call some action research with a majorsoftware development company whose name you would recognizeif I were going to mention it, which Im not, but a big, bigcompany.They had a major project, 13,000 personnel project, on theirsingle biggest application that theyre doing. They told us theywere hopelessly behind schedule. They had six months left to gountil their due date.So were entering the scene late, late in the cycle. We went inthere and said, "Look, youve got to... From what were seeing..." Holistic Approach Theory of Constraints Copyright Business901
  14. 14. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsWe did a little survey of their 30-some employees who wereworking on this particular project, got them to identify theundesirable effects they were experiencing. It became clear, aswe kind of knew before we even asked that they were drowningin multi-tasking effort.They were flooding the organization with more projects than theycould handle which increased the work in process and added tothe chaos and confusion and so on. They were also being floodedwith service requests for their developers to support that shouldhave been handled by a service request organization that theyhad.Anyway, to get to the bottom line quickly, we choked off thereleases. We told them, "Look, youve got to lay out a criticalchain that considers resources. We want you to tell youremployees that were no longer going to measure them on taskcompletions, which they were being measured on in theirperformance evaluations. That we want 50 percent estimates,that is, estimates where you have a 50-50 shot at making it,instead of padding your estimates with another 40 or 50 percentto make sure your measurements are covered.Were going to take the difference between your 50 percentestimate and your previous 90 to 100 percent estimate and weregoing to put that in a project. Were going to take half of that andput it in a project buffer, were going to implement a relay runnerapproach where we ask people on the critical chain when theyrefinished.""When are you going to be finished with your work? OK youregoing to be finished day after tomorrow." We go to the nextperson tell that person "Day after tomorrow youre going to getthis work, when it hits make sure that youve got full kitting,make sure that, and tell me if youre missing anything and whenyou get that work you dont do anything else until you have it Holistic Approach Theory of Constraints Copyright Business901
  15. 15. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsfinished." The bottom line was we brought that project in on timewith a morale improvement which we tested later with a littlesurvey that went right up through the roof that people wereecstatic and we cut the error rate, the number of defects byseventy-four percent compared to what their previous experiencehad been. I mean it just bowled them over, they couldnt believethey had made it but they did.Joe: What takes place when you have these paradigm shifts?Youre saying weve got these management methods and to makethese huge shifts you have to have a pretty significant shift in theway you do business to get improvements of 40, 50, 60 percent,dont you?John: You surely do.Jim: Yes, on this project here that John was talking about, weactually constructed a current reality tree with the undesirableeffects, clouds, future reality tree to determine the objections. Weused the prerequisite tree and developed a full-scope solutionusing the TOC thinking process tool set. The environment couldhave been almost any environment and the tool set would haveworked equally well in those environments.But using that tool set, we have developed a prettycomprehensive solution with the manager over that area andlooked at the negative impact of some of the actions and theirproblems. But youre exactly right, it is a paradigm shift in theway you think about an organization and the way you manage anorganization. Many people look at that and probably walk awaybecause their school education, their local background is a localoptimum approach where theyre looking for those six lineproblems in industry and how do I solve this six line problem andthey dont realize their solution causes problems in marketing, orsales, and human resources or employee morale so they never Holistic Approach Theory of Constraints Copyright Business901
  16. 16. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsrealize that their own actions can be causing problems in otherareas.John: If you take the shift that you make in saying, "Were notgoing to measure people to on-time task performance." Thatsounds like a form of heresy to a lot of people. I mean its, whenone does that, one overlooks the fact of human, normal humanbehavior. People are part of the system and when you look at theworld that way, you can see that, "OK, if I tell people that Imgoing to measure them to on-time task performance, and thentheyre going to pad their estimates."Already this is starting to give me trouble, and when I tell themthat Im not going to measure them to on-time task performancethen theyre willing to give me a 50 percent estimate, and then Ican take the contingency that was previously scattered throughall these individual estimates, and put it in a project buffer that Ican use to help me track and protect the project. And we alsorecognize that if someone knows that theyre being tracked andthey happen to finish a task early, in a lot of cases they wontreport it as completed because... Well, then the next time aroundmy manager will say, "Well last time you beat your estimate by30 percent. So why cant you take that much more out of thisnew estimate?"We try to get away from the tendency people have to sandbagand not report their work so the project gets the advantage ofearly completions which we help by using the relay runnerapproach to moving work through the system. But its too bad, asJim alluded to a minute ago, that we arent picking up on some ofthese things and incorporating them into our university curricula.Joe: I believe theres not a good segment on just even problemsolving and quality initiatives. The engineering field gets a littlebit of that but is there in the management structure of Holistic Approach Theory of Constraints Copyright Business901
  17. 17. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsuniversities? Youre more acclimated to academia than I am but ismanagement theory being taught, these type of things into?Jim: Not to the extent that it needs to be. There are a fewpockets or a few schools that teach TOC in depth, but not many.TOC challenges a lot of paradigms. The traditional managementparadigm is to manage everything, to get the most of allresources versus the TOC paradigm of focus. Its as important todetermine what not to do as it is to determine what to do.Traditional project management versus critical change, John wentthrough some of the differences there.If we looked at manufacturing scheduling and control we seelarge MRP and ERP systems versus in TOC we see simple drumbuffer row or simplified drum buffer row and now one chapter iseven on pull MRP systems which simplifies and reduces lead timeand inventory at the same time in planning and control systems.Theres a clash between traditional push distribution systems withreal point ELQ type formulas and then max formulas at eachlocation versus the TOC rapid replenishment pull distributionsystem. There are clashes between traditional cost accountingwith this internal cost focus and measures versus through putaccounting with this external or market focus.Services are looked at as being very different for manufacturingversus in TOC weve got a robust system, tool set, thatsapplicable to all systems, to manufacturing, service, government,not for profit, for profit, education, prisons, hospitals, individuals.The same tool set can be used to identify what to change, towhat to change and how to cost the change for any one of thesesystems. Weve got traditional problem solving versus, anddecision making versus this holistic tool set. So there are manyparadigm shifts that have to be made to bring TOC into theacademic arena. Holistic Approach Theory of Constraints Copyright Business901
  18. 18. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsI think in academia a PhD is very knowledgeable in a niche or intheir own field and what were asking them to do is to becomevery knowledgeable or knowledgeable across a large number offunctions and to understand the interactions andinterrelationships. How to identify the constraint whether it be thesales function, marketing function, engineering, manufacturing,distribution, policies and procedures.Then if youre not the constraint, how do you subordinate yourfunction to support the constraint which again directly violates dothe most you can, work as hard as you can in each individualfunction? I think in academia we need to erase the wholeblackboard and then start all over with diagramming how thevarious functions work as a system in the short and the longterm.Joe: It seems sometimes too simple. Its too easy to do whenyoure just looking at a constraint. When I talk to Theory ofConstraints people, they go to a whole different level where thetypical understanding of the Theory of Constraints is kind of downand on the first floor and you guys are on the third, fourth floorwhen youre talking about it a little bit. You know one of thethings Ill go to, when we talk about problem solving and leanproblem solving, you talk about the five whys, but the thinkingprocess that the Theory of Constraints uses is a whole differentlevel of thinking, is it not? I mean it goes much, much furtherthan you can with lets say the five Whys concept.Jim: Yes, I agree with you, but if you took the five why concept,the early use of the thinking tools and the current reality tree inparticular, both would ask why but in TOC you would validate thatthat cause really existed before you asked the second "why".Then when you ask the second Why, you would validate that thatcause existed. So I look at the five "whys" and what we call theSnowflake Effect, or Diving Down to identify a core problem asbeing very similar, except TOC is like a person that wears a belt Holistic Approach Theory of Constraints Copyright Business901
  19. 19. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsand suspenders. TOC wants to ensure that that cause reallyexists and validate that cause exists before they ask the secondor the third or the fourth why.John: We go through categories of what we call legitimatereservation, which are also documented in the book, in reviewingthe logic so that we can assure that its solid.So the picture we see of the current reality expressed in logicalcause and effect construct is really right on the money. Itaccounts for causes of all of the undesirable effects that wevebeen able to identify in the environment.When we go to the next stage, which is to determine not onlywhat to change but what to change to, and we lay out a causeand effect picture of a future reality that we want to have, we canmake sure that we see in cause and effect terms whats going tohave to happen to get us from the current set of undesirableeffects to desirable effects and to whats really the goal orobjective of the organization.The tools of Theory of Constraints all link together to take us tothat logical objective of where, what we want to get to and whatsteps are needed and then to a Pre-requisite tree and Transitiontree that lays out the plan for actually how to execute that andget you there.Its really a complete system and part of the objective of it is notonly to get the logical picture of the environment and make surewe dont get confused between symptoms and real problems,core problems, but to then also make sure that we have a picturelaid out that will facilitate communication and discussion of theenvironment.When we talk about how to get to the future that we want, thatwe can go through a process of what we call Negative BranchReservations where we look for... We listen to the "yes, buts" Holistic Approach Theory of Constraints Copyright Business901
  20. 20. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsthat people have to say about what might happen in a particularstep and identify potential problems that might sink the efforttoward improvement. So that weve anticipated those in advanceand that the plan for improvement doesnt get defeated becauseof unanticipated consequences. Those things are all considered inthe TOC thinking processes.Jim: Theres a newer tool in the TOC toolkit, the thinkingprocesses, and thats the Strategy and Tactics tree. Back in, Iguess, the 90s, maybe before that, Goldratt talked about theStrategy and Tactics tree.But more around 2000, 2002, he got into how to construct thesetrees and now theres a body of knowledge where what we do iswe look at where were at and we look at how we implement theTOC tools, the Lean, or whatever the set of tools are wereimplementing. How do we sustain that, and then how do we growto the next stage?So from the top of the tree to the bottom, when we get to thebottom, were looking at the detailed actions taken by eachperson or each function of the organization for implementation,for sustaining, for growth. These trees are very comprehensiveand really combined the Future Reality tree, Pre-Requisite tree,and Transition tree into one diagram that leads as a road map towhere you want to go. There are some generic trees forimplementing critical chain, retail, S&T tree, make-to-availability,make-to-order. I think a pay-per-click tree...John: Right. Five of them.Jim: Five of them, now, that are in the public domain. One canuse those as sort a guideline but theyve got to be knowledgeableof the other thinking tools so theyre able to modify a specific treefor their own environment and their own situation. Holistic Approach Theory of Constraints Copyright Business901
  21. 21. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsI think there are a number of contributions in the handbook thatare new and extend the body of knowledge. I think the S&T istalked about four or five chapters...from different perspectives:How to use the S&T, and how to develop a Mafia offer, how toconstruct an S&T tree. So theres a lot of new material in therethat is not in other publications yet.John: So if you were a retailer, or if you owned... Say you werea company that owned its own supply chain, including retailoutlets, lets say, and you said to yourself, "Well, its time to do astrategic plan. Were not really growing the way we should. Wereseeing too many stock outs in our stores. Weve got this problemand that problem."You can go to the S& tree, and unless you are a highly unusualorganization, you will find a level-by-level set of generic steps fora strategy that will probably fit you pretty well. You will have, asJim said, you will have to modify it, maybe tweak it here andthere.But youll not only have those steps, but youll have a definitionat each of those steps of the necessary and sufficientassumptions that justify why that step is the step that should betaken. And, my goodness, it would just simplify your approachtoward getting a strategy put together enormously.Joe: Yes, I always argue that someone should never start with ablank piece of paper.John: There you go. Were together on that one.Joe: Its tough to do that. Even business plan or marketing plansoftware, most of the reasons software is sold is for the samplemarketing plans.John: I want to jump for a minute, if I could, to just anotherlittle discussion. In the book, in chapter 27, we have a chapter on Holistic Approach Theory of Constraints Copyright Business901
  22. 22. Business901 Podcast TranscriptionImplementing Lean Marketing Systems"Theory of Constraints in Prisons" as written by Christina Cheng,and working with the prison system in Singapore.That emphasizes a couple of really neat things about Theory ofConstraints. One thing Eliyahu Goldratt has always done is toemphasize the importance of the Socratic Method, leading peopletoward finding their own solutions and then owning thosesolutions.What Christina did is, she went into the prison, just to net itquickly. They asked her to teach the conflict cloud, theevaporating cloud, to a set of prisoners who were shortly going tobe released on parole. Those people would be able to identify orstructure the conflicts that theyre facing in their own personallives and come up with solutions for those conflicts that wouldhelp them to remain employed and to remain clean and out ofprison.Now the success rate of people exiting the prison and going outon parole had been about 20 percent. About 20 percent would geta job, keep it, and so on. Christina taught them the evaporatingcloud, took them through the construction of these clouds forthemselves. And by the way, she had people who spokeMalay-Chinese and generally poor English. So shes got to workwith this diversity of languages. She had 18 hours of class timethat she could spend doing this.Its a heck of a story. Its one of the really entertaining stories inthe handbook. What she was able to do was to raise that successrate from 20 percent to 60 percent, right out of the box.They got so interested in this in the prison system, they said, "Ohgood grief, weve got to back deeper into the prison and teachmore of this kind of thing to people who are longer-termprisoners, so that they can begin to understand." Holistic Approach Theory of Constraints Copyright Business901
  23. 23. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsSo instead of having a counselor say, "Well, George, youve gotthis problem and that problem, you should think about this andlook after that," and so forth... You let the prisoner really drill inby giving them the tools to do it with and understand what theirreal problems are.The story is really just incredible because she goes throughseveral individual cases to show you the work that they did, thehomework that the prisoners did, and how it helped them.Jim: Also, theres a chapter prior to that thats on the Theory ofConstraints in Education. Kathy Suerken has had significantsuccesses around the world in numerous countries of teachingteachers how to use the cloud, the Ambitious Target tree, orPre-Requisite tree, and the Negative Branch, in changing childbehavior.These are some very significant stories and some examples ofwhere these tools were used to teach History, or teach otherconcepts. As you know, the thinking tools are based on causality.So its very easy to show the causes of a war or the causes of asituation. Then putting it in that graphic format really helpsstudents remember and understand facts much better.Theyre used to handle behavioral problems there. Theyre usedto teach. Theyre used to, as you might expect, to handleadministrative problems also. So theres just one chapter afteranother...John Ricketts has an excellent chapter on the use of the TOCtools in professional a service which is consulting. John is a PhDeminent scholar for IBM and has used many of these tools, criticalchain tools and other tools. He has a book out where he discussesthe use of TOC and professional services. This chapter advancesthat even more in the differences that might exist betweenservices and manufacturing and how he was able... IBM was able Holistic Approach Theory of Constraints Copyright Business901
  24. 24. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsto use these tools quite effectively in their consulting practice,and in helping address problems of clients.John: He does a really good job of contrasting the application ofconstraint management, and buffering and the like...ofcontrasting professional scientific and technical services withmanufacturing. So he draws or connects the bridges for you sothat you can see how he moved from the sort of understandinghe would get in say, reading the goal to what you really have todo in that kind of a services environment.Joe: Theres also a couple of guys, I think, named Cox andSchleier that wrote a chapter on Theory of Constraints forpersonal productivity, didnt they?Jim: Yes, Joe, thats interesting. John and I... I taught at theUniversity of Georgia for 20 years and introduced the thinkingtools, right after I learned them from Ellie and Bob Fox. I cameback and taught an advanced Operations course to seniors. Iusually use case studies, and I just said, "I really think thesethinking tools are good so I am going to try them out in thisclass."With about a weeks preparation I started the class and I justsaid, "Students we are going to study your personal productivityproblems". Thats what we did. I taught them how to build acurrent reality tree the old way, how to solve things with clouds,and develop a prerequisite tree.Well one young lady in there, Sheila Taormina, came to me afterthe first class and told me she didnt want to do that exercise. Ihad Sheila in other classes and Sheila was about a 3.8 gradepoint student. She was a member of about 10 organizations, andan officer of about five to 10 of them. She was an all Americanswimmer, and so on and so forth. Sheila told me, "I dont havepersonal productivity problems. Im pretty good, thank you, at Holistic Approach Theory of Constraints Copyright Business901
  25. 25. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsmanaging my time. I swim five hours a day, I maintain this andthis."I had to agree with her, she didnt have a personal productivity.But I told her, "Sheila you are going to have to do this exercise. Iwant you to learn the tools." She said, "Well I want to do it butlet me do it on my swimming." So I told her I didnt swim well.And she would have to have someone who knew swimming tocheck that part of it, but I could check her logic. The story wenton, Sheila graduated, so on and so forth, and the story is in thatchapter...John: Tell them why she wanted to use it for her swimming.Jim: Well she said she kept working harder and harder andgetting worse and worse. She was spending more time trying toimprove and make the Olympic team and she was actually notimproving at all. At this point in time, she was a senior at theUniversity of Georgia. So she is getting rather old for being goodat swimming, a world class swimmer. I think she was ranked25th in the nation or something.So anyway, she analyzed her swimming. She swam in the Alamomeet and came in second with the best time, right after she donethe trees and clouds six weeks later or so, came in second toJanet Evans. You might know that name there, a world classswimmer of that era.But anyway, Sheila graduated and went on and got a Masters.Then in 1996, March or so, I got a card from her. She was tellingme that she had achieved her life dream and made the Olympicteam as an alternate. So she had taken the next two years aftershe graduated and worked, and made the Olympic Team. Bottomline was she won the gold medal on the relays in the AtlantaOlympics and was on the front page of USA today with her teammates and Bill Clinton and Chelsea. Holistic Approach Theory of Constraints Copyright Business901
  26. 26. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsThe story went on, she got the gold medal there. She has been inthe 2000 Olympics. She switched events and went into thetriathlon, which is a couple mile swim, bicycling and running. Soshe switched events. Then in the most recent Olympics in Beijingshe was in the Pentathlon.John: Pentathlon.Jim: Thank you. Which is five events, including horse backriding, I think shooting, fencing and I am not sure what else.Anyway, its a fantastic story, and it started there in that exerciseof using the tools for personal productivity.John: She wrote the story herself, for us, and it is well told. Youcan see clearly how she applied the thinking tools to help her getwhere she wanted to go.Jim: That is only one of... I use that exercise in every class,Advanced Operations Management class, at the MBA level andthe undergraduate level from that point on until I retired. And Ihad students lose a significant amount to weight, by using thethinking tools to address their problems.Ive had them whether they were marginal students; they turnedtheir day upside down. Instead of partying they went to bed earlyand got up at four or five in the morning, studied in the morning.So they identified their problems and their own solutions. Many ofthem had significant success in addressing these problems.So hence I think instead of reading organization books. Or how toremember names or faces, or so on or so forth. The first step isto identify your own problems. Whats blocking you fromachieving the goals you want in your life then solving those toidentify win-win actions to solve that problem. And then developand detailed implementation plan with measures that let youknow that you can achieve that goal in your life or goals in yourlife. Holistic Approach Theory of Constraints Copyright Business901
  27. 27. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsBy laying out a detailed plan and executing it. So hopefully overtime we will teach these tools and catch a lot of young peopleearly on where they recognize they need to change their ways,and they can achieve goals in their lives.Joe: That seems like the passion that you have for Theory ofConstraints is personal development. Is it not?Jim: I think so. I think Goldratts major contribution to all this is,the thinking tools. And its just the practical application fromlogical to common sense. But its so uncommon with most peopletoday. They take actions, and they dont understand the fullramifications of these actions. And then they have to live throughthe consequences of these actions. And I think his tools offertremendous opportunity to change peoples lives where they canachieve their goals.John: If we go back to the chapter we were taking about earlierof Kathy Suerken on TOC and education, one thing kind ofconnected to this that impressed me, was that her observationwas that the thinking tools can really be learned. At least some ofthem can be learned by grade school children. And in her chaptertheres a picture of a conflict cloud.Thats drawn in chalk, I think its in chalk, on the side walk ingrade school in the UK. And these grade school kids come outand resolve conflicts that they have, by walking through thatsidewalk diagram of a conflict cloud, because they have beentaught how to do it. And its just kind of interesting. I think thatthese tools can be understood and used by very, very youngpeople.Joe: When you talk about the thinking process, and to me I kindof relate it to value stream mapping, and the current state andfuture state of what we are doing there. But it seems that I lookat value stream mapping, more the operational level when I seeyou describe the thinking process; it seems to be a higher level Holistic Approach Theory of Constraints Copyright Business901
  28. 28. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsabove that. More of a management, or a management theory,can you comment on that correlation?Jim: Well I think of value stream mapping as laying out thedetails of an operation, and I think if you went in there, you couldtake a value stream map, and ask why. And dive a little bit lower,even into a value stream map and ask why do we use thisprocess, or "why do we have this step?" And then try and validatethose steps in the value stream map.As I discussed earlier with the validation approach, I look at theTOC tools as strictly causality, linkages in each diagram. If I dothis, then this will happen. If I do this, then this and this willhappen. Or in order to do this, I must take this step here. So Idlook at those as being, like a set of dominoes. Where I have onedomino, that first domino and it hits then next, the next, thenext.And then as we go up, maybe it splits into three different pathswith that action and another action. I look at that as being anintelligence diagram. A causal intelligence diagram whereas I lookat value stream mapping as just portraying what it is. Theprocess as it is right now, how can I improve the process? Whatshould it look like in the future?It is more an operations tool in itself and I look at the thinkingprocess of being a much more robust set of tools. Usually thepolicies, the procedures and the measures in an organizationcause bad actions. So I think thats where the power of TOCcomes in and the thinking tools in particular.You can have a nice value stream map. A future value streammap if you have bad policies and procedures. Or measures in thatvalue stream map, its not necessarily going to show up in thevalue stream map. You need to understand the logic of theenvironment around it. Does that address your question thereJoe? Holistic Approach Theory of Constraints Copyright Business901
  29. 29. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsJoe: Yeah, I think so. I think it gets to that, because I amlooking at the fact that the thinking process and the decisiontrees is a management function. Its more of systems typethinking, function.John: Exactly. Another thing that is important about those tools,Joe, is that they are also aimed at sharpening ones intuitionabout the problems that you are looking at. For example, inlaying out a conflict diagram, an evaporating cloud. People aretaught an effective use of language for surfacing the assumptionsthat underlie the elements of the cloud.Once one sees those assumptions on each side of the conflict, itsmuch easier to think of solutions because you see what theassumptions are, that may be somewhat misguided in somecases, or at least changeable. So all the way through theapplication of these thinking tools, one will find what I like to calltriggers of creativity; just because you are making the causesand effects visible. You are making the assumptions of underlyingconflicts visible or making the shape of the conflict itself visible.Doing all those things gives you ideas on how to make changesthat are important.Jim: I would like to add to that... You mentioned it as amanagement tool; I would like to think that the lowest levelworker in an organization can learn these tools. And use themeffectively to show whats blocking then from doing the job thatsneeded. We have a chapter on day to day conflicts by OdetteCohan, where he presents the use of it at the lowest levels in anorganization.We have another chapter where we look at studying yourcustomers and identifying the problems that your industry createsfor your customer. What are the assumptions built around thoseproblems and the how can we address the customers problems Holistic Approach Theory of Constraints Copyright Business901
  30. 30. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsthat our industry creates so that the customer wants businesswith us.So the tools are really robust enough to be used in engineering.To identify new solutions to problems, and sales in marketing andidentifying new markets, distribution. Its just very robust anddetailed, in the fact that you are able to identify hiddenassumptions about the way you think about a problem. So, Ithink they can be used anywhere, and its just a better way ofthinking than what we used today. And most of our decisionmaking that either at the individual level or at the organizationlevel or say a supply chain level where you have severalorganizations working together.It is taking that system thinking that weve always talked about,and nobody knew how to do it. Weve got tools and techniquesthere and how to steps that makes that system thinking a reality.John: I think Odette Cohans chapter is a really good example.He gives good examples of how one can take the evaporatingcloud, the conflict cloud for example and apply it to conflicts thatan individual has within himself or herself. How it can apply toconflicts between two people. How it can apply to conflicts thatexist across abroad organization or policy maybe driving you inthe wrong direction. So there is that kind of versatility in thetools.Joe: I think they are so important today because products havebeen commoditized so much that the only thing that you are leftin selling is really yourself and the knowledge within thecompany. Being able to distinguish and apply the proper thingsfor your customers and understanding their problems are soimportant.I think this is a... Theory of Constraints has a great opportunityhere to maybe come to a little more forefront than it has in thepast. Holistic Approach Theory of Constraints Copyright Business901
  31. 31. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsJoe: Well Lisa Langs chapter really hits a home run on that one.Jim: I think Lisa Lang has been a speaker on your podcastbefore.Joe: She has. It was very similar to this podcast. It ran reallylong.Jim: Yeah, she is phenomenal and we have a chapter by E. FredGoad, who holds a PhD in organization psychology, ownresistance to change and the layers of resistance to change andhow to overcome those layers. So its interesting that if you arelooking at marketing and sales, you can lay out a plan to discusswith your customer and to show them the causal linkages of theproblems theyre facing.How the industry creates it and how your solution addressesthose elements. And you can listen to their responses as you goand tell what layer and the resistance to change levels youre at.Then how do I respond to that to move them to that layer. So,theres a very exciting material in there from a sales andmarketing standpoint.Theres exciting material there in the measurements area withsome really outstanding new concepts and measurements.John: Deborah Smith and Jeff Foremans chapter is nothing lessthan exciting in this discussion of measurement which is notalways the most exciting thing to talk about but its really superbwork.Joe: I think measurement is so important but everybodystruggles with them. I mean nobody wants to do them. I cantwait to get my hands on the complete copy of the book.Joe: Is there anything you would like to add in this conversationthat maybe is important that I left out or didnt ask? Holistic Approach Theory of Constraints Copyright Business901
  32. 32. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsJohn: Well, I think just a couple of things quickly. I think Dr.Gary Bartletts chapter on Theory of Constraint in MedicalPractice. He case an oral surgeon who has just done a remarkablething with his practice and has... I think done an unusual amountto integrate lean and six sigma concepts in Theory of Constraintand what he has done. He took that practice in not beingprofitable after he had paid the salaries of his staff, othersurgeons, himself and his staff to a point where it is now threeand a half million dollars a year profit.But emphasizing the customer and how to provide service levelsthat go beyond what other competitive practices could provide.Lynn Boyd and James Holt chapter dealing with the Theory ofConstraints and complex environments is just a very, verypowerful piece of work. It hits a lot of the flow of ideas that haveto take place in a big company like an aircraft manufacturer andso on were all ideas on say that have to do with a new productwhere what needs to happen in manufacturing and distributionand sales and engineering.All have to come together and ideas on how to tie this flow ofideas together in a project network to make it work better. JohnCovingtons chapter where he talks about application of a Theoryof Constraints and a church denomination that is losing athousand members a week and how to identify what theconstraint is and how to bring solutions to that situation is a heckof an interesting story.Jim: And if I look at it, I think the core elements of TOC arewhat make it different. TOC is all about focus, Goad talks about,defines in the TOC chapter and one word, focus. TOC looks atconstraints determining the system performance no matter whatthe system is. The sum of the local optima is not equal to theglobal optima. Theres always a win-win solution, always. Holistic Approach Theory of Constraints Copyright Business901
  33. 33. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsJohn: And if you havent found it, you havent looked hardenough. There is a point made that this is true.Jim: Inherent simplicity exists in reality, the world is notcomplex. One must look for this simplicity. People are good. Manypolicies, procedures and measures call him to act madly. Look forsignificant global improvement. This is what TOC is all about notmarginal improvement and then the much overlook area, TOChas two necessary conditions.Sure it is focused on making money now or in the future orachieving if it is a nonprofit. The goal now and in the future butthere are two necessary conditions that must be addressed andthat is take care of your people and take care of your customers.So you cant achieve, in the long term, more money now than inthe future unless you satisfy your customers needs better thanyour competition and you treat your worker with significantrespect. So I think those points there made TOC, or really thefoundation of TOC and how it operates.Joe: When is your book coming out then?Jim: It is supposed to be available at the TOC-ICO, Theory ofConstraints-International Certification Organization, annualconference in Las Vegas, June 19th.Joe: As much material as we covered, I hope everyone realizesit is not a 122 page book.John: No, about 1,200 pages gets pretty close to it.Joe: I want to finish it up here by saying thank you to the bothof you. I had a delightful time. This podcast is available on theBusiness901 podcast site and on our iTunes store.John: Well, its been a great pleasure for us too.Jim: Joe, weve enjoyed it. Holistic Approach Theory of Constraints Copyright Business901
  34. 34. Business901 Podcast TranscriptionImplementing Lean Marketing Systems Joseph T. Dager Lean Six Sigma Black Belt Ph: 260-438-0411 Fax: 260-818-2022 Email: jtdager@business901.com Web/Blog: http://www.business901.com Twitter: @business901 What others say: In the past 20 years, Joe and I have collaborated on many difficult issues. Joesability to combine his expertise with "out of the box" thinking isunsurpassed. He has always delivered quickly, cost effectively and withingenuity. A brilliant mind that is always a pleasure to work with." James R.Joe Dager is President of Business901, a progressive company providingdirection in areas such as Lean Marketing, Product Marketing, ProductLaunches and Re-Launches. As a Lean Six Sigma Black Belt,Business901 provides and implements marketing, project and performanceplanning methodologies in small businesses. The simplicity of a singleflexible model will create clarity for your staff and as a result betterexecution. My goal is to allow you spend your time on the need versus theplan.An example of how we may work: Business901 could start with aconsulting style utilizing an individual from your organization or a virtualassistance that is well versed in our principles. We have capabilities toplug virtually any marketing function into your process immediately. Asproficiencies develop, Business901 moves into a coach’s role supporting theprocess as needed. The goal of implementing a system is that the processeswill become a habit and not an event.Business901 Podcast Opportunity Expert Status Holistic Approach Theory of Constraints Copyright Business901

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