The Ultimate Constraint

1. Deming?claimed that 95% of all problems stem from management (and management practices).
2. Eli Goldratt?made a similar claim: “Management attention is the ultimate constraint.”
3. Steve Jobs?claimed managers say “yes” to too many things. He said, “People think focus means saying yes to the thing you've got to focus on. But that's not what it means at all. It means saying no to the hundred other good ideas that there are. You must pick carefully. I'm as proud of the things we haven't done as the things I have done. Innovation is saying no to 1,000 things.”

I am comfortable with the idea that managers and management are a big part of all company’s issues and problems. The 3 points above confirm that managers and good management are important issues.

I did and still do take issue with Eli Goldratt’s claim.

When Eli Goldratt postulated his 5 Focusing Steps[1]?he specifically said they apply to physical constraints.

Policies, measures (KPIs) and behaviours (can) all, cause an organisation to underperform. These are ‘simple’ to change – just change the faulty policy, measure, or behaviour. True, it is not so easy to make people and organisations change – at least until they see the benefit (for them). The change can happen when people see and understand the benefits and how to get them. The game is even then not yet won. Fear and inertia (think of dieting) are still active.

The second part of the fifth focusing step talks about our inertia becoming the constraint. This inertia is?not?a physical constraint, to have inertia is human behaviour. We all rely on paradigms because they simplify our lives. But this behaviour is dangerous because relying on them is also inertia.

Eli Goldratt postulated why projects seldom meet their due date, budget, and content targets. He claimed, “In projects, we have plenty of time, but we waste it.” He showed how “student syndrome”, Parkinson’s law and making resources multi-task causes much unnecessary lost time. (Goldratt assumed we waste time on projects because it was the only possible way to a major improvement. He tested his assumption and found it was correct. He then developed Critical Chain Project Management (CCPM) to fix the problem. He also expects us to improve what he started)

The lack of management attention is the same problem. Managers have plenty of capacity, but they waste it.?Too much WIP (work in process) in production and projects leads to capacity losses, long lead times, unreliable due dates, and too much inventory. What is different about top managers’ jobs?

(Questions: Do top managers mistrust their people’s ability? Are they too involved in guiding managers? Do top managers waste their and their managers’ time?)

Eli Goldratt’s second improvement cycle asks 3 different important questions. They should be used to deal with the inadequate or faulty PMBs?(Policies,?Measures and?Behaviours).

1.?????What to change??You decide what needs to be changed. It's not to eliminate Policies, Measures and Behaviours (PMBs). They were developed with good intentions and for good reasons. It is to identify what changes are necessary to improve (management attention).

2.?????To what to change??It's not enough to know what must be changed; it is just as important to design the new PMBs correctly. You want to keep what is good and replace what is no longer appropriate.

3.?????How to implement the change??Changes to PMBs usually meet resistance. Management should schedule ‘challenge’ sessions. These give people a chance to voice their concerns and to help form the new PMBs. Done well everyone (including top management) will support the changes, and new PMBs and work accordingly.

Example: A common policy is all resources are to be busy all the time. It comes from the implicitly held assumption that “a resource standing idle is a (major) waste”. The result of this policy is to overload the constraint. The constraint becomes more and more chaotic. It and the company lose capacity, and reliability, lead times get longer, and stock levels grow. Sales, profit, and profitability decline.

The new policy will ensure your business has the right low level of work in process to ensure the smooth flow of materials and work – especially at your constraint.

Management and their capacity are not the constraints. Management is often the source of constraint mismanagement and the consequential loss of capacity, capability, sales and bottom-line income. Management has plenty of capacity to focus on the truly important.?Critical for success is the constraint and the necessary guidance for non-constraints.

Non-constraints must not inadvertently damage constraint capability. Management needs to maintain their attention on the 3rd and 5th focusing step. These steps are critical for every company’s success. Management has not always mastered the execution of these steps.

A good reason to call management attention to the ultimate constraint is to draw their attention to the damage their lack of management attention causes.

My graphic, TLS (TOC, Lean, 6-Sigma) is a process that many use to get benefit from 3 of the improvement philosophies. Agile is not (yet) part of the process. It would be nice if someone can show how Agile fits. The graphic below shows how the 3 can be integrated.

So, what is the Ultimate Constraint? It is an organisation’s failure to focus on the constraint, decide how best to use it and make sure all non-constraints support the decision.?

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[1]?Eli Goldratt’s 5 Focusing Steps (somewhat modified from the original):

1. Identify the?constraint?of your (business) system.
2. Decide how to exploit your?constraint.
3. Subordinate everything else to the above decision on how to exploit the?constraint.
4. If after proper exploitation and subordination the?constraint?still exists, elevate (expand) it.
5. If, during any of the above steps the?constraint?has moved go back to step 1. But do not let your inertia become the system's constraint.