Book Recomendation "Go For No"

I've just finished reading this book called "Go For No" by Richard Fenton and Andrea Wlatz. I thought it would be an interesting investment to go over some sales 101 and improve my career opportunities. Turns out it is a business novel that is focused on selling skill, but not limited to it. The thing is, as soon as I finished this book (and it is extremely short, took a couple of hours), I thought to my self - "well, here's something I can't connect to TOC, I'll just add this to my list of recommended business books as a good read". Sure enough, I then immediately realized I was totally wrong.

I've read Dr. Goldratt's "The Choice" (if you didn't read it yet - do, I think it's the best business management book I've read) about a year ago. It is a book that needs more than one reading, at least I needed. Each time I re-read it I gain more value from it. This is not your usual Goldratt business novel. This time there is no mercy, nothing is easy. The concepts aren't easy to grasp and some of them are definitely not easy to implement. The rewards, though, are plentiful.

One of the concepts I struggled most with, and still do, is the concept of experiments. Dr. Goldratt's outlook on life was that of an experimenter. When you set out on a new project and start building prototypes or start training, you do not expect things to work out perfectly from the get go. At least, you should not. Just like learning to ride the bike or any other skill you picked up along the way - learning has a curve and sometimes it means falling or stumbling. So, very much like a scientist or an engineer, you should view it as an experiment, understand what needs to be fixed or changed and try again. The difference between everyday and the lab is that in the lab we regularly expect things to fall short. We are actually running the experiment just for this reason - to figure out what is it that caused the results to fall short in order to change it. In everyday we expect things to turn out right in the first try, so we don't brace ourselves and take a hit.

Well, I can certainly talk the talk. But just between us friends - I do not walk the walk. I do not view my actions as experiments, I expect perfect results right away, and I get crushed when the results don't measure up. I did try to shift my mindset, but I guess I was just going about it the wrong way. I was committing a grave TOC faux-pas and treating the UDE highlighted by "The Choice" instead of diving in to the root cause.

This is where I see "Go For No" helping. The book uses the business novel format, using a very lame plot line, though the story telling skill is nice. Truth be told, I don't think it outlined any new concept, I've heard it all before. It did, however, take one step further and on top of the well known "slogans" there is a suggested path to making it all happen. So, from the self help point of view - it may have its imperfections but I find it to be a great place to start both for the process of getting to the root cause (the direction set in the book is towards the fear of failure) and for the process of improving my resilience and looking at life from the experimental view point.

A URO for Job Seekers?

If you find you need help finding a job, then maybe it's time to look at things differently. 

This TED (or TED-like) presentation shows the process one young guy went through. Job hunting as a college graduate looking for some decent employment in the 2008 economy was not easy. Hunting jobs was not easy for anyone at that time. The way he dealt with the situation was innovative and it led him to create, essentially, an URO (UnRefusable Offer) type of offer to present to employers he wanted to work with. Although he probably did not look at the situation through his customers' (the hiring organizations) eyes, he did realize how his offer greatly reduces their risk. Best of all - it worked.

Past thoughts about hiring

Seeing The World Through Another's Eyes

TOC promises a lot of benefits to those who embrace it, be they individuals or organizations. Yet those promises can materialize only if change occurs. And we all know change is hard. We've seen and remember that people don't resist change just because it is change. If the change is right for them they embrace it. Yet, the fact still remains that changing is hard and considering 'no man is an island' (John Donne), this change is most likely going to require the cooperation of others. To get this cooperation 'they' will need to see how this change fits them, and it is 'our' job to show them, as this is 'our' change. Only after we have proven that this change truly fits, will there be a chance of 'them' taking ownership.

In order to get others to buy in to the change, clearly we need to see things from their point of view. We must look at the current reality and the proposed reality through their eyes. Understand what constitutes a valuable pot of gold for them not for me (or us). Understand what are their risks, not ours.  Find their mermaid and crocodile and understand the impact these have on them.  Not an easy thing to do. No sir.

Now, I know it is not easy to see the move to TOC through your team members eyes. These are people you know, people who have many similarities to you, people who communicate with you. So, if that's hard, how hard will it be to see things through your customer(s) eyes? Horrible, isn't it? Horrible, but essential if you want to develop an Un Refuse-able Offer (URO), if you want to create your Decisive Competitive Edge (DCE), even if you just want to improve sales.

Well, I'll admit it is not easy in any way, but I will also remind you that that's what the TP tools are for and that to make it a bit easier you can always start by deliberately analyzing your view point and then, once you've gotten that out of the way, you can concentrate on the more important 'THEM'.

Anyways , a few years ago Best Buy put out a campaign just before Christmas that, for me, epitomizes seeing the world through another's eyes. It seems clear to me that the ad agency behind this campaign truly understood Best Buy's customers and the people they buy gifts for. I hope you find this as inspirational as I do.

2012 - Which Conference to Attend?

As you know, I have just returned from Kiev after attending the TOCICO 2011 European Conference. I had a great time there. This being my first TOC conference, I learnt a lot from both the professorial speakers and the local case studies. I also made some great connections. I even got lucky and won a prize in the lottery they held at the reception. In "The Choice" luck is defined as preparation meet opportunity - how lucky would I have been spending the weekend with the family as always?

During the conference the subject of the 2012 TOCICO International Conference came up. Well, I had pledged myself to go, but that was before I knew there was a European conference. Now, of course I still want to attend and I do realize that both my leaning and my networking will be significant. "Look at it as an investment" I was told. The issue I have with this investment is the risk. The risk we take when making any investment is the risk of that investment becoming a down right expense. That trip to Kiev was an expense, one I could allow myself. I took on this expense in hopes it turns out being an investment and I sure am trying to make that happen. Yet I am not currently using TOC to create my personal income, so it was out of pocket money for 2011 and, for all I know, will be out of pocket money that is non refundable and non deductible in any way in 2012 as well. I've done my math, going to Chicago is going to cost me at least $1,000 more than going to Kiev again, simply because Kiev is so much closer than Chicago. That's why I view it as a greater risk.

What will I end up doing? only time can tell as there is still plenty of time to change the facts behind the decision ... So I'm hoping for another stroke of "luck".

What's so bad with a flow line?

I've got some more to write about the time I spent in Kiev, but it is so amazing how much 3.5 days away can disrupt the flow of life - I am still trying to get on top of things. So until I settle down, I took a couple of minutes to dig this advertisement up in YouTube (no link, you's all know where it's at). I like looking over advertisements since you can find great examples for different things and somebody else payed to get them done at high quality...

Here is a lovely ad from Visa, that manages to explain why the flow line can't handle variation. This is why Henry Ford said his famous "They can have a car in any color they want as long as it is a black Ford Model T" (I may have re-phrased the original), this was not a personal idiosyncrasy, but rather a basic fact of life that the factory he had built to be so efficient as to allow a car for every worker was based on a flow line and could not support any variety greater than 1.

BTW, there is another instance of this clip on YouTube claiming it demonstrated TOC manufacturing. Of course it does not, since TOC (as explained by Dr. Goldratt in "Standing on the Shoulders of Giants") will only advocate a flow line where it can fit, and the way the process is set up in the clip, it can't since not all customers can be served without compromising something (the process or customer satisfaction). Now in this artificial example only a very small change is needed to fix the issue. What would you change here?




Edited to add:
I've been going through my old posts and found this one about the train that never stops. Can you see a difference between the two systems?

Will you allow me a little brag?

Carol Ptak really likes my blog. OMG! This is such a compliment to me, after all she co-authored "Necessary but not Sufficient" and she is enjoying reading ME?
Oh, the fulfillment. Oh, the meaningfulness (is this a legit word?). Oh, the utter horror of knowing I have such a standard to live up to. Nah, just kidding. I'm trying to be very natural in my writing and I totally enjoy doing it.
It is funny, though, we had a lecture about living a meaningful life, a subject Dr. Goldratt and his daughter, Efrat, covered in "The Choice". It was delivered by Christoph Lenhartz, who connected the process of clear thinking to the work of Viktor Frankl, the "father" of "Logotherapy". We were told there are three ways to create meaning in our lives - by what we create (giving to the world), by encountering people (getting from the world) and by our attitude towards unavoidable suffering. Well, I feel I just created meaning in both the first and second ways - through my writing and my (unbelievably fun) encounter with Mz. Ptak.

How We Communicate is Important

When  was in Kiev (yes, I know you know I went to the conference, but I WAS in Kiev when this happened) I kept thinking of you, the readers of my blog and how I will post this and post that. One thing I thought about was this advertisement clip. The post was clear to me, the subject, the connection to Theory of Constraints, everything. But by the time I got around to digging it up I could not remember what got me going in the first place. It still feels right, though.

I find this clip has a very powerful message about communication and conflict situations. I suggest you watch it first with the audio OFF! Now before you run it again with the audio on, let me tell you these two actresses are doing a great job here. Of course there is a catch, but I won't tell you what it is, turn on the sound and hear for yourself.

{BTW, I noticed a lot of readers view this blog through a translating site, so if English is not for your ears, I've added a transcript below for the translating tool, as the text is relevant}

Here's what I see here, when we find ourselves conflicting with others we many times get into a "fight" mode. Think back about arguments and fights you've had over the years. As soon as the disagreement starts we become entrenched in our own corner, defending our needs or wants or point of view with all our might. This is greatly intensified if, coming into the 'discussion', we predict the other side will not react as planned. We are armed and ready and so we are ready to misinterpret any of her reactions as a declaration of war. Now, as soon as we go into "fight" mode we turn off "communication" mode and thus we stop listening to others and start listening only to our inner voice. We hear only those things that can serve as "ammunition" in the next "round". Do you remember this Magritte painting?

Well, can you agree that an argument is not communication, then?

As stated here, the Theory of Constraints requires change and it requires cooperation from others. To get others to cooperate with the change offered communication must be used to get buy in and commitment. You can't argue your way into convincing them that you understand and that you have a valuable offer.

The III European TOCICO Conference

I just returned tonight from the conference. My head is still spinning from all the learning and insights I got. It was a very special experience for me and it will probably take me some time to completely process it.
Here are some quick "take away"s I noted down throughout the days:

• People have the means to live but not a meaning to live for - we are no longer fighting to survive, we are looking for a meaning
• We each create the meaning for ourselves, so it is our duty not to interfere or hinder or create obstacles to the ability of others to create their meaning (a tad more on meaning can be found here)
• Success (or failure) do not come from the uniqueness of the product but for the uniqueness of the product
• "Where there is a tail - there is a dog" (attributed to Eli Goldratt) this means that when all you see is a "tail" - a handful of clients with a special need there is a "dog" you don't see - a real market potential for a new offer
• Projects fail because time estimates become time commitments
• Analyze success (better than expected results), not just failure (below expectation results), it holds opportunities you can capitalize on, but only if you can understand them
• TOC implementation requires a paradigm shift, compromising drastically increases the possibility of failure of the implementation
• Win Win offers do not sell themselves, especially when the environment is saturated with suspicion and mistrust
• The conflicts of my clients are my conflicts
• The reason to really learn a subject matter is for improving it
• The bigger the base - the bigger the jump

Let me know if you'd like me to elaborate on any of these, or if there is any particular detail you'd like to know about the conference.

You Need a Conflict to Evaporate a Cloud

Earlier today, for some reason, I remembered my first (and last, as of today) try to get my boys (Then 9 and 6) to use the EC tool. Even tough we managed to reach a solution it was a total failure as the solution worked just once, and probably because I made it work. Today as this experience popped into my mind I realized what went wrong.

Here is the story, in short: Once a week, early in the morning, the boys get a magazine in the mail box. Every week they would rush to get it and then start quibbling right away over who gets to read it first, while getting ready for school and on the drive there. So on the week I was at Goldratt House doing the "TOC for the Ever Flourishing Organization" workshop, I decided to use the tools and help them solve this conflict. I sat them down, listened to each and tried to write the cloud. We came out with something lame. The wants were clear - each wanted to be first. The needs they stated were, at least to me, not relevant and somewhat foolish. The real issue was the common goal, I had to force one on them - this should have been a huge blinking warning sign for me, but I was a Mama with a mission, I ignored.

Well, thinking it over I realized that I was trying to draw a cloud where there was no conflict. They had no problem with the situation, perversely enough (in my eyes, totally natural by any other point of view) they wanted those quarrels to go on. The problem was, of course, mine and the conflict was, sure enough, between me, wanting peace and quite as I drive them to school and them, wanting to keep up the good fun of having the other blow up.
Looking at the situation from this angle the first thing to pop up is the common goal (easy after reading Lisa Scheinkopf's example about her daughters). It was "make sure Mom doesn't lose her temper". The wants I already know and there is really no point in trying to figure out the needs - they are no longer fighting over this....

Theory of Constraints with a Personal Touch

I first came across the name Chesapeake in Lisa Scheinkopf's book "Thinking for a Change". Well, I went looking for them on the web and I really liked their Newsletter and was very impressed with how the personal and professional come together in it.
Seems worth following.

Tool update - Gliffy.com

Just wanted to share that I'm working on my first TP project and I came across this web site that offers a Visio-like, web based, tool. All I had to do was register and start working. The tool is easy to use, for some reason I find it a bit less frustrating than Visio and, graphically speaking, the results are great.
The free account lets you hold up to 5 public diagrams on the server. So if you need more diagrams or privacy you'll have to pay a monthly fee and upgrade. I'm still in my 30 days trial so I can define documents as private. Another great feature is the ability to collaborate with others as you build your diagram. The site sends them a link to connect and they can edit the document as well.
There are no TOC specific abilities, of course, but if you are not ready to commit or know you'll just need a tree here and there it seems like a great tool. Here's an example of how it looks:

Of course I could have taken on  Flying Logic's 30 days trial (I reported on the TP training in their tutorial here) but I don't feel ready for that commitment. At the end of that trial period I'll have to make up my mind - pay or leave and I am not expecting enough TP work in the coming weeks to support that decision, so a TP supporting tool will just have to wait and I'll just have to work a bit more. If you decide to purchase  check it out in Amazon.

What's this got to do with TOC?

Well, apart from the fact this costume is real cool and kinda freaky, I think it shows us the way we should be thinking when taking on the six questions of new technology (well, at least 1-5):


Question no. 1:  What is the Power of the Technology?

Question no. 2:  What current limitation or barrier does the new technology (or product) eliminate or
vastly reduce?

Question no. 3:  What usage rules, patterns and behaviors exist today that consider the limitation?


Question no 4:  What rules, patterns and behaviors need to be changed to get the benefits of the new
technology?

Question no 5 – later version:  What is the application of the new technology that will enable the
above change without causing resistance?

Question no 6:  How to build, capitalize and sustain the business?
(I copied the questions from Eli Schragenheim's artice "Using the Six Questions by Dr. Goldratt on Riddle no. 3")

Should I elaborate?

Happy Halloween and enjoy the treats

Shop floor insights - freinds and foes

TOC for retail is based on the statistical characteristics of forecasting. Specifically the fact that the more general the forecast - the better fit you will get between results and reality. The other side of this coin is, of course, that the more specific the forecast - the worse fit you'll get. Therefore TOC calls for holding inventory centralized and moving it closer to the end costumer as late as possible.

Pushing the merchendise into the final storage rooms earlier creates local shortages and surpluses. These increase the workload for the sales staff, of course. Since they can never know what is available and what is not, so they are always checking. Another very significant impact this has is the increase of the customer's percieved risk. Since you can't know ahead of time, even when you know for sure the SKU is part of the store's stock, if it will be available in that store at that moment and if they will have the size and color wanted.

As I described in earlier posts, the chain I worked for pushed the inventory forward as soon as possible. I am sure this seems logical to them, after all - if the item is not in the store it can't be sold, so that seems like the best place to store you inventory, no?
The stores also had access, through the central database, to the tracked inventory of all other stores in the chain.  This data is used to reduce lost sales by cross shipping from oher branches. There were always calls from one branch to the next requsting the relevant SKU (though we were always describing, not using the codes) and issueing a cross shipping. I don't think there was a morning we did not have packages of cross shipments coming in AND going out.
A couple of things I noticed. First off - we never checked the warehouse inventory. This makes total sense in retrospect, since the warehouse was automatically replacing any shortages we had if there was stock. So, if the warehouse had it, we knew we'd get it. Even surpluses were rarely sent of to the warehouse. Everything was worked out between the stores. Second - cooperation between shops was choppy at best. Finding the garment you need to get the sale was always a good thing, but sending off a garment wasn't such a hit. We were directed to limit the outgoing shipments to those garments we had enough stock off and the ones that were not selling well. When a branch "overdid it" the manager would stop answering their calls and direct us to do the same. Then, if one of us inadvertedly did answer, the manager of the other store would give that poor bastard such a talk to.....
From my point of view, as a simple sales clerck, this was a no win situation. If I help out the other store - my manager gets mad at me, if I don't help them I have the phone going on all the time and at the end they manage to get a hold of us and they are mad at me.
Taking the owners point of view this whole situation is not in their best interest, either. Don't you think?

Shop floor insights – winners and losers

One of the pillars of TOC is the "win-win" concept, which states that for every conflict a solution in which nobody loses is feasible (Please see the comment I got on this from Avraham Mordoch below). This stems from the very basic assumption or axiom that win-lose situations can't exist in real life. Compromises can exist only when the compromise is acceptable for the compromiser and in most cases both sides need to compromise to make the situation acceptable. When a compromise can't be achieved there are only two options: either everybody wins or everybody loses. No other option exists.

This axiom should be taken into consideration when creating any kind of incentive pay scheme. If your scheme is based on "one man's gain is another man's pain" you are setting yourself up for disharmony and loss.

So what happens when people get paid a commission based on their sales? As far as I could see we got less service to customers as it is considered bad manners to step into another worker's sale and we got quarrels when such step in accidentally happened. Sometimes even heated quarrels. Between people who have to work together day in and day out. When I asked about this I was told that when we compete against each other (the data was easily reviewed at all times) we become more motivated. If we see the other sales clerk has more sales, we'll push harder, if we see the other store has more sales – we'll push harder. But, as far as my logic goes – people buy what they want. Sales clerks have an impact, sure, but it is limited. If someone has lit a fire under me, the natural reaction will either be to push hard, which will turn off the buyers, or clam up, which will reduce service to the buyers.

I have to say that I find I get the best service at restaurants that use a tipping pool – all tips go into the pool and are then split between the entire shift staff. This means all the service staff has a vested interest in my pleasure and cooperation is beneficial for all. I am sure that the team members know who is free riding on them and quickly straighten such abusers. When tips are personal, service can still be great, but it is at risk.
My suggestion to that retail chain - pay comission based on store performance, then you'll have a team working together.

Shop floor insights – goals and incentives

Here is one subject on which I can't really recall much TOC specific wisdom. Dr. Goldratt did concur with the common saying "tell me how you'll measure me and I'll tell you how I'll act". This supports his claim that people are predictable. The other related content is this research summary clip that talks about the limited power of financial incentives. But they were looking at the impact of offering a too high incentive. I've found out how I react to a too low incentive. It killed my drive.

Let me give you the background. While shops may mark up their products 100% or more, most of this mark up is needed to cover fixed costs of operating stores in good locations, holding on to stock and paying for people to sell this stock. Shop operation is quite work intensive and since rent on good locations is high and inventory spending is high (when you buy stock for the entire season ahead of time) and both are relatively inflexible, it seems there is no choice but to limit workforce costs. Hence hourly pay at the shop floor is insultingly low. This is not singular to the chain I worked for, the pay I was given was pretty much the standard pay in this kind of job in Israel.

On top of that, to offer some incentive, you get paid 1% commision on all your sales as well as bonuses if you reach certain sale volumes.  Sounds good, doesn't it? Well, only until you do the math. There was no way the bonus would amount to anything substantial; the shop just did not have that kind of potential. So that went out of the window, at least for me.

The other thing that kept killing my motivation is the habit of the managers to set personal sales goals. It was a bad day, I had a couple of hundred NIS in sales and 2 hours to go when the manager comes in and hands me a piece of paper with my goal for the shift. The goal was 2,000 NIS. There were no customers in sight. Shocked I turned to her and she just said "you'll have to try harder and make it happen". OK, it was not her fault, she was stuck in the same messed up system as we were and she was also misled by her managers to act like that, taught that goals create motivation. Well, I guess my TOC understanding miss-served me there because it was clear to me that people buy what they want. Sales clerks have an impact, sure, but it is limited. I also thought no effort in the world can create a sale when there are no customers in the shop. I found out I was wrong when the manager tried to make me buy something to improve the registry.

Is that really what management wanted?

Great Theory of Constraints resource - YouTube

I'm interrupting my shop floor series to share with you another grate resource - the TOCexpert channel on YouTube.

Hope you enjoy

Shop floor insights - daily replenishment

When I first encountered the TOC logistic and supply chain management solution I got the impression that the daily replenishment of stock with what was sold, is the driving force of this solution. The solution is based on the idea that the sales outlet should hold minimal stock on hand - just enough to allow you to sell to any patron who may wish to buy the item + enough to support the display.

For the shop I worked in (some background and a disclaimer - I was a sales clerk, this was not a TOC project) the second part was almost negligible, we sold all garments displayed in the shop which were not on the manikins, of which we had only 3. The first part, however, is quite tricky as we have no idea how many patrons may wish to buy a certain item on a certain day. This is why the forecasts aren't good, remember? we had items of which we sold 1 unit, or maybe even nothing at all for weeks and then one day we'd sell 3 or 4. The TOC replenishment solution answers that with a rule of the thumb. You start high, with enough stock to equal 14-20 days of average sales. Then you adjust as you go by tracking end-of-day inventory using 3 zones. Red zone is the bottom third of your target. If for a few days you continually end up having less than one third of your original target then this is a fast runner and the target has to go up. Green zone is the top third, pointing out that this is a slow runner, the target is too high and has to go down. Yellow zone is in between and where we'd like to be.

Well, the store had daily replenishment. Israel is a tiny place, everything is within a few hours drive, there is no sense in replenishing less frequently. The store was also supposed to be replenished according to the last day's sales, with four o'clock as the cutoff time. There was even a general target level of 2-3 units per SKU (that would be model - color - size) at each shop.

Didn't work. As I reported earlier we had surpluses and we had shortages.

The most annoying sensation for me was, after finding myself telling 3-4 different customers that we have run out of the blue dress in most sizes, but was have the black one in all of them and have the customer explain the blue is what she wants and thank you very much, good bye. After all that, the next day we get 3 more of the black dress in a variety of sizes. So the shortage stays and the surplus grows. Now I'm not trashing on the warehouse, they do the best they can. They don't have what we need so, trying to be helpful, they send "the next best thing", something similar, something close enough. But it isn't. 

Sometimes it just became macabre. The day after the new manager finished cleaning up the back room and sending some of the surpluses to another branch (took her 3 days), we got at least one of those surplus models again in all colors and all sizes. We were really low on it.....

My point of view now is that daily replenishment is a great way for minimizing inventory, but you can implement TOC replenishment without it, it is not the most important thing. As long as your central stock is out of whack with the market, nothing's going to help in the long run, this should be the most important factor of your supply chain analytics and your supply chain risk analysis. This is felt much more profoundly in a small country like Israel, where there is simply not enough clout for the "big numbers" rule (that's the statistics rule that shows that if you have a big enough sample everything ends up looking like a normal distribution) to take effect.

Insights from the shop floor

I spent the month of June working as a sales clerk for a local fashion retailer. Not a very big one, but still respectable enough. During that time no one in the chain was interested in what I know about TOC and the chain was not doing any kind of TOC project. It was an entry level job and I was judged only by my ability to ring up the register, and using that parameter I was no star. I'm OK with that, not everyone has to be great in everything and a smart employer will get the best from each employee, even if it means shifting the person around a bit.
Anyway, I found myself working in one of the bigger stores in the chain, one considered a "flagship" store. Yet we sailed through some very rough waters during that short month, with me joining the ranks after most of the sales force quit and the store manager, who turned out to be the reason for all the turbulence, was removed from her position during my second week. Working the floor was a great opportunity to validate and better understand TOC's supply chain management application, presented in the supply chain management book "Isn't It Obvious".

Before I dive into the TOC point of view, some info about the shop is appropriate. The shop is located in a closed mall, this was one of the first closed malls in the Tel Aviv area, built some 20 years ago. The mall has been updated with a movies mega-plex a few years ago, but I think this was not enough to shake off its outdated image.
As for the shop itself - while this shop is considered large within the chain, it is actually quite small, perhaps even very small if you compare it to shops in the US. The shop has a tiny back room to store any inventory that is not needed for display on the floor. The shop's floor is small in comparison to the variety on hand and not all sizes are put on display, some are only available if you asked a clerk to get them from the back room.
The first things to come up were the fact sales were going hard, even though the shop was either in promotion or sale mode the entire month. The second was that we were constantly telling shoppers that we're sorry but the wished for item, in the wished for color and size, has sold out. We would always offer to check and if it is available at another store - the customer can pay for it and we'll call her after it arrives at the store. Some of them did, which only goes to show the competition isn't any better.
I had befriended the one sales clerk who had managed to survive through the turmoil created by that shop manager, so I checked with him if the theory works. A theory is tested by its ability to predict. I used the TOC theory to "predict" what had happened in the store at the season's start, weeks before I joined. As I "predicted", sales were easy and merchandise was flying of the shelves at full price.
This should come as no surprise. At season's start stocks are full, all the high runners are available at all sizes, so sales are easy - with customers easily finding garments they like at the right size they often convince themselves into buying. The sales force is free to help the customer find more items and "deepen" the sale.
By the time I arrived at the store, though, the negative effects of buying according to forecast, predominant in global logistics and supply chain management, have reared their ugly head. The cream of the crop, the best models, have been totally sold out. The fast runners we did have were running short on their best sizes and we had way to much of some dead weights  So even with lowered prices sales were hard and the sales force concentrated on convincing customers they should indeed buy. Sales were "shallow"  with most customers buying only one item.

If you want more details about the damages of working to forecast and the TOC approach to replenishment, here are a couple of links to the "Big Brand" case study:
First is Dr. Goldratt's report on the process (which can also be found in "The Choice", the best book on supply chain management) can be obtained here (just fill in the details and you'll get the PDF in your mail)
Second is the IDEA report on the project, this one includes graphs showing the progress made.

To be continued ....

 

Satisficing

Theory of Constraint talks a lot about avoiding local optima, about maximizing the system and not its parts. This leads to road runner ethics, to making sure we are not trying to be more accurate than the noise in the system and so forth. The Theory of Constraints solutions tell us what to do at a good enough granularity. The rules are simple. Don't protect every step, protect the system by protecting the constraint, maintain flow. The tools are there. DBR and sDBR, CCPM, Logistics. So what's the problem?

The problem is there is still a void, although it seems to be just a verbal one. If we are not optimizing, if we are not "doing the best we can", than what are we doing? We can't just brush this off as being "just a verbal thing, just definitions", definitions are the starting point of clear thinking, as Dr Goldtratt taught us repeatedly.

There is another reason that makes this important. While the human logic can accept fuzziness, our subconsciousness can't, and that's where it counts the most, since most of our decision making is actually done there, at the most instinctive level. There are no voids in the subconscious mind and there are no gray areas. Like Master Yoda said in one of the Star War movies: "Do, or do not, there is not try". That's your subconscious mind for you.

So, for our subconscious mind not "doing the best we can" is, actually "not doing the best we can" or, if we'll put English grammar aside for a second, "doing NOT the best we can". Which sounds bad, doesn't it?
So, we really need a good name for not optimizing. That name, to me, should be "satisficing", a term I first heard during my MBA from Prof. Boaz Ronen, a TOC disciple in the academic world.
Satisficing means being good enough, not perfect. It has lots of merits. It reduces "analysis paralysis" and stress levels, allows for better flow through faster outputs  (I demonstrated this while discussing the hiring process here) and it sounds good.

What do you think?

Edited to add:
Following the replies I got here and on LinkedIn, I guess satisficing needs a bit more elaboration. Here's an easy example - say I have to prepare a birthday bash for a 6 years old and my goal is to make that 6 years old as happy as possible. I know I'll make a chocolate cake, cover it with chocolate cream and decorate it. Once the cake is ready I can make this cake:   decorated with M&Ms and a sugar paste "Happy Birthday". Time invested is about 1 hr and child is very happy.

On the other hand, I can make this cake: covered with sugar paste and decorated with sugar paste designs. Time invested 4-5 hrs (at least) and child is very happy, perhaps a bit more than with the first cake but not significantly so.

Both cakes are eaten up at about the same rate.


(yep, I made both of these cakes, and other "optimizer" cakes you can see here.There is room for hobbies in this wold, IMHO)

What we see is that I can go for a satisfactory cake or an optimal cake. The result, in goal units of child happiness, will not vary substantially, the only difference is the effort I put in. The first cake demonstrates satisficing - doing the necessary, the sufficient and nothing over that. The second cake demonstrates optimizing - doing the necessary, the sufficient and everything else, trying to be perfect.

One last thought (Thanks Henry for bringing it up) - whatever you do, it has to move you in the right direction. It is not enough to "do it right", you have to "do the right thing right"

I'd love to hear what you think about this.

In Memory Of Dr. Goldratt

Dr. Eliyahu M. Goldratt
1947- 2011

His memory will be with me forever

Using a simple problem to demonstrate the TP

Looking through my blog's statistics, it is very clear that Thinking Process is the most interesting topic for people. I know it is the part of TOC I found the most mystifying. So I did a bit more web digging and found this little gem in a site filled with TOC examples – a simple example of all the steps of the thinking process. This example takes a very very simple problem and runs it through all the steps. Now we are talking a very simple problem (did I mention the problem is simple?), so putting it through the full TP process seams silly and at first leaves the impression that somebody really lost their common sense and any sense of proportion at the same time. Yet once I have gone through it I immediately had those lovely "A-Ha" moments when everything just clicks in place AND I finally figures out what's a transition tree. So I have to hand it to whoever did all the hard work setting up all those trees – Great Job!

I do want to warn you that some things, though, didn’t work so well, this being a very simple problem (I'm starting to feel like a broken record). First, the use of the Three Cloud Technique (which, by the way has you write 4 clouds; 3 from the UDEs and a generalized one), in this example this step is totally redundant and all 4 clouds ended up being virtually the same cloud with slightly different wording. Second, although once the general cloud was ready, you can easily understand how it was turned into the CRT this CRT has no root cause in it since it starts with the common goal and builds up from it. This CRT basically explores what is the expected reality if we choose to implement only one side of the conflict or the other. Third, the FRT is built from an injection defined in the general cloud phase and is very simply the CRT's negative. This feels way too simplistic and is probably not representative of the way the CRT and FRT will look and feel when using this process on a complex problem.

Hope you find this helpful and I'd be glad to know what you think.

TOC hiring logic from Bill Rhind

Bill Rhind (see profile on linkedIn) of P3 Consulting has kindly prepared this overview of utilizing the Theory of Constraints logic in the employee recruitment process. I found it very clear if you think of a constrained resource group, but Bill pointed out to me that this logic stands for any hiring, not just within a constrained group.  In fact, he feels the real value is in the non-constraint since there are many more non-constrained resources than constrained resources and one often doesn't think of “exploiting” a non-constraint. To top it all off he even included a small and very thought provoking case review.

Thanks Bill!

"What intrigues me is that many HR decisions are still made utilizing "local" thinking. Each hiring decision is generally made in isolation… on an individual, functional, or divisional case by case based and on the merit of each request. In addition, the decision to hire (elevating the system) is often done prior to identifying the constraint, to exploiting the constraint or subordinating to the constraint.

Why do I believe this is generally the case within most organizations? Organizations which I have been part of or visited (and have not implemented TOC) have a FULL list of personnel requests with all functional managers stating that theirs is the most important, and the managers do not have a clear way to accept or reject them. Managers don’t have a value based way to determine the priority or explain why one group was able to hire while another may not (or they hire based upon “local” efficiencies and don’t realize they are actually hurting the system’s overall performance).

I would like to inject that hiring must be considered holistically. Looking at all requests in an organization and prioritizing them based on T, I and OE (T, or Throughput, is the money or goal units generated by the system, I, or Inventory, is the money invested in the system in order to generate T and OE, or Operating Expenses, is the money the system is working on in order to transform in to T) from a systems perspective. There truly can only be one (or very few) most important hire.

In order to tackle this question, I suggest breaking the answer into three parts

1. decision on hiring
2. who (which skill) should ultimately be hired
3. the hiring process

Decision on Hiring

One necessary condition in order to know what is the most important hire is the company knows their system’s constraint (the only true way to know the impact on T). If the constraint for a system is not known, the best one can hope for is impacting delta I and delta OE (which are also often from a local perspective). Of course there may be situations where this is not the case (e.g., a key skill is missing or lost, and without it, even if the position is a non-constraint, T goes to “0”).

I think a key faulty assumption made or a missing process step in hiring is the assumption that a company truly needs another person within the constrained resource group to add capacity. A step that I believe is fundamentally missing in most hiring processes is the step to ensure that we have fully exploited the current capacity of the skill prior to moving to the elevate step. I can think of a few observations/checks which can be made to test the current state:

- What is the level of bad multitasking occurring within the group?
- What percentage of the constrained group’s capacity is the constraint (or CCR) performing the task which only they can perform (e.g., have they off loaded Herbie)?
- Are they working on the most valuable work to the business?

Prior to even considering the hiring of any additional personnel (and adding OE), I would want to ensure that we have, at a minimum, fully exploited the current capacity (it is important to make sure that the measure is not activity based but truly value based, focused on measuring only the amount of capacity where the constraint is doing only the specific work that the resource/skill can provide) and subordinated all else to ensure that the company was not wasting any of it. As all of you know, these steps alone can bring significant increase of flow (25%...50%...or more) within an organization while having a very positive impact on all of the people.

Who (Which Skill) Should Ultimately be Hired

If it is determined that the currently available constrained resources have capacity which is being stolen doing “other” work (work which does not add value from the customers perspective), then I would suggest hiring a person to remove this more general work from constrained resources versus hiring another constrained resource. The benefit of this is many fold:

1. The hired person would cost less OE (I know this is an assumption, but I believe a pretty good one)
2. It would have a much bigger impact on T (and, therefore, NP)
3. Constrained resource generally happier and more satisfied in their work

Take for example a sales group. We have seen instances where a company was interested in increasing throughput and was considering adding additional sales people. It was obvious that the constraint was the market. In which I really mean, the company’s ability to sell more to the market (the market by itself was not the constraint since the company only had about 10% of the market). To check whether hiring sales people was the right decision, we analyzed the sales process and were looking for overall effectiveness. The key here is how does one define effectiveness.

It became quickly apparent that the sales people were always busy (and one might say efficient); many working non-stop for 50-60 hours per week. Their days were filled with meetings (both internal and external), report writing, following up on sales orders, logging their sales calls, obtaining marketing materials, driving between calls, trainings and, of course, sales calls. Since sales generally are going to be made during sales calls, we asked how much of the day is spent with customers. The general answer for this client (and many others) was 25-50%. As we peel back the activities within the call itself, we asked one more question: “how much time are you spending with the decision makers?” The answer was enlightening, only 5-10%.
Would adding another sales person have an impact…of course, but, in this case, adding a person who’s responsibility would be to provide support to the entire sales organization would be much bigger. In this case, adding one support person provided for an absolute increase of 15% to EACH sales person. This is the equivalent to a doubling or tripling of the SALES FORCE. While I know that there are other possible levers for improving the T, no one of them could deliver more impact on T (while minimizing impact on OE) in the time it took to implement this improvement.

The Hiring Process

A key improvement is to consider the multitude of hiring’s as a multi-project environment. Ensuring that the hiring projects are being released in such a way as to ensure bad multitasking is minimized. Ensuring that Full Kit (strong job description is developed, availability of resources, clear end date, etc.) is fully developed prior to starting the recruiting process. Ensure that the hires are prioritized and released into the hiring process based upon their impact on T, I and OE.

I think by breaking the solution down, a company can now focus and improve the process to deliver value to the business at a global versus a local perspective. The organization can now make much better and quicker decisions on hiring and the hiring will happen at a much faster rate."

10 Places to start Your journey

My dearest darling is very supportive, he even visited this blog. Then he told everyone who would listen that it is not in any language known to man.

If you concur, here are some great places to make your first strides:

1. The book shelf - read "The Goal" and any other business novel or book by Dr. Goldratt (there may be a new one on the way), add "The Choice" after you've read a few of the others; it is a bit harder, even though it is still an easy read.
2. Join Dr. Goldratt's basic workshop "TOC for the Ever Flourishing Company" at the Goldratt House, even people who have been around Theory of Constraints concepts for years told me they found value in this workshop. This is not overly expensive as the workshop costs about $250 but you do need to pay for travel and accomodations
3. Attend a TOCICO event in person in a conference (here is some data on the 2010 conference) or through the web in a webinar. You can also commit to a Theory of Constraints certification process and start taking the exams. Costs start as low as $40 for a webinar, through $100 for an exam to about $2,000 for a conference. Note that some activities require you become a member of the TOCICO which costs about $200 (less for people in academia)
4. Join the Goldratt Schools program. They offer different programs, some are offered only as a whole and in some you can attend only the sessions you are interested in. From what I understood of their web site joining the whole program costs $10,000 up front + another $10,000 success based fee to be paid only if real life results of X10 the basic fee are achieved (meaning you pay $20,000 for real life results of the scale of $100,000, I think that's quite fair, if you can come up with the $10,000 to begin with)
5. Use the self learning tools put out by Dr. Goldratt's team such as the TOC Insights self learning program ($80 per subject, $800 for all) or TOC.TV (this has some free content but is mostly pay per view and subscription based)
6. Use this highly recommended site. I've been referred to this site many times and it always came highly recommended, but I still have to give it a deep scan, so I can't chime in with my point of view at this time.
7. Visit the "Focus and Leverage" blog, written by Bob Sproull. This is a step by step intro into TOC for people and organizations, with a specific focus for those already involved with Lean and 6 Sigma. Bob has reached step 31 by now and hopefully will continue adding steps soon.
8. Take a class at the university, or even go the whole way and get a certification or degree. For example, Dr. James Holt holds classes and has a full certification program at WSU, that are also available as web courses. There are other US universities with Theory of Constraints focus, such as the University of Tennessee. Internationally you can find programs in Poland, Ukrain, Colombia, Taiwan, South Africa, India and more. Many other Universities offer only single courses on the subject.
9. Dr. Goldratt's blog is a great place after you've picked up the basics, full of "golden nuggets" and extensions, it is in Theory of Constraints jargon and a novice could easily get lost. Once you're up to speed, though, it is the place to be.
10. Goal Systems International, a Theory of Constraints consulting firm with some of the biggest names, has very good topic specific articles in the "papers" section of their web site

Great learning source for Thinking Process

I've just found this great tutorial of TP. It's great because it uses real examples along the technical and theoretical material. This is great to make the learning process accessible for both the "learn then do" crowd and the "learn by doing" crowd. I've only skeemed this one, as I'm BMT as it is (taking time off from other tasks because I've run out of concentration), but I'm certain it's a keeper.

The source is agilecoach.net. I am not really sure who wrote the tutorial, but looking for the right name to thank, I also found this terrific EC presentation which added to my understanding of conflicts - did you know there are 3 types of conflicts? 

Anyways, I'm naming agilecoach.net a gold-digger's paradise – lot's of treasures, not to clear at first sight. Happy digging!

what are people looking for?

According to Google's "Insights for Search" tool the interest in TOC is diminishing, whereas the Lean Six Sigma combination is gaining popularity, see graph. I wonder why that is. Considering the fact Dr. Goldratt was quoted saying he would like to make TOC a commonly used tool, I would say something is very wrong with this picture.

Flow to the extreme

A simulation clip for a train designed to never stop I fisrt saw over at the Goldratt House.
First off, I think it is important to think about the paradingm shift this represents. All the trains I have ever encountered work on the same paradigm - the train waits for people to board/unboard. This is, to the best of my knowledge, a main reason for train schedule flactuations. A Londoner once told me that he could catch the underground  at 7:45 and be at work within 10 minutes, or he could be a bit late and catch it at 8:00 and then be at work within 30 minutes. So it is pretty clear what is the power of this new technology and it is probably good practice to try and work through the other questions of new technology. But what keeps troubling me is - how does this thing turn around to start the trip back if it never stops?

In manufacturing we seek flow because it means inventories are moving and as inventories move in one direction they create a move of income (or rather Throughput) in the other direction.Jusr remember flow is only a means to a goal and must be viewed from the greater perspective of the entire system (here's why)

Using TOC while seeking a new job (part 2)

(Part 1)
When a system goes through a TOC process it defines its goal (what it wants more of) and the necessary conditions (what can't be done in order to get more of the goal units). Once this is in place every part of the system can be graded as supporting the effort to reach the goal, not supporting the effort to reach the goal or limiting the effort to reach the goal. If one was part of such a system – which type of position (regardless of performance in said position) would one want?

This is a point to contemplate as we move through the process of finding and getting a new job, in my opinion. At each step of the hiring process it is a good idea to stop and review the possible grade this position has in the organization.

Admittedly, most systems now days have yet to define their goal the TOC way.  When the hiring organization is a for profit company, this is not a major issue as we know the goal. If the organization is not for profit, it is a bit trickier but I suspect most people will have the necessary intuition to run the analysis even without a clearly defined goal and measuring system.

Instinctively, one would probably consider a position with a "limiting the effort" grade a bad choice, but I think this deserves a second thought. If the insight gained shows one can help turn around this position to make it "support the effort" one can create value to the organization, maybe even major value which will, probably, lead to positive results for the individual as well. Tread with caution, though, and make as sure as possible the chance does exist at the position level (the position can be turned around), at the environment level (peers and managers will support and can be moved to support the change) and at the personal level (the effort needed is within one's current capabilities or within reach).

Here is an idea for creating a URO for employers....

Using TOC while seeking a new job

After looking at the hiring process in the last 2 posts, I'd like to change my view point and look at the process from the other side. When a person is looking for a job – can TOC be of assistance?

First up is the realization that seeking a new position is a process of change and as such it would probably be beneficial to consider the 4 quadrants of change. Using the matrix can help a job seeker understand what special needs must be addressed during the process. Generically speaking these are the needs to reduce the risks inherent to the change and the needs to minimize or mitigate losses of parting with the current situation (losing the "mermaid"). It is important to remember that even when this change looks very appealing, an example could be a case of someone unemployed and in need of an income, the change does bring with it risks and losses which should not be ignored. Also make sure to consider both the employment side and the personal side of the change. Looking at the risk quadrant as an example – employment side risks may be "I will not succeed and this position will create a bad impression in my CV", personal side risks may be "I will have less available time to contribute at home which might create friction".

(continued)

TOC for hiring part 2 - Sorting through the CVs

From a TOC point of view handling the classical hiring process (advertise opening, get CVS, sort, interview, hire) is entirely an operating expense (OE), it does not create any throughput, even though the end goal of the process is, indeed, an increased throughput. Then at the end of the process what you get is "marriage after a blind date", with neither sides really sure if the right decision is being made. Taking that into consideration – perhaps there is place for paradigm shift in hiring.

But assuming we have to use the current process – how can we minimize the impact it has on out throughput? As always – it is done step by step.

So, once a company announces an opening it will receive candidate CVs and most of the times it will receive a lot of CVs, much more than needed to create a meaningful selection. We can divide these CVs into three basic groups:

• The "No-s" – these CVs present candidates that are clearly not relevant when compared to the defined characteristics for a good enough candidate (as discussed here)
• The "Yes-s" – CVs that represent candidates with good fit to the defined characteristics
• The "Maybe-s" – CVs that are not clear cut, perhaps there is great fit in some of the defined characteristics but not in others, perhaps something else is creating doubt

How to treat the "No-s" and the "Yes-s" is clear, assuming there are enough CVs that are not "No-s". So the only problem is the "Maybe-s". This should not be a problem, if we look at the situation from a satisficer point of view. First these should only be considered after the "Yes-s" have been exhausted.

Once it is clear that there is need to go into the "Maybe-s" pool, the first step would be to re-analyze them. There is more data and knowledge in the system now, so perhaps some of these are actually "Yes-s" or "No-s" and should be treated accordingly. Then process them in order from the most promising to the least promising. Stopping as soon as possible (when the position has been manned, there are enough eligible candidates to move to next phase etc.)

One point to keep in mind is that often times bias leads to wrong decisions in hiring. This does not have to be the "regular suspects" of bias such as gender, race, religion and so on. There can be many hidden assumptions about the position, the appropriate candidate and so on that will lead to bias.

Using TOC for a hiring process

Let us begin by defining the goal of the process as finding a good enough candidate for the job. This is how a "Satisficer" would look at this. An "optimizer" will look for the best candidate possible and thus will take much more time and effort to fill up the opening – is this beneficial for the organization? I dare say it is not, since not only is the job open for a longer time, meaning that required output is delayed, the recruiting team also spends more time on this task and thus is not available for other tasks.

To recruit a good enough candidate you first must define the characteristics of a good enough candidate. It is important to keep some slack in these definitions to allow for variability between candidates, so recruiters have a real choice. In order to get a good understanding of necessary characteristics, just get a good understanding of the job this candidate will be doing.

Adding a person to the company's staff is a process of change and should be handled like such (as discussed here). Hiring managers should consider all 4 quadrants of this change first at the general level of hiring someone and then at the specific level of hiring a certain candidate. Throughput considerations should be used.

At the general level consider:

	+	-
Hire new person (change)	"Pot of Gold" - increased throughput by manning position	"Pain" – losing throughput by paying more salaries (increasing OE) without sufficient return
Don't hire (don't change)	"Mermaid" – low OE, business as usual, no need to train and bring someone up to speed….	"Alligator" – overloaded workers, missing capabilities….

This would be valid even when the manager leading the process is very willing to hire the new person. Also notice that these are very generic possibilities and should be replaced with the specifics of each situation in real life.

At the specific level each candidate is different so a generic analysis is not relevant. One point to consider, though, is how would the analyses differ between a candidate that is an acceptable fit on all parameters and one that is a very good fit on some parameters but poor on others. Which parameters are the most important to your throughput?

Continued here

Road Runner Ethics

Implementing the Theory of Constraints requires everybody behave like the Road Runner (the blue bird). It is either running full speed or standing, there is no other option. It should be the same for all our resources, especially the human one.

Cost world, which demands maximal efficiency at every point, leads people into conflicts - conflicts with fellow workers (that don't want to work their hardest ALL the time but don't want to look "bad" either) and conflicts with the system that requires they achieve opposing goals (no over time, on time delivery AND maximum utilization). These conflicts lead people to slow down their pace of work, make sure they look busy (I once saw a shareware that helps cover up the fact you are not really doing anything?) and often times leads them to make the wrong decisions.

Throughput world focuses on global optima, not local optima, and thus accepts the fact that most resources should have idle time. This means that being active isn't always being productive. But to get the most out of the system we need to have all our protection where we need it - at the constraint. Anywhere else it is wasted as it is not protecting the system. Therefore, even though a resource has over capacity and is not constraining the system, once it there is work to be done - it should be done ASAP. Knowing that working hard is not penalized (=rests are allowed when there is no work) should lead everyone to that direction. So there are no conflicts between fellow workers (no one should feel bad or threatened by co-workers working hard when they are not), no conflicts with the system and the road is paved for making the right decisions.

Meep Meep