In 1984, Eliyahu M. Goldratt introduced the concept of the “theory of constraints” in his book titled, “The Goal.” His ideas form a basis for continuous improvement and change management. He also applied them in the 1990’s to project management “critical chain” approaches.
His theory stipulates that all manageable systems’ are limited by a small number of constraints and, that by focusing on and overcoming those constraints, the system can continually be optimized for increased performance.
Goldratt views organizations as fundamentally composed of three items:
Throughput: The rate at which the system creates money
Inventory: All the money invested for things to sell
Operational Expense: All the money spent to turn inventory into throughput
In his theory, Goldratt specifies a five step process to manage constraints within an organization:
The Five Steps of the Theory of Constraints
- Identify the System Constraint – Find the part of a system that constitutes its weakest link or biggest impediment.
- Decide How to Exploit the Constraint – Goldratt instructs us to see the constraining element as an opportunity and to address its limitation with the least amount of effort and expense.
- Subordinate Everything Else – Examine all “non-constrained” elements and make adjustments to enable the constraint to operate at maximum effectiveness. These are incremental steps. Once this has been done, the overall system is evaluated to determine if the constraint has shifted to another component. If the constraint has been eliminated, we jump to step five.
- Elevate the Constraint – “Elevating” the constraint refers to taking whatever action is necessary to eliminate the constraint. This is a wholesale change and is only considered if steps two and three have not been successful.
- Return to Step One, – Beware of “Inertia,” or complacency about continuous improvement efforts.
If there ever were a constraint on our way of working, covid19 surely is one now. I am encouraged to see the many incremental ways peers are adapting to overcome constraints imposed by covid19. Also, in many organizations we all have already seen the constraint of co-location be elevated and eliminated thanks to advances in technology of the past few years.
Now more than ever, I encourage everyone to take Goldratt’s advice and to see obstacles as opportunities to be exploited. His principles of the theory of constraints not only have been leveraged by subsequent approaches such as critical path, six sigma and lean manufacturing, they are founded on empirical principles as old as Rome. It was Marcus Aurelius that said, “The impediment to action advances action. What stands in the way becomes the way.”
Consider the impediments thrown in our way by covid19 are less of a constraint and perhaps more as a set of a milestone markers showing us the road to opportunities. Keep a good thought and stay well!