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TOC has a PR Problem

Does TOC have a problem with public relations?

Yes! Several.

"Theory of Constraints" is named quite scientifically. In science there are no facts, only theories and postulations. A theory can never be proven absolutely, no matter how many proofs are put forward. And yet it takes only a single rebuttal based on good science to refute any theory. This is both the beauty and tragedy of scientific endeavour. As Thomas Henry Huxley said in 1870, "The great tragedy of Science - the slaying of a beautiful hypothesis by an ugly fact".

And so to be scientific, TOC does not assert itself as absolute truth. It is a theory put forward and exposed in the business and scientific community for someone else to come along and offer a counter hypothesis which disproves the principles of TOC.

And yet, in over 25 years, with all the demonstrated successes of TOC implementations around the world, nobody has been able to demonstrate the "theory" is not the practical reality. Perhaps a better term would have been the "Reality of Constraints" and then more people may be inclined to listen to what it's about.

 

 

As soon as they hear the word "constraint", it is a little surprising how many people immediately jump to the assumption that they know all about the subject. They assume it is a simple de-bottlenecking concept, or linear programming, or something else they already know about. Perhaps this is because the word constraint is a part of everyday language and they know what a constraint is, hence they assume they must know what the "Theory of Constraints" is all about. 

BUT TOC is not just a manufacturing solution. It has proven applications in project management, distribution, sales and marketing and even accounting. Clearly, then, it is something far more than some simple de-bottlenecking decision to purchase another machine.

Maybe it's better to have a name which completely bamboozles the listener so they are forced to admit to themself they don't know what you are talking about. Something like "Neural Linguistic Programming" sounds good. If you hadn't studied it, would you know what it was?

 

Due to issues like this, TOC has not penetrated the mainstream business community, at least in Australia. Only about 10% or so of people have ever heard of it before and perhaps only about 5% have read "The Goal".

But do these (or should these) issues or statistics in any way diminish the value of TOC? Certainly not because the value it brings has been independently proven. Search for "Theory of Constraints", "Drum Buffer Rope" or "Critical Chain Project Management" on the internet, or download some TOC case studies below:

Downlad ViAGO references and case studies

 
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Can you answer this correctly?

Find out if your cost accounting methods are leading you to make the wrong decisions, time and again.

Beware - you may be in for a surprise!

This will challenge some of the things you believe to be "true".

 

Difference between the cost world and the throughput world

Quiz

I answered the above cost accounting question.
 

What is TOC?

TOC is a multifaceted management philosophy. It is a systematic reexamination of some of the most fundamental beliefs in business management, culminating in a new approach to address problems facing us today.

TOC is more than a set of tools or techniques although it certainly contains these. It is more fundamentally a paradigm shift which demands that we think about our problems and solutions, our goals and objectives, policies, procedures and measures, in a different way.

Operating Expense, Inventory and Throughput

In TOC, a business can be considered in terms of just three measures, T, I and OE.

  1. T, or Throughput, which is the rate at which money flows into the organisation from sales.

  2. I, or Investment (or Inventory), which is the amount of money invested or tied up in the system, including equipment and machinery, raw materials, work in process, finished goods and so on.

  3. OE, or Operating Expense, which is the amount of money that must be applied to the business to convert I into T.

Theory of Constraints (TOC) is the name given to a large body of knowledge centred on the concept that any (indeed every) system must have a constraint - a single factor that more than any other limits the ability of the system to achieve its goals.

This idea is not new, indeed it is a very old concept, well understood in the pure sciences (such as physics), where the search for basic, fundamental relationships is the very essence of the science. What is more recent (TOC development started in 1982) is the application of these principles to systems that previously defied such approaches, such as the study of human systems and businesses in particular.

TOC can be applied to determine the constraint of each business system and then modify that system to improve performance at the constraint and overall. TOC principles of cause and effect logic, as well as sufficiency and necessity logic, also allow the location of the constraint to be controlled and can buffer out the negative effects of natural system variability. But TOC is not for the faint hearted. Installing TOC management and measurement systems requires a paradigm shift in thinking from the traditional cost accounting approach.

TOC introduces significant change into an organisation but brings with it powerful tools necessary to answer the following questions: What to Change? What to Change to? How to Cause the Change?

TOC introduces a completely new way of thinking about problems and implements solutions that have a dramatic and immediate impact on the bottom line. TOC changes bring measurable benefits in days and weeks, instead of the usual months and years (if at all). Improvements come so fast because TOC works on the key leverage point in your business; the constraint. To find out more you can Google "Theory of Constraints", "Drum Buffer Rope" and "Critical Chain Project Management".

The best online resource for TOC is the one written by Kelvyn Youngman. 

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