Yesterday I wrote about the idea that organisations choosing to ignore the Theory of Constraints are doing so at their own peril, because of the amazing results this achieves, the competitive advantage that these results create, and the speed at which it helps organisations achieve these results and build this competitive advantage.
One of the most puzzling questions from this is then: If it is really as good as all the case studies and available material would indicate, then why are all businesses not busy implementing TOC as fast as they can? I guess there is not a single answer, but looking into the TOC world from the outside, I have some suggestions for what I observe as being some of the main reasons.
Theory of Constraints is just not a catchy name. When you mention it to anyone who doesn’t know about it, you have to go into a whole explanation of what the real meaning of theory is, because most people associate the word “theory” with the idea of things that “work in theory but not in practice.” Provided they are still listening, you then have to explain what a constraint is.
At the “theory” part you lose most production people, and at the “constraint” part you lose most of senior management, unless you are really good at explaining these things in an interesting way.
A “Mom and Pop” business model approach
When I first started reading and learning about TOC, I was impressed by many of the concepts, the strong logic, the coherent and integrated approach and so on. Then I started looking for someone that can help us implement it in our own environment.
Fortunately I did end up with a shortlist of companies with pretty amazing track records and businesses. But in the process of finding this shortlist I came across a horde of one and two man shops—independent consultants admittedly often doing good work, but not presenting a professional front that makes it easy for someone like me to present them to my colleagues.
Clinging tenaciously to the belief that I am normal, I believe that there must be many people like me, who see the potential benefits, understands enough to try their own hand at driving TOC into their own organisations, but would prefer to use professional help. However, if the “professional” help comes across as less professional than the internal improvement program of your own organization, then it seems wise to rather just keep trying by yourself.
Lack of an effective sales engine
I’ve worked as an insurance salesman, I’ve worked as a salesman selling high-end information and communication solutions, and I’ve worked as an account executive in some of the key accounts for a large IT firm. In all of these roles I learnt to refine the concept of selling to a fine art, and despite that, still often struggled to make the sales I needed to reach my quota. Most of the time the sales processes started with a client that is totally not interested, and then over a period of weeks, and often months, we would find an entry point, begin to work our way into the organization until eventually we have the chance to present to the decision makers – and then we might make a sale. We invested huge hours, travel costs and marketing material into the sales process. With all that even just getting a 10% conversion rate from first call to closing a deal was generally considered pretty good.
Compared to TOC, what we were selling was offering very little real value to these customers.
Most of the TOC consultancies I’ve approached over the past few months seemed almost totally uninterested in even trying to sell. I can only conclude that they have so much business that they only can afford to focus on companies that literally invite them in to come and do work. Even when receiving interested calls and invitations to present to us, the general response has been very low key. Some have been supportive of my efforts and helping to guide me. But my impression in general has been that the TOC community is not big on selling. Compare this with the sales efforts of most business consultancies out there, and combine this with the fact that the name makes it difficult for an internal champion to sell it, and the generally low level of awareness – and then it makes sense that its penetration into the market would be quite slow.
This is also linked to the one and two-person business models. When you are working by yourself or with one partner it is very difficult to sacrifice the hours and make the investment needed to bring in big sales deals. However, if you build a business with some bulk, then you can afford to invest in a professional sales engine. Many TOC implementers clearly miss the bulk to build this capability.
Lack of general awareness
Driven to a certain extent by the above factors, the next items can all be roughly grouped under just a general lack of general awareness. I think about 90% of all managers at least know about Lean, even if they have never actually done it, or know what it is about. Six Sigma, TQM, Quality Circles and other similar methodologies are also generally well known.
But ask ten managers about Theory of Constraints, and one or two might actually know about it, some might claim to know something about it, or here and there someone might mention that they’ve read “The Goal,” (one of the first works on TOC every published – which contains an overview of some of the most basic concepts of TOC in a novel format.)
This lack of awareness is driven by several factors:
TOC implementers often work “under cover” of another name, like Lean
Clearly I am not the only one somewhat frustrated by the name. I have on more than one occasion heard and read about TOC practitioners who said outright that they don’t tell their clients that they are doing TOC, but that they are doing Lean.
The result of this is that those customers think they had a “normal” Lean implementation done, and if it gets written up as a case study, or an article is done about it, or they speak about their peers at industry conferences etc. then Lean “gets the credit” when in fact, it was a TOC implementation.
TOC works really well with especially Lean, Six Sigma, and Agile project management, but from what I’ve been able to see, the only company that has really effectively combined these approaches into a coherent and formalized methodology is Pinnacle Strategies. They then implement under the name of ViewPoint™ and RABIT™, so again TOC is not seen as the key that unlocks the results. I’m not saying it’s bad or wrong of them to do so. Just pointing out that this might be part of the reason why TOC is not well-known, and not recognized as widely as it could be, for the results that it delivers. In some of the academic research I’ve read the impact of both Lean and Six Sigma implementations were significantly improved after companies that had been using these methods before, started implementing TOC and using it as the leading framework. The results of Pinnacle underscores this research further.
Lack of academic “sexiness”
Academic journals love complex things with mathematical calculations. Most of the traditional operations management methods lend themselves well to this.
TOC, despite sounding rather academic in name, is actually quite unattractive for academic research, because once you begin to grasp what it’s about, it’s all “common sense.” It also exposes how much of all that academically attractive research topics are not common sense at all, but make no sense when they are clearly thought about.
TOC works in practice, and it’s based on a very strong platform of logic.
The consequence is that not that much research is done about TOC, it is not taught that much in universities, and so it’s not as commonly known as many of the other methods.
I studied for almost ten years continually (part time), to get a degree, and then a masters degree—the former in management, and the latter in managing and leading innovation and change. Despite the fact that TOC is the most comprehensive single set of management disciplines, and despite the fact that it offers probably the most effective change model, methods, and tools, it was not mentioned once in any of the text books or study material that I can remember. If it was mentioned, it was done in a relatively low key or passing way. Most of the other methods and their basic workings I remember from these studies. TOC I effectively only discovered after I had submitted my Masters Thesis and had time to start reading and writing about “normal” stuff again.
Lack of any significant large consultancies doing it
I mentioned the sales efforts of most other business consultancies. Most of the big name consultancies have highly sophisticated sales engines. They have to, because when you look at what you pay for their services, and how much real bottom line improvement you get from it, then clearly you need a really slick sales process to convince the decision makers that they should spend their investors’ money on these expensive services.
Most of these consultancies do not sell TOC. At best, they might sell some methodology that is similar to, or contains TOC principles, under some other name or model that they have trademarked. Most business consultancies also generally try to go for business that will keep them active in an account for as long as possible. That is, after all, the easiest way to get maximum value for the huge sales investment you made up front. TOC practitioners generally try to move the client to being able to independently continue on a path of rapid continuous improvement as quickly as possible, so that they can get out of there.
Furthermore, many business consultancies work on a model of getting highly qualified graduates – typically MBAs or equivalent, train them in certain specific methodologies that they then modify very slightly to suit specific customers’ needs. TOC consultants, on the other hand, are generally much older, typically with many years of industry experience in companies that actually make things, and with a thorough understanding of the concepts on which TOC is built. When they move into a client, they combine their experience with their understanding of the concepts, and instead of implementing a ready made approach, they adjust the application of the concepts to the specific situation.
This lack of suitability for the big name consultancies means that TOC is not getting the exposure created by the massive marketing budgets of these consultancies. It also means that most of the time when a business is looking for help, the TOC consultancies are not the top of mind names of who to call.
It is too good
The last item is a bit of a counter-intuitive one, but from the case studies I’ve seen, this actually can have all sorts unexpected negative consequences. It is just too good.
If things suddenly get better – what does that say about me?
In some cases TOC is resisted out of fear that if someone from the outside suddenly comes in and improves things within a few weeks or months, then it would make the current team responsible for that part of the business look incompetent. After all, if it is so easy to fix it, why haven’t you figure it out yourselves long ago?
The truth is that TOC seems to be a bit like riding a bicycle. I recently taught my children to ride bike. I spent a lot of time running and helping them balance, reminding them to look straight ahead, reminding them to look at where they are going, and not look at their pedals etc. They could have done it by themselves, but that would have been a lot more painful, and taken a longer time.
Similarly, TOC is common sense enough that you can try and implement it yourself, and you will probably get it right, but it could be done so much quicker with experienced help – and you can save yourself a lot of pain.
The improvements get punished
One of the most difficult things about TOC if implemented by someone somewhere in the middle layers of an organization, is to get the overall systems improvements. TOC can work in one department – and it often does, resulting in quick release of spare capacity.
With the rest of the organization then still stuck in a cost-world, instead of throughput-world thinking, that spare capacity is quickly recognized as waste, and then layoffs occur. The team that was an example of what could have been possible for the whole organization then becomes an example of the fact that real improvement is punished, not rewarded.
I’ve often heard people say that “if it sounds too good to be true, then it probably is.”
There is a pervasive limitation in each of our beliefs regarding what is possible. I don’t claim that “anything is possible,” but most definitely we have seen enough times in history that things that were once deemed impossible, are sooner or later proven possible by people with enough faith to keep trying, and with the right strategies to make it happen.
I think in many cases people read or hear about TOC implementations, and then they just think that it sounds too good to be true. The fact that a lot of TOC literature is written in novel form possibly further exasperates this impression.
This then becomes a cycle. The same question with which I started this article, is then asked. If TOC is really as good as it claims to be, then why isn’t everyone doing it, why haven’t I heard about it before, and why are there not more, and more professional looking outfits out there, implementing it. If it really works, why are universities not teaching it more, and why are the big name consultancies not selling it?
You may have some more ideas on these. But based on my own experience and what I’ve read of other people’s experiences, these seem to be some of the main contributors. It would behoove the TOC community to build a strategy and tactic tree to systematically overcome and remove these constraints! In the meanwhile, maybe some of these reasons can help you explain to others in your organization why it might be that they have not heard of this concept that you are trying to convince them to pay attention to.