TOC Thinkers

TOCPA conference videos

Videos from this February's TOC Practitioners Alliance conference are up and viewable, for free, her: http://www.tocpractice.com/category/tags/4nd-tocpa-conference.

There are 14 videos, including one from myself.

Enjoy!

Q&A Performance Improvement for Healthcare - Leading Change with Lean, Six Sigma and Constraints Management

Here's a q& a with the co-authors of the recently published "Performance Improvement for Healthcare - Leading Change with Lean, Six Sigma and Constraints Management."

Read on and lean!

q1.  Can you introduce yourselves?  What is your TOC background?  

Baha Inozu: When I was in academia, my applied research mainly focused on reliability and maintenance management. I was exposed to Six Sigma first at a maintenance conference and had an opportunity to apply it initially to the dry-docking of ships. Then the U.S. Navy provided a research grant to my team at University of New Orleans to pioneer Lean and Six Sigma integration in shipbuilding at Northrop Grumman Ship Systems.  The success of that project gave birth to NOVACES, which was founded by the project’s researchers. Next, we were invited to the core contractor team of the Enterprise AIRSpeed project to truly integrate TOC with Lean Six Sigma in the largest supply chain network in the world: the U.S. Naval Aviation Enterprise. The synergy between the methodologies was even more apparent than the differences. Subsequently, we had the opportunity to adopt and apply the integrated approach, first to Navy hospitals and clinics, and then to other health systems worldwide.  Our passion to improve healthcare performance brought us together to write this book. I actually won the conference lottery to get my TOC Jonah training during the TOC World conference in 2006. That training fundamentally changed my perspective. As I started working on the AIRSpeed project with our team, I got exposed to the supply chain solutions of TOC. Later, I started learning Critical Chain Project Management and now I participate in its applications for aircraft modification design projects along with Dynamic Replenishment implementations for commercial Aviation MROs.

 

Dan Chauncey: I have been directly involved in the implementation of quality since the heydays of TQM in the mid-1980s. My early application was using both the TQM team-based, facilitated approach and standard industrial engineering methods. As I transitioned into Six Sigma, I realized how a truly structured application of statistical tools, along with constant subject matter expert team input was truly powerful. Then came Lean. I could not believe that we would just "throw out" the use of inferential statistics in favor of the pursuit of "continuous flow" (oversimplified, I know). Then I realized the synergies and that you don't always need to apply heavy analysis. That worked fine for several years until I began to understand the potential of Theory of Constraints. Once again, I had to break through methodological paradigms and realize that my toolbox had room for even more. In addition to enhancing some of the concepts from Lean (through some of the supply chain solutions), TOC provides a way to focus efforts and see the organization differently. I believe that the book title "Learning to See" by Rother, et.al., is even better suited for TOC.

 

q2.  Why this book?  It's hard work writing a book ... why did you feel compelled to write THIS book?  

Each of the book’s authors has been a patient more than once. We have observed the vast numbers of inefficiencies, bottlenecks, and mistakes and the huge amounts of waste as both patients and practitioners. Every doctor, nurse, technician, administrator, and staff member is a patient at some point. Every year when health insurance renewal time comes, we all continue to be frustrated with rising costs and diminishing benefits, from individual consumers to small business owners and large corporations. There are few issues that touch so many lives as the importance of quality healthcare.

q3.  What problems will reading the book solve?

Healthcare professionals already know that performance improvement doesn’t just mean working harder. The question they have is: “How can my healthcare organization work smarter?”  This book answers the question, “how?” – it requires systems thinking and an integrated approach; by applying commonsense breakthrough solutions to manage bottlenecks, eliminate waste, reduce errors, and contain costs in their healthcare organizations.But these same readers have already answered this question. They have been on that merry-go-round. This is not their first time at the rodeo. They have tried the flavors of the month. It takes little experience to know that many performance-improvement deployments tend to plateau— or at least reach the point of diminishing returns. Yet we know intuitively that there is so much untapped potential yet to be realized. We need a mechanism to know the area of organization to focus on so that the biggest gains can be achieved.  Performance Improvement for Healthcare provides that focusing mechanism by integrating a mature, powerful methodology proven in private industry for decades, called Constraints Management.  This book demonstrates how to revitalize performance-improvement efforts and replace diminishing returns with flourishing growth.

q4.  What's your favorite TOC story (from the book, or otherwise)?

A hospital CEO once said: “Hospitals are a business; they are in the business of caring for patients and families.”  At the end of the day, performance improvement in healthcare is all about doing what is right for one patient while ensuring that the organization has the resources to continue doing what is right for the next patient.  If healthcare is an intensely competitive business climate, how do we resolve the conflict between improving the quality of patient care and reducing costs? 

There is no conflict. 

When bed-bound patients suffer from pressure ulcers due to not being turned in a timely manner, or a patient falls – poor quality and cost are synonymous. 

Just a few years ago, the Millennium Research Group cited medical errors as the fifth-leading cause of death in the US.  

Hospital-acquired infections have been identified as a leading cause of death as well.The costs of poor quality are becoming increasingly clear.

And it’s not just patients and healthcare providers who are catching on.  More and more, what are seen as preventable problems are not being reimbursed by Medicare or insurance companies. 

By applying principles to control variation and manage bottlenecks, which have been proven in industry for decades, we can see that the perceived conflict between cost and quality is actually a mirage.  Focused, aligned, patient-centric care does not compromise costs.  The reality is that it actually improves the bottom line, not drain costs. The management problems healthcare is struggling with have already been solved and the solutions are in the public domain.

Why haven’t these mature advancements been applied to healthcare?Although we have been getting better, healthcare, as an industry, is especially resistant to change.The Institute of Medicine noted a 17-year lag between the publication of research and its impact on patient care. This delay in applying evidence-based best practices to service delivery isn’t just unimaginable in other industries – in other industries, they’d go out of business.

Healthcare doesn’t have to be this way.We wrote this book to show that there is a better way – and how to get there.

q5.  Pick your own question and answer it ...

What is a robust deployment approach? 

A robust approach for deploying performance improvement is applicable to any organization regardless of its current degree of deployment progress or success. Three ways to categorize this progress are Greenfield, Revitalization and New Heights.

Every organization must decide what its purpose or goal is in deploying performance improvement. For some, it is the absence of a structured approach to performance improvement altogether. Others have an approach in place and desire to either revitalize it or take it to the next level. The most obvious level of maturity is the organization with virtually no structured approach in place. In such organizations, this is referred to as a Greenfield deployment, and these organizations may have been realizing some degree of improvement, but it was not due to any organized or focused level of effort.

Some organizations have initiated actions to institutionalize their performance-improvement program but seem unable to gain any real traction. These false starts tend to create disenchantment with a focused performance-improvement program. Both organizational leadership and staff begin to believe that they were better off with whatever method or approach they were using prior to the current deployment. This is common in healthcare organizations, where many versions of quality improvement are either currently in place or have been in place over the years. Not only are several approaches being used, but they also tend to be disparate in organizational placement and level, splitting intent and focus. These organizations need to revitalize their performance-improvement efforts.

Another organizational scenario is one that has been successful with performance-improvement efforts in the past, and now leadership wants to take the program to the next level—or new heights. In many ways, deployment in this type of organization is the most difficult. People become comfortable with the status quo—especially if it is meeting expectations.

While these descriptions alluded to organization-wide deployments, they also can be applied to division or department levels as well. In much the same way that an efficacious performance-improvement program must be robust across various deployment maturity levels, it also must be scalable to organizational size or even levels within an organization. While sustainment across an entire system historically has proven difficult, sound performance-improvement practices can be deployed within a single department or division—radiology, for example.

In some cases, this limited deployment is applied as a pilot for a broader deployment in the future. While this method has worked in many organizations, it should be pursued with caution owing to the high degree of interdependency between organizational entities within healthcare.

Bob Sproull - Epiphanized: Integrating Theory of Constraints, Lean and Six Sigma

Bob Sproull's new book, co-written with Bruce Nelson, is called 

Epiphanized: Integrating Theory of Constraints, Lean and Six Sigma

and it's out now on amazon. 

You can follow Bob's blog here: http://focusandleverage.blogspot.com/

1.  Bob, you're a well known figure in the TOC community.  Can you tell us a bit about yourself?  Where are you based?  What's your work day like?  And so forth...

I've been around since Moby Dick was a minnow and I actually live just north of Atlanta, GA.  I'm a certified Lean Six Sigma Master Black Belt and a TOC Jonah.  I've been in continuous improvement for what seems like an eternity.  I was part of the Deming revolution, TQM, and so forth.  I have an extensive background in Manufacturing with well known companies like Xerox, Michelin Tire where I served in a CI capacity.  I've been the General Manager of a manufacturing company that was scheduled to be closed, but we were able to turn it around in several months and it became the model for the parent company.  I was the VP of Quality and Continuous Improvement for 2 companies and a TPS Senior Consultant for about 9 years.  In 2008 I took a position with a Maintenance, Repair and Overhaul (MRO) company supporting the US Army's fleet of helicopters where we implemented TLS and CCPM.  With our CCPM initiatives we were able to reduce scheduled maintenance cycle times by about 40%.  I am currently a Senior Business Consultant for NOVACES, LLC which is a TOC, Lean, Six Sigma consulting company.  I'm very happy to be a part of this company and believe it is the premier provider of CPI.  I've been married to my wonderful wife Beverly for 44 years with 3 children and 5 grandchildren.  I enjoy writing articles, books and I have a very active blog named Focus and Leverage.

 

2.  Can you tell us about your TOC journey?  

My TOC journey began in the mid-1990's when I was hired as a GM to either close a plant or turn it around.  I had no prior operation's management experience, byt the man who hired me (my mentor) gave me a copy of The Goal and told me everything I needed to know was in this book.....and he was right.  Since then I've had a variety of TOC experiences and along the way became a Jonah.  In 2009 I was fortunate enough to have a book published, (The Ultimate Improvement Cycle - Maximizing Profits Through the Integration of Lean, Six Sigma and the Theory of Constraints.

 

3.  Why the new book?  Do we need another TOC book?  

Excellent questions.  The reason I felt compelled to write this new book is because I think we (my co-author Bruce Nelson and I) have a different kind of message to bring forward.  This book is loosely based on both of our travels in the TOC world, both the positive and negative parts of our journeys.  In this book we combine some known and not so well known tools into a business novel format which I personally believe the readers relate to much easier than straight technical books.  We tried to create a storyline that readers will relate to and to demonstrate just how quickly positive results can happen when TOC is used correctly....especially when it is integrated with Lean and Six Sigma.  In my opinion, the path to profitability is not through removing waste and variation in every step of the process and I wanted to get this message out.  So in answer to your second question, do we need another TOC book, I respond with a definitive yes!  I want people with positive experiences to write about them and share them with the world and a book is a great way to do this.

 

4.  How did you got about creating the new book?  Was it easier or harder than your earlier book?  This is actually my third book.  Back in 2001 my first book was published (Process Problem Solving - A Guide to Maintenance and Operation's Teams) but I had no idea what I was doing.  How did I go about writing this book?  One day I woke up and started writing and kept on writing.  I hadn't ever written a business novel before, but I can tell you it was 100 times easier than I thought it would be.  The cool thing about a business novel is that it can take you in so many different directions.  I mean you are constantly coming to different crossroads and you just make a decision on which way to go.  This book actually only took Bruce and I about 4 months to write....it's the publishing that takes so long.

 

5.  If you had a really tall building with really slow lifts ... what's your book's elevator speech?  

The short elevator speech is that TOC is all about focus and leverage.  Use TOC to find your leverage point (i.e. your constraint) and focus your improvement efforts on it rather than trying to "solve world hunger" by fixing everything.

 

6.  A question of your choosing ...

What makes this book different from the others?  This book is unique for your typical business novel.  In addition to the business novel, Bruce and I have created a very active appendix.  We take storyline tools and techniques and expand on them in the appendix.  We did that because we both remembered that when we were beginning our journeys, often times we wouldn't understand something and had to leave the book we were reading and go find a reference and it broke our reading pattern.  By having an appendix that expands upon these subjects in the same book, we feel the flow of reading will be disrupted less often.

Clouds with Jelena Fedurko

1. Hi Jelena.  We've never met before but I'm well aware of your work with the Goldratt Schools and now I've just read your new book "Behind the Cloud".  Before I get to your book can you tell us about yourself?

Jelena:

When I am asked about myself, I usually say that I come from a very small country of 1.4 million people altogether – from Estonia. It is interesting to say that to a group of students in a city of a few million people.

I think I have been very lucky to consciously know and go in my life through three geopolitical periods: the former Soviet Union with its ideology and planned economy, the transition period when Estonia was regaining its independence and learning how to operate in the market economy, and Estonia as the part of the European Union.

My background was shaped by my interests, circumstances and choices – in this sequence. As a child I was interested in languages and after school went to Minsk State Linguistic University, it was then called Minsk State Institute of Foreign Languages. I majored in English. We had top professors, and they built into us desire and knowledge to understand the meaning of what is said or written – to be proficient in teaching and translating. The university was five years six day study-week of hard work. A few years after I graduated, in 1991, the Soviet Union stopped existing. It was an overall change – major, deep and drastic. By then I was back to Estonia. We had to reassess the past and to learn how to cope in the new circumstances. The only way not to lose oneself was to stick to the main values of honesty and honor, and work for the benefit of the family, and society. It was a matter of choice.

I had what was not a common skill at those times – the professional knowledge of English, as well as trained skills how to translate and teach it. We were going into the new life, and it was no way that without making English a working language we could get the knowledge of how to set and run businesses, how to operate in the market economy and how to integrate into Europe. English was needed by everyone - kids at schools, students at universities, banks, local governments, diplomats, production companies, emerging entrepreneurs. It was not only English. The new life demanded the understanding of how different businesses worked. It needed to be translated, literally and figuratively, into building the new reality. I have worked with businesses and organizations that were of different sizes and had a different overall impact on what was happening to the country. I was helping them to acquire business knowledge and go through the changes. In the second half of 1990-s I felt I wanted to formalize my business knowledge, and I did an MBA in Concordia International University Estonia.

In 1999 I was approached by Heiti Pakk, director of Goldratt Baltic Network, who was looking for someone with the knowledge of English and business – to translate Goldratt Satellite Program into Russian. This is how my TOC journey started. I felt comfortable with the logic and straightforwardness of the approach, and have been working with TOC since then, first with Goldratt Baltic Network, then, since 2005, with Goldratt Schools.

In Goldratt Schools I have been lucky and privileged to closely work with Oded Cohen and Eli Schragenheim. I very much value working together with Martin Powell, Alejandro Fernandez, Roy Stratton, Frances Su, Philip Viljoen and other Goldratt Schools colleagues.

I believe that the strength of the TOC community is that many people professionally know many other people, the common knowledge is immense, and we can always rely on each other for assistance, and sharing knowledge and information. That is how, several years ago, I learnt about your site - from my old-standing friend Jim Bowels.

2. I've just finished your new book and it's a success.  I learnt a
lot from reading it and I wish I'd had it a years ago.  I genuinely
believe I can write better clouds now. Can you tell us what the book
is about and why you wrote the book?

Jelena:

Thank you for the kind words about the book. The book is mostly about checking, building and understanding assumptions – our justifications of the logical connections in the cloud. I find understanding assumptions an absolute key for being able to make sense out of the cloud and to use the cloud for what it is meant – for finding a solid and robust solution.

Why I wrote this book? I felt I needed to share the knowledge that I have built over the years of working with clouds. Consistency of difficulties with surfacing assumptions and finding injections that are so typical for the learners of the cloud throughout the world suggested that probably there was a lack of formalized guidelines how to build an assumption, and how to recognize that an assumption was not strong enough.

I personally do not believe that the answer to proficiency is intuition. In my understanding intuition is the combination of the knowledge stored in the specific format and the process of “navigating” in this stored knowledge – that people follow so quickly that they are unable or do not bother to “unfold” them. That’s why, the performance based on intuition often leaves the impression that a person has a gift, a talent, to do something exceptionally well. And others just cannot do it because they do not have this gift. I do not agree. Or, mostly do not agree. I believe that both knowledge and processes are transferable. This is what I wanted to do with my book – to transfer the knowledge and the processes that I have. I believe I have them due to my background in linguistics and the built-in habit of working to understand what was meant under what was said. I wanted to share it.

3.  How did you go about writing the book?

Jelena:

I just sat down and wrote, when I had time, simply talking to the readers, the same way as I teach TOC to the companies, and communication skills to my business school students. And it was the same enjoyable.

I wanted to get the book ready for the TOCICO Conference in New York in June this year. I am very grateful to Alan Leader who did marvelous job of editing, at the very short notice, and in the very short period of time, to help me get the book ready for print in time. And to Oded Cohen who was the first reader, also under a strong time pressure, and without knowing yet that the book was dedicated to him.

4.  Who is the book aimed at primarily?

Jelena:

Everyone. I believe it will be beneficial for the beginners, and interesting for the experienced TOC practitioners.

5.  Can you share your favourite TOC story?

Jelena:

I do not have a favourite story. We have seen many great implementations. We have seen how people build their confidence through building their skills. We have seen that the new knowledge makes people want to move with their lives and achieve more. I think the best a person can reach professionally – is understanding of their contribution to someone’s personal development. TOC certainly gives tools to make this contribution.

Available here:  http://www.goldrattcentre.com/merchant2/merchant.mv?Screen=CTGY&Store_Code=1&Category_Code=110 or here: http://www.toc-goldratt.com/tocweekly/2011/06/new-book-behind-the-cloud-enhancing-logical-thinking/

Be Fast or Be Gone - by Andreas Scherer

Another TOC book!  It’s called Be Fast or Be Gone and it’s written by Critical Chain expert Andreas Scherer.

1.  Hi Andrea, before we get to the book, what's your background?

For the last 15 years I have held VP level positions with public or private technology companies here in the US and internationally. I have a broad functional background in sales, marketing, business development, and consulting as well as software development. My educational background is Computer Science. I taught Neural Networks and Database Systems at the university level in Germany.

2.  Without giving away too many secrets, can you describe the books setup and plot?

Well, here is a brief overview of the book. The protagonist is Mike Knight, an executive in a semiconductor firm. He learns that his eight-year-old son Tim has a rare form of brain cancer. Tim's best hope for long-term survival is a drug called Supragrel. Unfortunately, Supragrel is still in early clinical trials and may reach the market too late. Mike makes the agonizing decision to quit his job and go to work for Altus Labs, the developer of Supragrel, in hopes of helping them bring the drug to market more quickly. Mike is in for the challenge of his life as he struggles to keep his family together while racing against time to implement Critical Chain in Altus Labs. Supragrel is just the beginning of a much larger Critical Chain implementation across the entire company.

3.  So, you've written a book about Critical Chain.  There are already a few good CC books available.  Why did we need another one?  What's different about your book?

Well, I would like to answer this question on two levels: professionally and personally.
You are right. There are a number of great books out there on Critical Chain. And I hope there will be many more. Each of these books cover a different angle. Here is the one that I was after. In business we want transparency of project status, reliable project delivery, and faster projects. We Critical Chain practitioners spend a lot of time explaining how this can be accomplished. I talk to a lot of people personally in the business world; I write a blog "The Point" (www.andreasscherer.com); I give speeches at conferences and more.  But at the end of the day it is tough for people to understand what an enterprise-wide roll-out of Critical chain looks like. How do you make thousand, two thousand, perhaps ten thousand people think and act in a way that is consistent with the methodology? What are the issues that come up? How do you make an implementation sticky?
Very often I had executives coming to me a year into a roll-out telling me that NOW they understood what I was taking about when we started our relationship. With Be Fast Or Be Gone I wanted to tell the story of an enterprise-wide roll-out of Critical Chain with all the dynamics that occur along the way. I wanted to write a book that helped executives and their teams develop an intuition of what to expect. I also wanted it to be a short read. It's designed so that you can read it on a flight from Washington DC to San Francisco. I proofread the final version of the book on that particular flight to be sure that it was possible.
On a personal note, I had a writing project like this on my bucket list. In my time as a computer scientist, I had published a lot--mainly articles but also books. It was a goal of mine to publish a book in English. Now that I have done this, I must say it was a lot of fun. I might do it again.

4.  Your company sells CC software but your book is software agnostic.  Is that true?

Yes. This is true. You find in the Appendix a reference to ProChain, but otherwise I kept the book software agnostic. I found that if I spent too much time talking about specific features and functions of the software it got in the way of the story and took away from the power of Critical Chain concepts.

5.  What was it like writing a business novel?  I know from experience that it's a really hard genre to write.  Can you tell us why you chose that genre rather than non-fiction?  What was the hardest part?

Writing a book is in many ways like writing software. But since I wanted to tell a story because I thought it would keep people interested, I chose to write a novel rather than a technical piece. I started with an idea and a general outline. The first version of the book was written within six months. In that time frame I had a close circle of people giving me feedback. After the first draft was done it took about another four to five months of continuous iterations driven by feedback from people in the industry. The most difficult part was making the little things in the book sound right. I wanted the book to be as authentic as possible. So, I am very grateful that so many of my colleagues in the life science industry took the time to educate me about their world.

6.  What's Rob really like?

Ha, that is probably worth another book. People know him as a superb software genius who had the foresight to start a company around Critical Chain. They know him as an excellent writer and book author. But let me tell you something that most people don't know about Rob Newbold. There is a little bit of a wild side too. Whenever his busy schedule permits he rides his motor cycle on the windy roads in Connecticut.

7.  What's your favourite TOC story - be it personal, professional?

Well, I put my favourite TOC story into the book. In one of our implementations we were able to clearly demonstrate that one business unit was the bottleneck driving the timeline of the R&D projects of the entire company. While this was suspected by some, it was a revelation to the senior executives after they saw our analysis along with precise numbers. Without giving everything away, you find my favourite TOC story is in Chapter 14 of Be Fast Or Be Gone.

Andreas Scherer, PhD
EVP and GM
ProChain Solutions, Inc.

John Ricketts - TOC Handbook chapter

Podcast, interview: http://clarkeching.libsyn.com/john-ricketts-toc-handbook-chapter

Danny Walsh - TOC in complex environments

A few weeks ago I had a great chat with long time TOCThinker Danny Walsh about his TOC Handbook article. Well worth a listen with a few new hints and nuggets - especially his classification of the three types of variability.

http://clarkeching.libsyn.org/index.php?post_id=639060

Hope you enjoy.

I've got another interview coming up shortly and then a few more to schedule.

 

Rob Newbold

One day I hope I can buy Rob Newbold a nice cold beer or a nice hot coffee.  We've just spent a very pleasant hour chatting about his chapter in the TOC handbook (on making change stick), the latest innovations in prochain, and life+TOC in general.  It'd be nice to do it in person one day.

You can listen here: http://clarkeching.libsyn.org/index.php?post_id=632663

Here's a link to the Kindle version of his chapter (which you can read on your PC, Iphone or Mac too): http://www.amazon.com/Making-Chapter-Constraints-Handbook-ebook/dp/B003VQQFYK/ref=sr_1_2?ie=UTF8&m=A7B2F8DUJ88VZ&s=books&qid=1279741807&sr=1-2

New Content from Eli Goldratt

This time, an animation: http://www.youtube.com/watch?v=hcz1aZ60k7w

TOCHandbook

Earlier this week I spend a fascinating 75 minutes talking with James Cox and John Schleier, the co-editors of the newly published TOC handbook.  

Download the podcast (or subscribe) here: http://clarkeching.libsyn.org/index.php?post_id=631796

It's a huge book (over 1,200 pages), not cheap in comparison to your average, run-of-the-mill books, but hugely valuable and imho worth its weight in gold.  It includes in-depth chapters covering almost the entire TOC body of knowledge as well as knew information not previously in the public domain. The chapters are written by some of the best-known TOC Thinkers & doers. 

One of the best things about the book is that the individual chapters are being published on their own as ebooks.  If you can't wait for the book to be delivered, if you prefer ebooks, or if you'd rather save a little money then listen to the interview to figure out which chapters you should buy.  

Here's a link to the paper book: http://www.amazon.com/Theory-Constraints-Handbook-James-Cox/dp/0071665544/ref=sr_1_1?ie=UTF8&s=books&qid=1279476704&sr=8-1

A link to the Kindle chapters:http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Dus-stripbooks-tree&field-keywords=theory+of+constraints+handbook+chapter&x=0&y=0&ih=4_2_1_0_1_0_0_0_0_1.89_70&fsc=-1

A link to the mobipocket chapters: http://www.mobipocket.com/en/eBooks/searchebooks.asp?Language=EN&TypeSearch=All&lang=EN&searchStr=theory+of+constraints+handbook

A link to the adobe reader chapters: http://www.mhprofessional.com/templates/index.php?cat=9959

Oded Cohen: Q&A - Questions 1,2 and 3

Many of you in the TOC community already know or know of Oded Cohen.  He’s been a leading thinker within our community for decades and a major contributor to the current TOC body of knowledge.

Please read on to hear more of Oded’s fascinating TOC-journey, his latest book and a touching TOC story.

Q1. Hi Oded. We've not met before and I only know you by reputation. I know you've been at the core of TOC development for decades, that you've co-authored a wonderful TOC book, that you've just published a brand new TOC book but that's it. Could you tell us a bit more about your TOC journey - how it started, the journey itself and where you are now?

Well – this is quite a long story. I will try to condense it.

It started in 1978. I then was the head of a data processing department in a large Israeli manufacturing company – Soltam – producing Cannons, mortars and saucepans. These were the early days of MRP and I was involved in developing a fully integrated management information system for manufacturing. I met Eli Goldratt, and got to know his scheduling software – OPT. We checked the OPT on two production lines and got outstanding results in reduction of lead time and on-time deliveries We used the software for a while and then I moved to another job in another company. I used the concepts of the software in my role as the assembly manager for semiconductor equipment.

In 1982 I joined Creative Output, Eli’s company and moved to the UK to help building the local company together with Alex Meshar and Avraham Mordoch. We focused on selling the OPT software, implementing it and integrating the concepts known as the “rules of OPT”. We worked with brand names such as Lucas, STC, Rolls Royce and others.

In 1983 Creative Output became more and more successful worldwide, and yet – selling the software was difficult in spite of the track record and the remarkable results that were achieved through the use of the software and the methodology. The analysis of the difficulty brought us to realize that besides a bottleneck there is also a market constraint. Not that the market for our product was limited, but that our ability to persuade the market to buy from us was limiting our growth. This realization brought us to focus on teaching and training managers in adopting the suggested way of managing. This realization also created an internal conflict in the company between the software people and those that were devoted to continuous improvement. The polarization was so strong that it caused a crisis that brought Eli Goldratt and his people to leave the company.

The next phase was the construction of AGI – the Goldratt Institute in the end of 1986. This was a partnership between Eli Goldratt and several people, most of them from Creative Output. I was the partner in charge of the UK and some countries in Southern Europe. After a year in Spain I moved back to the UK. As Creative Output was sold and OPT was trademarked – the term TOC was invented. We first focused on developing and teaching the Jonah Program. This was a ten day program for top management to get the essence of production solutions and the underlying thinking processes. The first Jonah Programs were taught based on the production solution and the Goldratt simulator. In 1991, after a request to develop a special Jonah Program for the service industry (for an insurance company and for a college) the thinking processes of TOC were defined and a set of guidelines were established to help in constructing and teaching them. Thereafter, this program became the standard Jonah Program.

1991 was the year that the UK AGI network was established. Several people that used to work at the EITB (the engineering training board in the UK) created their own group and were promoting the Competitive Edge approach (based on the Race). Among them were: Jim Bowles, David Marks, Mike Dinham, Karl Buckridge, Ted Hutchin and others. The network included also John Tripp who I have known since he joined Creative Output in 1984 and Alan Cohen who was the associate for the new information system software packages that was called “Disaster”.

Parallel to the full thinking processes (TP) work we were also developing the daily use of the TP. In 1995 I wrote the MSW – Management Skills Workshop, a set of five working booklets covering six daily tools: conflicts, half baked solutions (NBRs), chronic conflicts, lieutenant cloud, clear instructions and achieving ambitious targets (IO maps). This program was intended to give the Jonahs the practical tools to use the thinking processes to help them in managing their own areas on daily basis. It was apparent that the Jonah Program is the process to develop a strategic solution while the managers also needed tools for enhancing their ability to make decisions and resolve managerial challenges continuously. After developing the program I went on a grand tour visiting TOC communities of Jonahs and AGI network teaching and communicating the program. It was amazing to see how the TOC knowledge and thinking had been disseminated with a lot of commonality. The whole community was talking the same language.

The first MSW was run in Israel in the spring of 1995. Among the participants were Alejandro Fernandez (now Goldratt Schools’ principal for Latin America), Philip Viljoen (now GS principal for South Africa and India), Barry Urban and Kathy Suerken (CEO of TOC for Education). The MSW was adopted by the TOCFE and I conducted several programs for the teachers, headmasters and counsellors. Thereafter – the MSW was developed by TOCFE to become TACT – thinking and communication tools.

The years of 1991 to 1997 we devoted to the development of the thinking processes as well as the TOC solution for distribution, project management and the unrefusable (“Mafia”) offering for marketing. The article “My saga to improve production” by Eli G formalized the 5 layers of resistance to change recording our collective experience. Layer 6 was added as acknowledgement of the UK reality (when managers exposed to a new idea would say “yes” and do nothing).

Gradually, we incorporated programs and activities in promoting the TOC for functional solutions – production, distribution and project management. We developed the 5 day programs that were geared to give companies the knowledge of the TOC solution as well as the outline of the implementation plan.

In 1996 I met Martin Powell who joined me and since then we have been working together.

Eli Goldratt retired from running AGI in 1997 (when he became 50 he decided that it is the right time to retire and do the things he wanted to do). In 1999 Eli produced the eight sessions of the Goldratt Satellite Program. These lectures were used as the base for 4x4 program with the objective of transferring the knowledge and helping companies to decide on embracing TOC holistically. This program was a combination of 4 days viewing and discussing the lectures and 4 days of detailed TP analysis of the company and determining the holistic solution for them.

In 1999 Goldratt UK together with Alex Knight and his team from Ashridge Consulting Group had a major project at Norwich Norfolk Hospital. This was in conjunction with the first private financing initiative (PFI) for a hospital in the UK. The project covered the new hospital, new integrated (paperless) information system and improvements in work practices. Naturally we were also involved in the millennium projects.

In 2001 Eli Goldratt came with the idea of developing certification for the TOC profession. The idea was to create some case studies describing the scenarios of some companies and asking the TOC practitioners to come with suggestions about the potential growth of these companies and how to go about it. The plan was to gather at least a hundred of such cases and to use them for the certification. We managed to collect just a few case studies before this idea was used as a spring board for the creation of TOCICO.

TOCICO was created in a meeting of the TOC community in November 2001. A founding committee was elected and I was chosen to be the first chairperson of the organization. It was intensive work to get all the parties together and to construct the organization that will be the home for the TOC community. This year is the 9^th year anniversary of the TOCICO.

In January 2002 I left AGI. I continued the TOC activities in the UK and some of countries in Europe in partnership with Martin Powell through our British companies.

In 2002 and 2003 a group of people were gathered around Eli Goldratt with the view of helping him to make TOC the main way. For most us it was obvious that this direction must be taken. Even though we made a lot of progress in formalizing TOC, the basic concepts, the Thinking Processes and the functional solutions, the level of acceptance of TOC was not as high as we expected. We recognized that we had a severe marketing constraint. The Goldratt Group was constructed as a virtual organization where all the members volunteering to contribute 50% of their time for as long as needed. The group direction was synchronized through the top of the GG S&T tree (level one and two) that determined the role and activities of Goldratt Consulting (GC), Goldratt Schools (GS) and Goldratt Marketing Group (GMG). I became the head of Goldratt Schools. GS is run by several principals – Eli Schragenheim, Shri Mokshagundam, Martin Powell, Alejandro Fernandez, Philip Viljoen, Jelena Fedurko, Frances Su and a wonderful team of faculty members that teach TOC in universities around the world (please visit http://goldrattschools.org ).

In September 2003 Eli G. conducted a one day seminar in Belfast, Northern Ireland. This was the beginning of the Viable Vision approach. The first VV seminar was conducted in February 2004 in India. The first company to embark on the VV was GCP Godrej Consumer Products in India. Goldratt Schools was asked to prepare TOC consultants for serving as application experts on the GC projects. We built the TOC Application Expert Program (AEP) to teach the logistical applications – MTO, MTA and Distribution. We started with 4 weeks program and gradually extended it to seven weeks over 3 months. From June 2004 to 2008 we ran 25 programs all over the world. Wherever the sales process of GC started (usually with a seminar of Eli G.), GS was there to develop the necessary resources for the VV projects. All together we developed nearly 500 TOC application experts (the majority of them successfully passed the GS exams as well as the TOCICO certification). Unfortunately, the majority of our graduates did not participate in the VV projects but many of them have successfully used the knowledge and know-how to develop their own practices and bring benefits to their clients.

In December 2005 GS started a major initiative – a TOC Expert program covering all aspects of TOC and VV solutions. This was a 26 week program that was run in India for participants from India, China and Brazil.

The introduction of the S&T tree for the standard VV solution has marked also the change of the implementation process. The implementation is done on a step by step process covering one box (entity) of the tree after another. The responsibility of the implementation was shifted to the company and as such there has been very little demand for TOC application experts. GS shifted its activities to providing knowledge and support to the TOC community and to the academics in several regions that we operate in.

Since 2009 I have been working intensively with my colleague – Jelena Fedurko, in bringing TOC and the TOC knowledge to Russia while continuing to develop, conduct special programs and keep on writing.

In 1999 I wrote together with Domenico Lepore the book – Deming & Goldratt.

In 2008 I wore the first edition of Ever Improve. The full edition was printed in June 2010.

Q2. I'll come to your first book shortly, but could you tell us about your new book? From what I understand it's a combination of two approaches to TOC production and a new way of framing the TOC thinking processes.

Ever Improve has combined new and vintage knowledge. Over the years we have gathered a lot of experience, ideas that work, ideas that do not work, and many iterations of attempts to transfer the TOC knowledge so that it becomes accessible to the people who want to learn TOC.

TOC has two different solutions for production management: the MTO for the Make-to-Order environment and the MTA for the Make-to-Availability environment. The origin of the MTO solution goes back to the days of OPT and hence most of the concepts are over 30 years old (that is why I call them vintage and not just old). In reality there are companies that are building their products to forecast in anticipation of future sales. Traditionally it is called make to stock. The view of TOC is that stock is the means to provide availability and hence the MTA solution was developed. The realization that the MTA is different from the MTO has been revealed gradually over the last 5 years. Now it is formal and official – these are the two applications of the production solution for different environments. The book contains the two solutions.

The new full edition of Ever Improve has five parts:

1. TOC Systematic Approach – the U-shape

2. The Reality of Production and Operations Management

3. TOC solution for MTO

4. Implementing TOC Solution for MTO

5. TOC solution for MTA.

The first edition of Ever Improve was published in 2008 and covered the first three parts. Since then it has been used by companies to implement the MTO solution and has brought results and benefits. I do hope that the new and full edition will continue to bring value to companies and individuals who want to enhance their managerial abilities and ever improve the performance of the systems under their responsibilities.

The book can be obtained from:

http://www.goldrattcentre.com/merchant2/merchant.mv?Screen=CTGY&Store_Code=1&Category_Code=030

What you refer to as a new way of framing the TOC thinking processes is not really new. It is a variation of the way I used to present the full TP map for many years. In the TOC material from way back you can find the TP Map. This came from the desire to provide a graphical presentation of the internal flow of the thinking processes from the CRT to the TrT (Transition Tree). There was also a desire to show which entities prove the bridge between the different elements of the TP. I used to show the structure of the current reality (UDEs, CRT and Core problem) on the left side, the future reality (core driver, FRT and DE) on the right side. I put a link between the core problem and the core driver. The GS team pointed that it looks like a U and one of the students prepared the slide that has been used since then. So the U-shape may be a new reference name but the concept has been there a long time. Yet, once we started to use it we saw that there is a need to add clarity and precision of every element of the U-shape.

TOC contains a lot of knowledge. I was looking to help our students in organizing the relevant knowledge in a structured way to capture the logic, to be able to store it and to be able to retrieve it. The U-shape provides a platform in which all the relevant pieces of the knowledge have their own unique place organized in a logical and systematic way. My students were saying that the U-shape gives them the confidence that even if they do not know a part of the knowledge they can position themselves on the U-shape and rely on the logical connections to find the answers.

Q3. What is your favourite TOC story?

In a journey of more than thirty years there are many stories. I can write a story for each decade or even for each year. The stories that I like are about the way TOC has been integrated in the personal life of the individual as well as into the social life.

One example is a story about using “The Goal” for a company outing.

I became the MD of Creative Output UK in the summer of 1984. Later this year The Goal was published. It took some time for the book to be accepted by people in Creative Output. This year I spent Christmas and New Year with my family in Scotland. This is when I discovered that you can ski in Scotland. Actually, it was three days of great skiing with a couple of days trying to survive in the tough weather conditions on the Cairngorm. When I came back to London, I shared my experience with my colleagues in the office. Many of them did not know that it is possible to ski in Scotland. So, I came with an idea – to have a company break in Scotland and combine The Goal with skiing.

In February 1985 we took a long weekend break. We caught the night train from London to Aviemore and got there on Friday morning. We had three wonderful days of skiing and took the night train back to London. And The Goal? Well, we had prepared copies of the chapters of the book that contain the story with Julie. When we were on the train to Scotland every wife got a copy and was asked to read it during the journey. We announced that we will have a discussion on this material.

On Friday afternoon we had a very interesting and involved discussion about the book. Most of us in Creative Output worked before in manufacturing companies. Some of the wives that read the book said that they had never been aware of the life of their husbands at work. They really probed and wanted to know if their husbands had the same problems and hectic life as Alex Rogo. The book gave them an entry to know and understand the reality of their husbands as production managers.

Podcast with Larry Leach about his new book: Lean Project Leadership

Last week I spoke with Larry Leach about his new book "Lean Project Leadership".  It's a good book.  I recommend it.

Buy the book:http://www.advanced-projects.com/books/leanprojectleadership.aspx

Download the podcast: http://clarkeching.libsyn.com/index.php?post_id=622730

Ted Hutchin - Unconstrained Thinker.

[Confession time ... I interviewed Ted almost a year ago and then things got busy and I forgot to post his response.  My apologies to Ted and to y'all.]

1. Hi Ted. Can you tell us a little about your TOC journey? 

Where did it start?  It started in 1987 when I first met Eli at a seminar in Coventry whilst working for the Open University in the UK. This started me thinking about just what he was saying with respect to the manufacturing industry in the UK at the time – but I could not see the process which as a systems engineer was rather important.  The next time was meeting Oded following an invitation to attend the Slough Jonah Conference in 1990 I think. This was the real start as I could now see a process, and that led to my going to Ashridge with most the UK team to do what I think was the second Thinking Process Jonah course. From that moment on I knew that TOC was my home as far as work was concerned, and this has remained the case. In 1992 I undertook my PhD at Cranfield which led to the publication of my book Unconstrained Organisations which really tried to understand the barriers to change that many people had to face and which I called Paradigm Lock. If you want to know more about that there are also a couple of Jonah Conference videos which capture some of what I researched.  It was certainly very interesting taking over 350 clouds and bringing them all down to 1 – the paradigm Lock cloud. This cloud remains to this day as one of the key barriers to change and why my work these days is much more focused on helping people break free from the grip of the cloud than other applications such as DBR or CCPM.

How was the trip? I’ll tell you when I have completed the journey – but so far I would not change one single aspect, it has always been fun, and fun to work with such wonderful people. 

2. I know you had a big involvement in preparing the Management Skills part of TOC.  Can you tell us about that work?  

I first saw the embryonic MSW when Dale and Tracey sent me a three day session they had developed as part of the Jonah programme at the time, TOC for daily use I think it was and it covered the use of a conflict cloud for both simple and complex problems, NBRs, PRT and TRT.  It was very simple, was designed to give the people on the course a quick win whilst waiting for the full TOC analysis to deliver once completed.  From that it developed to a full blown application in its own right, and filled a real gap in the market for effective team development tools that dug a little deeper than the usual. 

I have often linked my work in this are with that of Meredith Belbin and found great synergy between the two. I did some work a while ago with the Forensic Science Service and the Belbin analysis allowed me to predict the likely conflicts that were occurring with great accuracy, and also to help them change the structure so that people did not find themselves in the wrong position within the organisation.

Of course this then led to the development of the Personal Focus tools which are supreme in their ability to unblock people and I doubt if there are better tools around.  They do need to be used with great care, and not everyone who thinks they can use them can actually do so, but apart from that, they really are powerful and effective, what more can you ask.

3. What was your favourite TOC success?

This is tricky but I would have to say no one single event; rather watching people breaking free from the blocks in their life is what ranks up there with the highest. To see people achieve their goal in life, or at least for them to see the way forward is simply one of the greatest gifts we can ever have.  I have worked with many companies over the years, large and small, and all around the globe, but it always comes back to people. When I hear from people I have worked with in the past and they tell me what they have done with the knowledge I taught them, they have achieved so much and it makes me feel rather humble to have had just a small part in that process. 

Stephen Covey tells us to live our lives in crescendo, and I agree; so for me the best is yet to come, there are people I have yet to meet who need the knowledge I can teach them, the skills I can coach them in, and they will achieve great things.  I stand on the shoulders of great people, Eli Goldratt, Oded Cohen, Alex Meshar, Alex Klarman, Alan Leader Dee Jacob and many more. I have been privileged to work with many more great people and it is impossible to try and name them all, but perhaps just a few, Kathy Austin and Dick Peschke, Bert Husken, Jean-Claude-Miremont and all the other GIG folks, Avraham Mordoch and Tali Mastboim and so many more. 

Perhaps it is my definition of success determines why the answer is as it is. The goal is not about money, it is not about how many projects in however many companies. It is not about growing a large TOC consulting practice and so on. For me the goal is to see people flourish, to become what lies inside them but has perhaps been held back. To make a difference in a world that desperately needs people who can make a difference, to make companies stronger, to make our communities stronger and a better place to live and bring up a family. To see conflicts being addressed using a process that delivers, to see people be the people they were born to be.

4. Can you tell us a little about your family life?  

Where do you live?  I live in a small market town called Melton Mowbray famous for pork pies and stilton cheese.  We, that is my wife Audrey and myself,  have lived here for many years now, both our kids were born here, went to school here and my daughter Suzie, whom many in the TOC world will know, still lives in the town with her husband and two children, and my son Mark lives in Rothley with his wife and also two children, so four grandchildren – which makes life wonderful. Audrey has a border collie called Millie and I have two cats, one of 23 years and another of 3 years – which again makes life interesting. Audrey and I still enjoy taking our MGC GT out for rallies and being rally marshals for classic car events, although our days as major rally participants are behind us these days as are my days racing Lasers!!

My primary interest is my role as a Lay Minister and Evangelist within the Anglican church, the role of preaching and teaching, but also being out on the streets late at night as a Street Pastor, working with other Christians from all the other churches, meeting people, helping them if they need it, being there if they need us. 

5. Oh and one more question, if you don't mind: if you could suggestion a question to ask yourself what would it be and what's the answer?

Good question and one that forces me to think.  I guess I would like to have an easy question to answer...that makes life easy, but then since when have I sought a quiet or easy life.

And then does it have to have an answer, for example why do people in the UK spend vast sums of money on improving areas that do not need improving, spending scarce resource on non-constraints simply because the measurement cannot make the distinction between a constraint and a non-constraint?

Why is it that prospective clients say that they will "do" TOC once their current projects are completed, even when they know that the current projects are driving improvement in the wrong direction, or even no improvement at all?

Why do major companies in the UK feel that they have no need of focusing as they will get round to the real issues eventually and anyway they already know what to do, even if they do nothing!

Why do people stay in pain due to living in the wrong paradigm, especially when they know that they are in the wrong paradigm? Why is it better to stay where you are and die than to move and live (see Who Moved The Cheese)

What does it take to encourage people to think differently, to think even!!

And when you sit with people in this state the overwhelming feeling is one of shared grief, they are about to fail and there appears to be nothing that can be done to address the situation, and most likely more people will lose their jobs because the people at the top cannot bear to admit to their failures, there is a lack of morality at the top of many companies and this must be addressed.

The answer to all this....................well it starts with people accepting responsibility, being accountable, for the results of their actions and not blaming others. This is not easy as people will often try to shift the blame to others, but this aspect forces us to recognise that we are able to define our future for ourselves. It all depends who lies at the centre of our being, if it us then we become self-seeking in every decision we make without regard to the implications for others, it is "me" that counts and I do not have to care about anyone else (welcome to the post-modern world). But we do not have to inhabit the very core of our being, someone else can.

But this is not enough, there is a second aspect to the answer which is that we need to understand, define, and subordinate to our goal in life and the necessary conditions that must be achieved if the goal is to be achieved.

And remember the goal, the FRT if you like does not have us anywhere within it, part of the Prt yes, but not the FRT. The FRT is our legacy whether it is in life or an organisation is not the question, the FRT, the Goal, is what we leave behind when we move on.

Finally there is the question of leadership, and it is part of our progress through life that we are able to respond to the promptings of others, both those above us and below. Leadership comes from may places, from many people, but are we tuned to that message entering our lives or are we filled with all the noise of a fractured world? So listen to the promptings of our inner self, of those around us, of those perhaps with whom we have little or no contact and yet are able to give us valuable insight to who are we are and what we can be. Live life in crescendo, live it to the full, for we have but one life to make a difference to the world in which we live. Now you can see part of what I feel my legacy to be, hence the work in personal focus, hence the work within the church, hence the desire to see people grow, to be before doing.

Finally, here's a copy of Ted's review of Eli Goldratt's book The Choice: Review of The Choice.

Mike Dalton - TOC in innovation ...

Q1. Hi Mike. I'm reading your book, Simplifying Innovation, now - I'm about a third of the way through now and I'm liking it.  Before I ask about the book, can you tell me a little about yourself?

Hi Clarke - My wife, Carol, and I live in Racine, Wisconsin. I know that sounds like it’s close to the arctic circle, and this time of year it feels like it too, but it's only about an hour North of Chicago. We live there with our rescue pitbull terrier Sugar Bear, so that would definitely make us dog people. I have to say, the whole pitbull stigma is total rubbish—just media hype. Pitbulls (or Staffordshire’s as I think you call them in the UK) are intelligent, obedient and loving dogs that just want to please their owners - unfortunately that's true no matter what kind of idiots own them.

Q2. Why did you focus the area of innovation for your business and writing and how did you become involved with TOC?

Growing up in the midwest, Saturdays were project days; my Dad would wake me at the crack of dawn to tackle another home improvement or repair project - anything from automotive to plumbing, from carpentry to small engine repair. Honestly, at the time, it felt more like indentured servitude, but over time, I realized that I truly loved troubleshooting problems, finding solutions, and fixing things. Probably to the point of annoyance for my wife who sometimes feels like - "can't you just leave well enough alone." But for me, that's what coaching and  consulting on innovation is all about: Understanding what makes things work better and better. Identifying problems, finding solutions and helping implementing them.

 My first exposure to TOC was around 10 years ago when I was the general manager for SC Johnson & Son's North American industrial polymers business (now part of BASF). Our manufacturing operations saw such great results with TOC that I just had to learn more. So I spent some time with our Jonah, a guy by the name of Jeff Rideout, learning whatever I could. From there, I was hooked and  began reading and learning everything I could about TOC applications. 

Somewhere along the line, a good friend of mine, Dr. Paul Gloor,suggested that we should be able to apply it to new product development. So we began dabbling with TOC concepts in one of our new business units. We were investing heavily in new products and saw some real improvements. Over the next few years, we began integrating the thinking processes wherever we could--like using the future reality tree to plan new product projects and to look at what was constraining the success of individual new product projects. It became a very powerful tool for us, but we were just scratching the surface.

 Eventually, knowing there was much more there, I started my own coaching and consulting firm, Guided Innovation Group (www.GuidedInnovation.com) where I fully developed the TOC for new product innovation concepts and began helping companies use these concepts to drive improvement in new product growth and speed to market.

Guided Innovation is focused on working with companies that want more impact from their new product and innovation investment. With our unique, TOC based approach, clients have been able to slash time to market, increase new product profits, and reduce new product expenditures. Most importantly, they’ve been able to do so with their existing resources. Everyone talks about the importance of innovation, but no one wants to spend more money – nor should they. That’s where our approach comes in – helping them get more from what they’re already spending.

3. What's your new book about?

Simplifying Innovation is about how companies can use the five focusing steps of TOC to get more impact from their new product investment in less time. I have to say that it wasn’t my intention to advance the TOC body of knowledge with this book. Rather it was to make TOC accessible to an even wider audience – those responsible for new product development and marketing.

So the book is really more of a synthesis of some of the most effective concepts from innovation and marketing together with TOC as a focusing mechanism—just like TLS where Lean and Six-Sigma are now being combined with TOC for even faster improvement in manufacturing. For me that’s part of what makes TOC so powerful. There are all these powerful business improvement concepts constantly coming at you, but it’s hard to know which ones you need to pay attention to. In Simplifying Innovation, I show you how TOC provides a framework that helps you decide which problem to focus on and which tool to use. 

4. It's not easy writing a book, let alone a business novel.  Why did you go that way?

Rather than going the traditional business book route, I decided to bite the bullet and write a business novel inspired in part by The Goal. I say, bite the bullet because a didactic approach—one that teaches through story, is really like writing two books at the same time. You have to craft an engaging story line, including characters readers can relate to as well as conflicts and an important objective or goal. But as Carol Ptak, who I’m sure you know co-authored Necessary but not Sufficient with the Eli’s (Goldratt and Schragenheim), shared with me as I was getting started, weaving them together is a huge challenge. You can only advance the story line when you’ve made the teaching point, and you can only teach at the right point in the story line. Learning to do all of this was fascinating, and I really enjoyed it.

Of course business novels aren’t everyone’s cup of tea, so I also included a practical summary at the end. This is probably heresy, but that’s one of the things I always missed  in Goldratt’s books. Patrick Lencioni’s leadership novels always have practical summary at the end. I’ve read all of his books and I thought “What a great idea – I’ll do a summary.” It added 20 plus pages to the book, so I ended up going well over my target of under 200 pages. But some early readers have really appreciated it, so I think it was the right call. 

I’m also planning a second book, which would be a traditional business book and will be kind of step-by-step how to guide. It will be called the Simplifying Innovation Guidebook or something along those lines. I’m hoping to publish that in late 2010 or early 2011.

Here's the book on amazon: http://www.amazon.com/gp/product/061532939X?ie=UTF8&tag=newbook00-20&linkCode=xm2&camp=1789&creativeASIN=061532939X

cc-Pulse software - now free for 30 years...

Tony Rizzo announced today his company is now giving away cc-Pulse, their critical chain add-in for MSProject, for free, for 30 years.  cc-Pulse works for single-project critical chain projects.

Look here for details: http://www.pdinstitute.com/AllFramePages/FP_Critical_Chain_Software.html

-----------------------------------------------------------

If you have a TOC related product and you'd like to add details here (for free) then email me at clarke.ching@gmail.com and I'll see what I can do.

New copy of transcript

Thanks to Wendy Maxwell, we have a corrected transcript.

 I've updated the file on scribd ... http://www.scribd.com/doc/23593618/Clarke-Interviews-Eli-Goldratt.

But here it is in full:

CC:   Hi Eli, it’s Clarke Ching here, I’ve just clicked record, and we’re all go now. Can I just check: you’re in Amsterdam today, is that right?

EG:   Yes.

CC:   Do you live in Amsterdam?

EG:   No. First of all, it’s not Amsterdam. It’s Roelofarendsveen. It’s a small village near Schiphol. And no, I’m not living here, but this is my main office. I live in Israel.

CC:   Ah, right, right. You do live in Israel. I must say, I love Amsterdam but I’ve not been to Israel… yet!

EG:   You’ve missed something!

CC:   I know. I was talking to Eli Schragenheim at one stage, and I zoomed in on Google Earth to where he was living. It looked like a very nice place. Anyway, let’s get straight to what everyone wants to hear about, which is your new book. I read it about two or three weeks ago, but, just this morning, the actual paper version arrived with the post. It’s called ‘Isn’t It Obvious?’, it’s by yourself and you have two co-authors – which I might come back to later. But I wonder if you could perhaps just tell us a bit, or as much as you like, about the book. Why you wrote it.

EG:   Why I wrote it? You know, sometimes you don’t have a choice. A book is coming, and grabs you in the throat, and says “Write me!”.

CC:   Fair enough! I noticed that you touched a little bit on the topic of this: the retail solution in ‘The Choice’. ‘Isn’t It Obvious’ is an elaboration of what was in ‘The Choice’, and it looks to me, the way I read it, it’s the distribution solution that you’ve been writing and talking about for a long time now, but you’ve written this book from the retailer’s point of view.

EG:   Correct. As a matter of fact, I do expect, that, if we wrote the book appropriately, every reader, on the first reading, will be able to distil three main messages, which I hope are quite clear in the book. But, first of all, let’s talk about the title of the book. ‘Isn’t It Obvious?’ is the criterion that every scientist is using in order to know whether or not he reached a good solution. You are working on a problem, you can work on it for years, and then, one morning, you wake up and say to yourself “Oh, it’s right in front of my nose! How didn’t I pay attention to it. Isn’t it obvious!”. And only then you know that you have found a good solution. If you don’t have this sensation, suspect that your solution is not good enough. This is not to be confused with: it was obvious to find it. As a matter of fact, these solutions are the most difficult ones to find, but, once you find them, you know that they are there. So, basically, the message is: if you agree that it’s obvious, then you know it will work. At the same time, the real message is: keep on thinking about the solution until you reach this level. Only then you know that you reached a good solution.

And, as you pointed out, what I’m using in this book is solutions that I’ve been talking about for years, and have tried, and I know to what extent it’s working, and this is a solution for retail. I’m flabbergasted by the fact that retail still believes that the key is to find a better way to forecast! And they are spending an enormous amount of money on these– I’ll call them crystal balls, though today they are disguised as computer programs – to get a better forecast. And this is a huge industry! And nobody is doing even the most obvious check before they buy another module of forecasting. Let’s just take the past data of, let’s say, two years ago, load it in the computer, and see what the computer’s forecasting module will tell you about what should have happened a year ago, and check it with what really happened, just to find out that all these new forecasting modules are as bad as the previous ones. And it’s about time to realize there is no way to accurately forecast consumption on an SKU level. It’s theoretically impossible. So the only way out is to reduce dramatically our dependency on forecast. And this is the solution that I have been talking about for so long in distribution. So what I’ve tried to portray in this book is almost obvious. How clear is this solution, how well it works, and, more than that, that the results that are coming when you implement this solution is not a small improvement and it’s not a 10 per cent improvement. It’s really propelling the performance of retail to a new level.

The way that I wrote it is a little bit different than what I’ve done in ‘The Goal’, which is, in this book there is no Jonah. In other words, people are learning it from their own experiences. There is no smart, wise man who gives a solution. You’re learning the solution directly from experience, and that’s why I believe that if ‘The Goal’ had the impact on manufacturing as it was, this book will have an even bigger impact on retailing. An even bigger impact, hopefully. So, one message of the book is a retail solution. A solution for retail in a way that I hope that people cannot ignore anymore.

CC:   Actually, if I can just say that I read it and it was one of the clearest, quickest reads I’ve ever read. I think you’ve succeeded there brilliantly.

EG:   No, no, no, no! I will not take the credit here. Here the credit must go to the two co-authors that I had.

CC:   Ilan and Joe? Ilan Eshkoli and Joe LeerBrown

EG:   Ilan and Joe, yes. You see, ‘The Goal’ was so readable not because of me, but because of Jeff Cox. The only problem was that it was – how shall I say it – painful to write it. You’re writing with a gifted writer, like Jeff Cox is, and after he writes, let’s say, two drafts and he writes it a third time, and he’s happy with what he has. And then to come and say, “No, it’s not good enough. Here and here it’s not portraying it accurately enough, and here it is not precisely logical, and write it again, and write it again.” And what is happening is you start to fight! And, after we finished writing ‘The Goal’, I said “Never again!”.

CC:   Really?

EG:   Oh yes. Never again. It was about 13 months that it took us. The first few months were nice. After that, we were fighting about the problem of rewrite and rewrite. Maybe I’m a perfectionist, but that’s what I am. So I said “I’m not going to work anymore with writers!” So I wrote on my own, but then my problem is that I’m cramming much too much in each chapter, and that’s why it’s not as readable. So, this time, I decided “Let me try again.”. But, I tried something new. Rather than working with professional writers of books, I decided to try to write with profession writers of TV and movies. That’s what Ilan and Joe are. You see, my assumption was that, in movies, the one who writes the script has to change it and change it even on the day of the shooting.

CC:   Yes, Yes of course.

EG:   So they would have, I hoped, much less inertia to re-write all the time and to polish, and that’s exactly what happened.

CC:   And that’s probably why the book reads so quickly as well, because that kind of format is much quicker by nature, isn’t it?

EG:   Correct. And, if you notice, for example, there are no pages where anybody is thinking to himself. Because, if a person thinks for half a page, the camera doesn’t know how to work the shoot. Or, when there is a dialogue, the heroes are moving, so the camera will have to move!

CC:   Yes, Actually that does explain something for me, because, when I read this book, I read it just so quickly. I just raced through it, and I was actually at the end of it going, “Wow I got so much information out of it!” I almost feel robbed that I wasn’t reading it a day or two later! So they did a very good job in that respect.

EG:   Very good job. But, at the same time, you have to realize there isn’t a single chapter there that was not re-written at least five times! There is one chapter that was re-written sixteen times! There were also chapters that went to the basket, even though they were very good, just because they interrupted the smooth rhythm of the book.

CC:   Yes, yes. I can understand it totally.

EG:   And here I am really grateful for these two people who were so accommodating, and didn’t have any inertia to re-write it, and re-write it until all three of us felt very good with the outcome. So the fact that it’s so readable, I would say that all the credit should go to them.

CC:   Very good. So, you were saying that the retail solution was the first of three points.

EG:   Yes, correct.

CC:   And then I interrupted!

EG:   The other two points are a little bit more subtle. One point that I wanted to bring across – and I think that I’ve already started to do it in ‘The Goal’ and in all my books, but in this book we put so much more emphasis on it ­– is that in the formal text books, and certainly in the universities, I think that there is not enough emphasis on the role of the informal system. And to what extent the informal system is not just an integral part of running a business, but to what extent it is important in running a business. And I’m talking about the fact that there are relationships between people that allow them to not follow the formula system and, because of it, to improve the performance so much. I’m talking about family relationships and I’m talking about friendship, and to what extent this is key in running a business.

CC:   Like the relationship between Paul and Roger?

EG:   Roger, for example. Without that, it wouldn’t have happened.

CC:   No, it couldn’t have.

EG:   And such things do exist in reality, in every company. Why don’t we pay enough attention to it? Why don’t we understand how important it is to encourage it, to support it. So that was the other thing that I put throughout the book; I wanted to show that the informal system is almost as important as the formal system.

CC:   Okay, I can see that, actually. You’re right, it is subtle. I hadn’t realized, but, throughout the entire book, everything gets done apart from one bit where Paul goes to his boss. Is his name Martin, I think?

EG:   Yes.

CC:   And he actually starts working the formal system at that stage. Did you start writing the book with that intention of putting him in such a…?

EG:   Absolutely, absolutely. Otherwise I could not write it. Absolutely. And the third message, which I hope that everyone that reads it will get, is to what extent, if you are implementing a good solution and it works and you get now much better results, to what extent your mind should be not on continuing to polish it – because then you will reach diminishing returns – but to realize that this solution that you’ve implemented is really elevating the company into a new level. It gives a much bigger and better platform to do the next jump, which, by definition, since the platform is bigger, the next jump is bigger than the previous one. And not to fall into the trap of saying “We’re already the best in the industry. We are number one, so we’ve reached it.” No! The opposite is true. Which is: the better you become, the bigger the next jump can be, if you just allow yourself not to be trapped in the box that you put yourself in. So what I’ve done in this book is: I’ve done three such jumps. Every time you think “That’s it!”; no, no, no, no, it’s just the beginning, And that’s why the last sentence of the book is ‘Even the sky is not the limit’. And the reader understands that that’s correct.

CC:   It is, too. Yes, I’m just looking at that page now.

EG:   The idea is, my idea is to write six such books. As a matter of fact, those who know TOC know very well that what I’ve done here is nothing but taking one of the standard S&T trees and to turn it into a novel. Now, there are six S&T trees for the various segments of the industry. So this one is for retail. But there are five more, which my intention now is to find excellent writers and to write them one at a time. So the next book will be called, most probably, ‘Isn’t It Obvious 2?’ and then ‘Isn’t It Obvious 3?’ Each one covering a totally different section of the industry, but with the same ideas, which are every huge step, that really changes and really elevates the company to another level of performance is just the platform for another jump, for another jump which never ends. And that’s what I want people to realize.

CC:   Okay, that’s interesting. One of the things that I noticed in it, which I thought might have been another theme – actually I suspect it might have been one of the three – was to do with the current economical situation.  How by reducing the amount of inventory and the amount of cash they needed, that was (it just seems very relevant now) the less cash you need to run you business.

EG:   It’s not just the less cash. As a matter of fact, if you are talking about the current situation, this financial crisis that’s after this super sophistication that was so stupid and created the financial meltdown, it turned into an economical crisis only because there were too many inventories in retail. If there were not these mountains of inventories in retail, we would have passed through it without any trace of economical crisis. But no, this was not my intention, because, when I’m writing such a book, I’m not writing it for this year.

CC:   This is an evergreen, isn’t it?

EG:   Yes, correct. Correct.

CC:   And here I was, I thought I was clever, because I just…

EG:   Yes, it’s more relevant now than ever, but this wasn’t the intention.

CC:   Okay, that’s good. So you’re here with three points. Now I’m familiar, passingly, I suppose – if that’s actually a word – with the S&T trees. I know that project management is one of them. Is that right?

EG:   Right.

CC:   So, would you intend doing a rewrite effectively of ‘Critical Chain’ with the new knowledge that’s out now, in ‘Isn’t It Obvious 5’ say, or…?

EG:   Yes, correct. As a matter of fact, the book that we’ve started to work on right now – and we are really well advanced into it – is not a critical chain, but the ‘make to order’ environment. In other words, we are going back to the environment that is described in ‘The Goal’ in order to put all the new knowledge in. And, if you notice, ‘The Goal’ is finishing much too early. In ‘The Goal’ there isn’t a clear way to show that the sky is not the limit. In other words, I have to take it through three jumps, where what ‘The Goal’ has shown is just half of the first one.

CC:   Aha. Actually, here you did write; he’s got to the point where he’s rescued his factory. They’ve found new capabilities, but they’ve not really exploited them beyond the one factory.

EG:   Not at all. Even that factory was not really capitalized. Anyhow, the real thing is the three other messages that I’m afraid that people will not distil after the first reading. And then, maybe, if you highlight it, people will get it, even in the first reading. Are you interested in hearing about them?

CC:   I suspect I probably am, Eli, yes!

EG:   The first one is: how do you invent? Invent powerful solutions to your real problems, to your environment. And most people think that, maybe, you have to be born with this ability to invent. What I’ve tried to show here is that every good manager is a fantastic inventor. But you don’t pay attention to it, and you waste all the inventions. Let me explain a little bit what I mean, okay? Every manager faces emergencies. And he reacts to emergencies. What can he do? As a matter of fact, a good manager will react quite well to emergencies, and he solves the problem. And what we have to realize is: whenever we react to an emergency we actually deviate from the standard rules. Always! What people do not pay attention to is that you don’t just deviate from the standard rules, you are actually following a different set of rules. And the point is: after the emergency is over, why won’t you take the time to verbalize the new set of rules that you just followed? Then think on the following; if I would have used this set of rules not just in emergencies, but in the normal day to day, what damages will happen? What undesirable effects will result, and how can I prevent them? Because, if you will now augment this new set of rules with what should be happening, in order that, when I’m using them in day to day life at the normal time they do not lead to anything negative, what you are ending up with is a set of rules that is so much better than your current rules. So much better, that even emergencies are handled as if there is no emergency. And that’s what I’ve shown in this book, if you notice. Okay, a pipe is broken. Emergency. Fine, you react to it. But then what is even Paul saying? He’s dying to go back to normal! Wait a minute, pay attention. Look at how much the situation is better now. Think, how can you use it on a daily basis, because then you get this huge improvement. And that’s what’s happening in this book.

CC:   It sounds like you’ve done it deliberately in the book.

EG:   Absolutely.

CC:   As a plot device, I thought that the emergency with the pipes at the beginning was ingenious, and I thought your co-authors had done a fantastic job of coming up with that, because it just works so well. But, of course, that was planned, is what you’re saying here.

EG:   Absolutely! But what I’m saying is: this is always the case. For example, take ‘The Goal’. In the first chapter, he faces an emergency. As a matter of fact, the emergency is so big that the head of the division comes to say, “There is an order which you are late on. You must expedite it!” So they expedite it. And he’s bitching and moaning about it. At the end of the book he’s doing exactly the same for the big order that saves his bottom line. If he would have just stopped after the first chapter and said, “I’ve deviated from the rules of how we are running a plant. It did work, I did send the order earlier. What are the new rules that I’m following?”, he would have saved the whole book, and he would have invented it rather than Jonah. Because, let’s face it, the way that he handled his big order at the end is exactly the same concept that he handled the emergency in the first chapter. It’s always the case. So, if people would just pay attention to it, everyone becomes an inventor.

CC:   That’s intriguing. We have the same problem. My specialty is software development, and we have the same pattern. It goes on and on, over and over again in projects. They get to the end, they realize they can’t finish on time, and then they do what they should have done to start with.

EG:   Yes. But there, distil the new rules that you are actually following in the emergency. Trim the negative ramifications of them, and then you have the new system. This always works.

CC:   Yes, yes. And it’s just amazing, though. Your advice is very good, but very, very few people do it.

EG:   Almost nobody! Almost nobody. Everybody will just want to go back to normal.

CC:   Yup. I had a medical emergency three years ago where I ended up in hospital and nearly died, but I was very, very healthy for six months afterwards! And then, of course, slowly reverted back to the old ways. And I guess it’s the same.

EG:   Yes, it’s the same. Well, this is the second message which I’ve tried to show: that, even if you do it once and as long as you don’t fall into the box, the sky is not the limit, because there is only one emergency in the whole book!  **

CC:   Yes, yes there is. Everything flowed very elegantly after that.

EG:   Correct.

CC:   Can I ask, with this book, was it based on – I know you’ve done the solution which is embedded in the real world – but was this based on any particular company when you were writing it?

EG:   No, no, no, no. Let’s put it this way, okay? We have tried this idea in dozens of companies, so the knowledge, the detailed knowledge of exactly how to do it and so on, was evolving through the years. So this book is just the accumulation of this knowledge.

CC:   Right.

EG:   But it’s not any particular company. It’s not like in ‘The Goal’, where I based it on three companies that I’ve dealt with at that time. So I see these three companies; here it’s dozens. The experience here is enormous. And, by the way, the numbers in the book are accurate, but conservative relative to reality.

CC:   Okay.

EG:   Those are the minimum numbers that we ever got.

CC:   Right, right. Why is that? Is it that you didn’t want to sound too crazy?

EG:   Anyhow, nobody will believe the numbers!

CC:   That makes good sense, okay. I understand that. Can I come back; you said there were three points.

EG:   Yes.

CC:   That the first one was, how do you invent.

EG:   How do you invent, yes.

CC:   The second one, i.e. …

EG:   The second one is much, much different. It’s different, but in many senses it’s broader, which is the whole subject of resistance to change.

CC:   Now we’re cookin’.

EG:   You know that I was adamant against ‘People resist change!’ and all this mumbo jumbo. Yes, of course people resist change when they have to resist it. And people embrace change when they have to embrace it. As a matter of fact, look at the usual thing like, people want to get married even though they know that this change will change all their life, they still want it. So they are not born resisting change. As a matter of fact, what people are doing is looking on the proposed change, and they evaluate for themselves if it’s good or bad. And, remember, a major part of the good or bad is the risk involved, the unknown involved. This influences the decision dramatically. But, when they come to the conclusion that it is good, they embrace it, and when they come to the conclusion that it’s bad, they resist it! What is important to realize is that, when we come to judge any suggestion if it’s good or bad, we are judging it according to some patterns that we have in our minds. Patterns that came from our own experience. These patterns, many times, are not correct. And if you notice, in the book, what I’m trying to show is some very important things like: the first one to resist change is the inventor himself. Paul is resisting his own change. He just wants to go back to normal. And, if you read very carefully why, there are patterns in his head that say “Ah! All the good results that I’m seeing are just a fluke.”

CC:   Yes, yes.

EG:   Now, where is it coming from? And, as a matter of fact, our own patterns are coming from two different things. One is that, when we have a major problem that really hurts us and we’ve tried and we’ve tried, and we cannot rectify it, protective mechanisms are coming into the game. And these protective mechanisms are actually that we’ve become blind to the problem. We accept it as part of life, it’s not a problem anymore. These are very wrong patterns. Now, if you notice, the first one that I’m talking about is: how much sales are lost due to shortages? Paul knows very well that about 25 per cent of the SKUs that were supposed to be in his shop are missing. But how many sales are lost? And, if you notice, he’s totally convinced that it’s only two or three per cent. And this is not just Paul, this is almost every retailer that I’ve talked to. Now, when you start to analyze, it’s crazy to think that it’s only two or three per cent. Because: why are these items missing? Because they are not selling? Or because they are selling more than the average that are missing? So if 20 per cent of the better running items are missing, how can you say that sales were impacted only 2 per cent.

CC:   Yes!

EG:   That’s the defensive mechanism patterns that exist in people’s heads, which block them from judging the value of the change. This is one type of pattern. The other type of pattern is that, when you are used to some environment, you will draw patterns from it. And you will not pay attention to the fact that there are other environments. For example, the second pattern that blocks Paul is that he says “If sales are going up by so much, how much did the profit go up? I know that I’m making six per cent profit and this means that, if sales went up by X, my profit went up by this X times the profitability that I have, which is only six per cent of it.” What is it based on? It’s based on the fact that usually, when sales go up, all the expenses that are associated are going up at the same rate.

CC:   Right.

EG:   What happens when sales go up and expenses stay exactly the same? Then the impact on profit is huge.

CC:   Enormous, yes.

EG:   But he doesn’t see it anymore, because the pattern is there.

CC:   And he can’t see it, because he doesn’t have the lens. He just doesn’t have the experience.

EG:   “He can’t think.”, “If he would think about it.”, and so on. Or, somebody will highlight it to him. We are not stupid. Nobody is stupid, so, when the fallacy of the pattern is highlighted, then he has a base to evaluate his own invention and then he becomes almost zealous about it.

CC:   Right. Right. Yes.

EG:   But this is not just Paul. This is every person. What is important to realize, and that’s what I’m showing in the book: that when you go below, to people below you, they are blocked by patterns as well. But different patterns. And, as long as you don’t address it, they will fight you to the hilt. If you identify these patterns and show the fallacy of them, then immediately they are in favor of the change. Look at the people who are working for Paul. There is the pattern: if inventory goes down and we don’t bring more inventory, this means the shop is about to be closed.

CC:   Yes. Yes.

EG:   This is a pattern. As long as this pattern exists, they will resist the change and they will even take actions that will kill you. You have to identify it, you have to take the action to show them that the pattern is false, and then they are all for it. Likewise, after that, when Paul talked to his peers, they are blocked by the same patterns that he was blocked with. But there is a huge difference. Paul went through an experience that enabled him to be more open to evaluate the change. They had not. Which means that the amount of work which is needed in order to verbalize these erroneous patterns much better, and how to prove that they are false, is much bigger. You do it, everybody is with you. You don’t do it, you will never change people. How to identify the patterns and how to go about exposing their fallacies; if you look, there are two chapters devoted to it. One is a chapter where they are preparing the presentation and the other one is the chapter where they give the presentation. Follow this chapter, this is a recipe, a generic recipe of how do you identify the wrong patterns and how do you overcome them. And then everybody’s with you.

CC:   I’m just making a note to re-read those two chapters right now!

EG:   Then you have to realize that, above you, the people are blocked by different patterns. It’s not the patterns that blocked you and your peers, it’s not the patterns that have blocked your people – there are different patterns that block the top management. And, again, the same thing: you have to identify them and to show that they are false, and then everybody is with you. And that’s the real message throughout the book. I’m showing that the only resistance to change is coming from erroneous patterns that cause people to judge the change as not good, as too risky, and so on. And, when you identify the patterns and you show the fallacy, how quickly people change their attitude! To the extent that the whole change has happened in nine months. And everybody’s for it. This is generic. This is what I’ve seen again and again in reality. My problem is to what extent we don’t understand it, and then we are trying to use force or incentives and all of that, rather than addressing the real thing! And that’s the real message of the book.

CC:   Right. I do remember those two chapters. They did change pace slightly, and that’s interesting. I hadn’t realized what was going on there, but you did talk about that, so I’m going to go back to them. But can I ask, you’ve overcome your own inertia, your own patterns, you’ve figured out something. You’ve then got to get into the world of the people, that say, work for you, and the people you work for, above you, or even in the case of the book, the vendors – getting them to work differently. How do you get to understand the world that other people’s patterns have. How do you go about that? That was a very poorly articulated question!

EG:   No, no. It’s a very good question. But, for that, you have to read another book, which is ‘The Choice’. In ‘The Choice’ I’ve shown exactly how it is done. And what are the obstacles that prevent you from doing it, and how to go about overcoming them. That’s the whole message of ‘The Choice’. My problem is that most people who have read ‘The Choice’ did not fully understand it. And then what I’ve done is: I went back to complain, or to cry on my daughter’s shoulders, saying, “Nobody understands it.” And she said to me, “Father, I told you so!” And I said, “What do you mean?” She said “Look, when you have asked me to work, and to give you my input” – which has changed the book dramatically; ‘The Choice’ started as a fictional book, basically a documentary almost on the discussions that I had with my daughter – she said, “From time to time, I’ve asked you what is the whole logic of this thing? And I gave you a logical map with, you know, entities and arrows, and, in the beginning, you said “Ah! That’s not the case!” and you scribbled for me the logical map.” She said, “I worked on it so hard. I understood these maps. I wrote the notes on it: it was the only way that I could understand what you were talking about.” And then I said, “Can I see again these logical maps and your notes?” And we worked a little bit more on them, and the next version will contain, for each chapter in ‘The Choice, an Appendix which is maps and notes, so people could really understand it.

CC:   Ah, fantastic, fantastic. I must say, I liked ‘The Choice’. I read the early version, the draft that you sent out. I can’t remember what it was called, but the early version. I haven’t read the latest version.

EG:   So, if you want and you don’t want to wait until the new edition is published, Wendy will be delighted to provide you with the Appendices. Of course, in the next version I have to acknowledge fully the contribution of my daughter so she becomes a formal co-author because, first of all, all the Appendices were written by her. The second thing is: her editing or her talking to me in the book has change the book totally, so it became almost a real description of the dialogues that we had.

CC:   Ah, right, right. I really enjoyed ‘The Choice’ as it came out. It was harder to read than the other books, because it made me think so much more, and it was one I’ve set aside to take away for Christmas so I have something to read!

EG:   If that’s the case, I will highly recommend that you get the logical maps and the notes of Efrat. This will make it so much easier to read.

CC:   Very good. My favorite book of yours is probably ‘The Essays’ book. [Essays On The Theory Of Constraints]. It probably says a lot about me; I mean, I love ‘The Goal’, and I’ve read every single one of your books at least three times, apart from the last two, which I’ve only read once each so far, but ‘The Essays’ book I sort of keep dipping into that at random. Actually I don’t think I’ve read it the whole way through since the very first time, but I really enjoyed that. And I think ‘The Choice’ would be another one of those ones where the ideas will take a long time to percolate.

EG:   I hope it will take a shorter time now, because in my eyes ‘The Choice’ is by far the most important book that I have ever written.

CC:   Actually, you know, when I read that, it was like – I remember reading it and trying to explain it to someone – it was like “ah, ah, ah....”. I suppose it’s been 10, 12 years since I first read ‘The Goal’ and I’m quite convinced that I think very differently now than I did 10 years ago, and largely that – I would say, if I summed it up – it is probably the simplicity  and the win-win. And I read those ideas, I got them, but it’s only, probably, in the last five or six years that… I almost think in terms of clouds at times now, which…

EG:   Lovely, lovely. And once you think not just in terms of clouds, but in terms of trees, then you will see how clear the world around you will start to become. And, more than that, how good the people are that are surrounding you.

CC:   That was the other thing,  that people are good.

EG:   Yes.

CC:   That’s one of the ‘isn’t it obvious’. I have a friend with whom I often argue, and he will say people are stupid, and I’ll say they’re not stupid. They start out, they’ve got good intentions…

EG:   They are so far from stupid. The problem is that the wrong patterns are causing their conclusions to look stupid sometimes. They are not stupid at all! Which brings me to the last message of the book, which is: if you recognize that the resistance is coming from patterns and you learn to overcome them, then, actually, you can change a company from anywhere that you are in within the company. You don’t have to go from top down, you can go from bottom us as well. And almost at the same speed. If you notice the whole change in this book is starting from bottom up.

CC:   Yes, yes, yes it is. Because Paul’s in the store manager position.

EG:   Yes! And what I’m trying to show people is that it doesn’t matter where you are in the organization. It doesn’t matter how big the organization is. If you just approach it in this way, you can change the whole organization.

CC:   Okay. That’s quite remarkable, actually. You’re right. These last three points, they’re subtle, but they’re, they’re all through the ...

EG:   They’re there all through the book, and, if you are keeping them in mind and you read the book again, you will see how clearly they are coming out, and to what extent in this book. It’s not just about retail, it’s a recipe about all these comments.

CC:   Mm, mm. I’m not going to call you a liar here, but how do you – when I write, I’m always amazed at what comes out the other end. Yet you sound like you write very clearly to me. Thoughts that are already very, very clear in your mind. I write to learn, and that takes me a long time!

EG:   But still, don’t forget, this book, even though Ilan and Joe were so helpful, it took one and a half years.

CC:   Really! Really.

EG:   Mm hmm. It’s what it takes to write such a book.

CC:   Of course it does. My version of ‘The Goal’, I’m currently in the re-write of that at the moment. I’ve been going for five years, sort of dipping in and out of it, and I can completely understand one and a half years, but I’m awed by that. Anyway. So, when did you finish this?

EG:   ‘The Choice’?

CC:   ‘Isn’t It Obvious?’

 EG:  ‘Isn’t It Obvious?’. I think that I finished it in May.

CC:   Right, right. And so it’s taken you about six months or so?

EG:   That’s what it takes until the proof reading and the publishers and all of that. And, more than that, who cares? It took so long for the book to be written, it can take another two months, that’s not the problem. Especially when I was not standing idle waiting for the book to come out, as a matter of fact, I immediately moved to the next book.

CC:   That was going to be my question. So this is the ‘Make To Order.’ Is that right?

EG:   Yes. Yes.

CC:   And you have another year, roughly, to go on that?

EG:   Hopefully. Look, what I’ve learned is that I’m too old to have deadlines, and the pressure of deadlines! I am doing what – let’s do a very good job in how much it takes and, as much time as it takes.

CC:   I like that. I’m going to get a cup made up of that, ‘I’m too old for deadlines’.

EG:   Absolutely. I’m too old for deadlines.

CC:   Do you enjoy the writing?

EG:   Er, sometimes. Sometimes I hate it.

CC:   Right.

EG:   Sometimes it’s painful, but always rewarding.

CC:   Yes. Yes. What’s your favorite book? Apart from ‘The Choice’. I know people pick out ‘The Goal’.

EG:   The book that I enjoyed writing, and I still think that it’s a very important book, is ‘The Haystack Syndrome’.

CC:   Ah!

EG:   I’ve tried to say – with this book, I’ve tried to say the whole very important subject, which is artificial intelligence. Do you remember the time that everybody was talking about artificial intelligence?

CC:   I do. I was at university studying computer science, at the time.

EG:   How lovely. And then, what I find out is, that they start to deviate into what they called ‘expert systems’.

CC:   Yes.

EG:   And I knew that that was the end of artificial intelligence. So I wrote ‘The Haystack Syndrome’ in order to save artificial intelligence. To show how an artificial intelligence should be developed.  The three main steps, and so on. Unfortunately, nobody paid attention, and artificial intelligence is almost sunk.

CC:   Right.

EG:   So I failed.

CC:   That’s intriguing. I’m just looking, and I can’t see ‘The Haystack Syndrome’ on one of my bookshelves here. I’m going to have to read it again now, aren’t I? When you frame it like that, it was such a big leap away from what you had been doing beforehand. I suppose it would have been hard for your – I’m not sure that followers is the right word – your audience to move and probably pick up on that message, was it?

EG:   Er, let’s put it this way. I didn’t do a good enough job in describing – how shall I say it – people did not distil from it. That I’m not talking here about just computer programming and how to schedule a plant. That I’m really talking about: how do you go about inventing and writing effective artificial intelligence? And, if you notice, the first section – there’s three parts to the book – the first one is: how do you go about formulating the decision rules?

CC:   Yes.

EG:   Without it you will never have artificial intelligence. The second one is: once you have the decision rules, how do you verbalize and formulate the applications of them?

CC:   Aha, yes.

EG:   And the third one is: how do now take all this body of knowledge and convert it into specifications for a computer.

CC:   Right!

EG:   And what I tried to show is a generic way to do them. When the ERP, or the scheduling problem, was just an example.

CC:   Yes, yes. Of course, because that was your example.

EG:   Yup. And people pay attention to the example and not to the…

CC:   Rather the concrete... rather than the lessons that surround it. Ah! That’s intriguing. It’s been so long since I looked at that. Probably ten years, I’m guessing.

EG:   if you go back to it and look on it, you’ll see to what extent I was so meticulous in describing the process that you are using, you know, to do it.

CC:   Yes. I remember the information; the answer to the question you asked…

EG:   Mm hmm. What is information?

CC:   It was the answer to the question you ask, is that right?

EG:   Basically, whenever you have confusion, go and find out the word that has more than one definition, that causes the confusion. That’s the starting point of the book.

CC:   Right! I’m going to be busy reading over Christmas, I think! Okay, well that’s very interesting. Do you mind if I ask you a little bit about Japan? You’ve just been over there for the conference.

EG:   Yes.

CC:   I’ve not actually attended any TOC conferences, but I’ve seen the videos of a few of them, the DVDs.

EG:   Yeah.

CC:   Was there anything special come out of this particular conference that you’d like to talk about? I’m hoping there is, when I put it that way!

EG:   For me, this conference was quite different from the previous conferences but, in one aspect, which is: I was talking – like in every other conference – on the new developments that I’ve done since the last conference, in other words, the new developments of the last 12 months.

CC:   Right.

EG:   And I was talking and giving just the highlights of it for two days. Now, in the past, whenever I came with new knowledge, the experts – and remember, this conference is for the professionals – I had mixed emotions. I couldn’t but feel that, from one side the happiness was in the new information – new inventions, if you want to call them this – but at the same time they are reluctant. It’s as if the new information somehow diminishes the importance of what they know already, or criticizes what they know already. And this always gave me a hard time. Because, for example, when you are a physicist and you are going to a conference, what are you expecting to hear? Why are you going at all? Only for the new things.

CC:   The new stuff. Of course, yes.

EG:   So you take it for granted there will be new stuff. More than that, every new stuff is totally taken for granted that it’s built on the previous stuff, and that it’s adding another layer, an important layer, not that it’s criticizing the previous one. And, somehow, in the most social subject of management, this is not the attitude. The attitude is that if there is a new thing, it is replacing or criticizing the previous thing, which shouldn’t be the case.

CC:   Right.

EG:   This year, at least my impression was that the community at large greeted the new developments in the right way. Even though, I think, that there was, in the year before, that I’ve presented so many breakthroughs, important breakthroughs, the whole attitude was: “Give more, give more, we do realize how important it is. We do realize that it’s built on the previous. We are not taking it as criticism of what we know already, but the opposite.”

CC:   Why do you think it was different?

EG:   Maybe because the community is more mature.

CC:   I presume it was a large Japanese, or…?

EG:   No, not so much. I would say that about one third were from the area of Korea, Japan and so on, and the other was from the rest of the world.

CC:   Okay, okay.

EG:   So it was a real international conference. Maybe the TOC community are starting to understand that TOC is much more physics, than it is economics.

CC:   Right!

EG:   That it’s a real science and that its evolution is an evolution of real science.

CC:   Right, right.

EG:   So in this sense, it was beautiful.

CC:   I was just going to say…

EG:   Yes. The other things were the things that I expected. You know, many more testimonials of companies which are further along the line, so we are hearing more and more about companies that have already reached ‘ever flourishing’.

CC:   Right.

EG:   And what is the meaning of ‘ever flourishing’? Maybe this year it was more clear, because 2009 was supposed to be a big recession year. And to see these companies’ performances on the background of the recession, shows to what extent the claim that, if a company does know what they are doing, the world around them can go through whatever turmoil, they will continue to flourish without any dent in their growth.

CC:   Right.

EG:   And to get such cases, for example, a company that shows growth year after year, and then they have to put an arrow to show ‘here is a recession’. And if they wouldn’t put the arrow, you wouldn’t have known that there was a recession. And to get these kind of testimonials, and the companies are not talking anymore about DBR, or about CCRP or about the T, I and OE.... They’re talking about the gestalt of the whole way of running a business.

CC:   Right.

EG:   And that’s what is starting to be more and more testimonials because more and more companies are reaching this stage – remember it takes years to reach this stage – and this is, let’s say, so reassuring. It gives you so much confidence on how many people are good, and are able to use it. And each one of these companies have brought all the management team, and you see how the relationship and how – these people in terms of team, of collaboration – these are a different type of companies now. And to see it with your own eyes and to talk with them is such a delight.

CC:   I can imagine. This is probably going to sound like a silly question, but I believe you turned 60 a couple of years ago?

EG:   Yes, I’m old!

CC:   I don’t want to rub it in!

EG:   I’m old, yes.

CC:   Well I just turned 40, and I’m reeling from the shock! I’m rolling back, I can remember 20 years ago, when I was 20, I couldn’t have imagined, then, doing what I’m doing now. I was a programmer, and that was me for life, and I was sorted. Forty-ish years ago, you were a physics student.

EG:   Mm hmm.

CC:   Could you have possibly imagined that you would be having this conversation, or going to conferences and hearing these stories, 40 years later. Did you ever have that as a goal of where you were going? Put it this way; has life turned out remotely like you expected it to?

EG:   I will answer it, but, please, don’t take it as arrogance! When I was 20 years old, on my birthday, I committed to my goal in life, so yes, in a way, it was all planned. My goal in life at that time was – and still is – to teach the world to think. And that’s why I went to learn physics, I wanted to teach myself to think, not in order to learn physics. So in a way, yes, I’ve seen it. But, at the same time, I can tell you without any hesitation, I never believed that I would live long enough to see what I’m seeing now. It’s beyond all my expectations.

CC:   Really, really?

EG:   Yes, You know, some people are saying, “Why are things still moving so slowly, and why is not everybody adopting it?”  This is a huge collection of paradigm shifts. If you would look on everything that involves a paradigm shift, you will look and see how many years it took until the paradigm shift was accepted as a norm.

CC:   Yes.

EG:   And, if you are really comparing the speed in which TOC is accepted by business, I don’t see anything in parallel. TOC is moving much, much faster than anything that I’ve seen. Let me give you an example, okay?

CC:   Mm hmm.

EG:   The first article on critical path was written in 1906.

CC:   Oh, really? Wow.

EG:   Yes. Now, this is a real paradigm shift. Here you have a PERT of, let’s say, 3000 tasks, and here comes a person who says “Forget it, just look at the critical path that is composed of maybe 30 tasks. That’s the key, on that you have to focus; everything else is just supporting.”

CC:   Right.

EG:   Huge paradigm shift. Now, the first real articles that start to refer to it are – you have to wait until 1936. PERT implementations you have to wait until 1950. Only in the 70s it started to become the norm, and everybody is taking critical path as the norm.

CC:   Yes.

EG:   This is 60 years. Now look at Critical Chain, which is a bigger paradigm shift. Along the same lines, but much bigger.

CC:   Yes.

EG:   That book was published in 1997. It’s only 12 years! And look to what extent it’s used now, in so many of the largest companies in the world, by ministries, by everybody. 12 years only! So can we complain on this slow adoption? That’s why it’s still flabbergasting to me. To what extent TOC is accepted! And I’m very grateful, to tell you the truth.

CC:   That makes good sense, actually, when you look at it like that. I hadn’t realized that critical path was that old, but then we often look back on the great buildings, the pyramids, and so on and so on, and I wonder how they planned them.

EG:   Oh! By intuition, they have used critical path for it, for sure. By intuition. But I’m talking about the verbalization of it.

CC:   Right.

EG:   And even then, how much time it takes.

CC:   And they were maybe too old for deadlines as well! I’d venture they built things in decades.

EG:   They had a very, very strict deadline. Don’t forget, the pyramids were the tombs, and they had to be ready for when the pharaoh is dead.

CC:   Yes, yes. It’s a shame they didn’t have a way of lifting up each layer so that they would always start with it this tall, and then as they go on and on and on, jack it up another level. It would have actually always finished precisely on time.

EG:   These were huge inventions.

CC:   I’m conscious of your time here. We’ve just been talking for an hour now, so. Is there anything you would like to add? I’m going to pop this out…

EG:   Not really. I think that your questions were very nice in guiding me to really express what…, so I don’t have anything to add.

CC:   Very good, and thank you very much. I will just click pause now, just hang on for just one moment after this. This will go up on my website and all of the various TOC groups on the internet.

EG:   Excellent.

CC:   Thank you very much for your time. I’m just going to press pause now, and that’s us.

EG:   Thank you for your time.

[End of interview]

Eli as he was being interviewed...

Eli as he was being interviewed...
Originally uploaded by Clarke Ching

Here's a picture of Eli as he was doing the interview. (Photo taken by Wendy Maxwell)

Interview Transcript

For a surprisingly low cost, I managed to outsource the transcribing of my interview with Eli to, of all places, Italy.  The results are very good, I think, although there are probably a few errors.

You can read (and download) the interview here:

http://www.scribd.com/doc/23593618/Clarke-Interviews-Eli-Goldratt

Isn't it Obvious? Interview with Eli Goldratt (mp3)

I've just finished talking with Eli Goldratt about his new business novel Isn't It Obvious.  

You can download the mp3 file here: http://clarkeching.libsyn.com/index.php?post_id=552869

In the 60 minute interview Eli talks about the book's title (it's kinda obvious why he chose the title when you hear his reason), the three obvious lessons from the book and the three less obvious, but more important, reasons.  You'll also hear about his next book, which he's currently writing  ... and the four after that.  You'll hear about the writing process and, I'll bet, you'll have reread "The Choice" and "The Haystack Syndrome" by the end of the year.  

I hope you enjoy the interview and please share.

[Oh and while you're here, why not read Rocks Into Gold - think "The Goal" crossed with The One Minute Manager, but set in the murky world of commercial software development.  It's free and you'll read it in about 20 minutes.]

Eli Schragenheim and Bill Dettmer - Supply Chain Management at Warp Speed

It's not every day you get to chat with two of your heroes ...

I've just completed a fascinating interview with two of the TOC Worlds most brilliant and innovative thinkers. Bill Dettmer and Eli Schragenheim. Although the focus of the interview is on their new book "Supply Chain Management at Warp Speed" we also wander off into some other fascinating areas. They've got some great book recommendations between them, for example. Plus they talk about their next publishing efforts. Oh, and Bill mentions the key reason why you'd want to buy the book - it's the first public viewing of the TOC solution to ************** (you'll have to listen to find out). I can't tell you how pleasurable this session was for me - to chat with two of my heroes. 

You can order the book here: http://www.amazon.com/Supply-Chain-Management-Warp-Speed/dp/1420073354/ref=sr_1_2?ie=UTF8&s=books&qid=1239384783&sr=1-2

You're probably best to download the file files directly.  Here's Part 1  and here's Part 2.  Why two parts?  'coz computers suck and my recording software went a little wonky.  You'll miss about 30 seconds worth of conversation but Bill revisits that near the start of part 2.  I hate computers.

The recordings last about an hour and a quarter all up.

Efrat's Cloud - read the paper

Here's a copy of what is commonly known in TOC circles as "Efrat's Cloud".  Efrat is Eli Goldratt's daughter.

It's best viewed if you click the full-screen icon in the bottom right corner.

Or, if the web-2.0-ness of thsi freaks you a bit then take a look here: http://www.flickr.com/photos/22007534@N00/sets/72157616489805407/show/

(And, yes, Efrat's gave me permission to post this )

Gerry Kendall

q1.  Hi Gerry, You've been involved with TOC for a long time now and you've written some great books (Viable Vision was, in my opinion, a masterpiece - I don't know how you managed to fit so much clearly articluated thought into such a small book).  Can you tell us a bit about your TOC background? 

Thanks, Clarke. I did spend a couple of weeks with Eli Goldratt in initiating the thoughts on the Viable Vision book and having some of his coaching. But 15 years of practice certainly help. I also received extensive help from my wife, Jackie, who's been practicing TOC since 1993. I started my TOC journey in 1993, reading The Goal and being fascinated. This led to joining the A. Goldratt Institute as an associate, and going through about 80 days of formal training over the first three years (Jonah, Jonah's Jonah, Manufacturing, Distribution and Project applications, management skills, conferences and upgrades). In 1997, I realized that my biggest constraint was in the market. At the time, no TOC consulting organization seemed to have the answer on how to market TOC (a paradigm shift product), so Jackie and I decided to go on our own and build our practice. Over the years, we've done over 100 TOC workshops, worked in Australia, Bangladesh, Malaysia, Germany, Poland, Switzerland, US and Canada and completed dozens of implementations in all TOC application areas, developing a wonderful client base.

q2.  What do you do these days?

I am on the road, every week, either customizing strategy and tactics or implementing. This year, the focus is primarily on Critical Chain, marketing and sales. Over the past year, our work has taken us to Malaysia, Zurich, United States and Canada.

q3.  Can you tell us about each of your books?

Do you really want to be that bored? I spent a year writing my first book, Securing the Future, as a novel. My publisher rejected the idea of a novel, saying that there were enough novels on TOC. He claimed that what was really needed were case studies and examples using the TOC Thinking Process. So I rewrote the entire book. My second book, Advanced Project Portfolio Management, came from extensive work in Project Management and being witness to the constant ridiculous fights between traditional project management and TOC Critical Chain. I began doing projects for IBM, my first employer, in 1968. The deterioration in success of projects over the past 40 years fascinated me. I met my co-author, Steve Rollins, at a conference and we identified a major deficiency in project portfolio management. We didn't know how the book would fare, but it took off immediately after publication and has been a bestseller in the Project Portfolio Management space. The Viable Vision concept verbalized by Eli was so intriguing, I couldn't help myself. I forced myself to understand it by writing the book, and have done 5 years of implementations. Soon to be released, The Dentist is a collaborative work between myself and an oral surgeon, Dr. Gary Wadhwa. Written as a novel, it embodies elements of a true story of how TOC, Lean and Six Sigma helped a practice to achieve a Viable Vision.

q4.  How would you advise a TOC newbie to learn about TOC?

Must you ask such difficult questions? I think there are two good ways to learn TOC - either by teaching or by implementing. Teaching forces you to really digest the concepts. Questions raised in workshops force you to think more deeply on the subject. However, in the artificial space of a classroom, learning is still limited. So the real way to learn is by doing. We are much more fortunate today than 15 years ago - there are TOC solution companies like Realization Technologies, that hire newbies and have a great intern program to develop skills by working with experienced people on TOC projects.

q5.  Can you tell us about your most successful TOC story, from your point of view?

Jackie and I worked with Alcan Quebec, in 1997, using the TOC Thinking Process to overcome a 20 year problem of operational instability - strikes, walkouts, etc. At stake was a $1.6 billion investment which would impact the lives of thousands of people. After a gruelling week with an Alcan senior management team, working through the full Thinking Process, we had facilitated a practical strategy for Alcan Quebec to overcome their 20 year problems and secure the investment money from the parent company. The team began the implementation in the summer of 1997. In February, 1998 we received two press releases and a congratulatory note from Yvon D'Anjou, the VP (later to become President of Alcan Quebec). The first press release documented an 18 year framework agreement signed with their unions - unprecedented in union-management relations not just at Alcan but, as far as I know, with any company. The seond press release announced the $1.6 billion investment in Quebec. TOC can change lives for the better. For me, nothing is sweeter than that. 

Clarke: You can read the press release here: http://docs.google.com/Doc?id=ah2b9gg2zgg_282g9cf5zdx

Richard Klapholz – The Cash Machine & Release the Hostages

Here’s an interview with Richard Klapholz, co-author along with Alex Klarman, of two TOC novels,  The Cash Machine and more recently, Release the Hostages. 

Q1,  Hi Richard, I've not got your brand new book, "Release the Hostages, yet but I loved your first one, "The Cash Machine" ... I recommend it often as a nice, well rounded, and gentle introduction to TOC and good business thinking in general.  Can you tell us a little (or a lot) about The Cash Machine?  Why did you write it?  Why should people read it? 

A1, While working in sales and marketing, I simply found many analogies between what Goldratt described in his books on Operations and Project Management and what I saw in real life. I’ll give you 2 simple examples: nearly all R&D managers are people used to be R&D engineers. But I think we’ll all agree that writing software code and managing a project are totally different disciplines. Very similarly, selling and managing a sales force are totally different professions and still, nearly all sales managers are ex- sales persons. Another example is that all production floors consist of a sequence of dependent steps with some level uncertainty for the time of completion of every step. I discovered that a selling process is very similar. Before you get a purchase order, you at least need to assess the customer needs, present your product or service, submit a quotation and negotiate the terms of the deal. You have a sequence of dependent steps with various levels of uncertainties. If TOC greatly improved production, then why not sales? I, together with co-Author Alex Klarman, wrote The Cash Machine simply because I found no other book on sales force management. Every book called “sales management” focuses mostly on the management of a single sale or of a single sales person (time management, proposal submission, deal closing and so on). So, I found an uncovered niche and I thought it would be a nice opportunity to cover it. The Cash Machine could have been written in a much more detailed way, but we decided to keep in short and easy to read – mostly with an aim to trigger thought. It is not a ‘cook book’. It won’t give a solution to every problem, but it will create a different mindset among managers of sales forces.   

Q2.  Now tell us about your new book, Release the Hostages.  How did you make the transition from sales management to customer support?

A2,  In my environment, namely high tech, there are many start ups. Those start ups make a huge effort to sell their products or services and when they are successful they find themselves with many customers and a big installed base. Well, companies who did not find ways to deal with that installed base profitably can not sustain their initial success. After you succeed in sales, you must succeed in after sales service. So here again, I found an uncovered niche and I decided to fill the gap. There are many books on service and on customer support, but none that I saw covered the topic from a holistic, comprehensive business way as we did. We called the book “Release The Hostages”, because companies who do not succeed in taking care of their installed base profitably are, in a way, being held hostage by that installed base. Indeed, no matter how many new products or services they sell on an ongoing basis, a growing installed base which is not dealt with properly can bring a company down. I have seen this happening more than once. The book has 10 chapters. In every chapter, we raise a new concept and attempt to solve it. Most or many other business books revolve around a single main idea and then cover it from every possible angle. This is not what we did in our books. In fact, I’d claim that every single chapter could be turned into a separate book as each and every concept presented can hold for itself.

Q3.  What do you do for a living, when you are not writing books?

A3, I am myself managing a distribution operation (“distribution” stands for marketing, sales and customer support) in Asia. I am headquartered in Hong Kong, and we operate in China, Taiwan, Korea and South East Asia. We sell. We provide services. All what I wrote in both books comes from first hand experience. I deal with that every day. I am not a consultant and also, I am not an academician. I come from the industry. At the same time, the co-author of both books, Dr. Klarman, is a professional consultant who manages projects in TOC and who has taught Jonah courses for many years. So I think that, together, we’re well covered…

Q4.  Oh, and do you have any samples I could put on the blog?

And here is a sample:

Tim steps forward to present their findings. “Daniel and I have focused on two areas. The first one is related to the first case presented: the sequence of a service call. Responding and Closing service calls is substantial portion of what we do at Customer Support. The second one is related to the third case presented: the multitude of problems evolving around Warranty.

“For the service call matter, we have tried to go through the five steps of TOC as mentioned earlier. For the Warranty matter, we have tried to identify the root cause and offer a resolution to that problem. We believe that the result of our work may lead to significant cost savings, although we are still far, far away from the 50%.”

I am impressed. The guys have really worked hard and invested a lot of thinking in the process. I am curious myself to see what the outcome is.

“I thought that in order to cut costs, one has to look at the major cost components of Customer Support and cut there.” This is Charles. Although a physics professor, Charles sits on many corporate boards and he has obviously gained some experience in cost-cutting exercises. He continues relentlessly, “Labor is over 50% of your expenses in Customer Support, the rest being spread between spare parts and travel. A 30% reduction in labor would yield a little less than 20% reduction in your overall costs. Why not start there?”

It is always so frustrating to have an in depth discussion of TOC with someone who was educated in the cost-oriented world. It was naïve of me to believe that Daniel’s attempt to give a short TOC overview would re-educate someone as self-confident as Charles. I decide to keep quiet for the time being, allowing Tim to answer. 

“Charles, you are absolutely right and it may come to that. However, the question would remain where to remove those 30% of employees. We are talking about well over seven hundred people here and these people do something productive. Unless we change our way of thinking, it won’t be easy. So rather than starting from the cost components and reducing costs all over, we prefer to do it in the TOC way. In other words, we want to find the places where dramatic improvements in efficiency can be made, or solve a series of problems with a minimal amount of investment. At the end we will obviously come back to these cost components, we are not magicians. But let’s look at the processes first and then at the cost items. Okay?”

“As a member of the Board,” continues Charles, “it is important for me to emphasize that there is urgency in this matter. Customer Support is decreasing the company value of CGS. We represent the company shareholders. We cannot, in good faith, watch this happen and sit quiet. I was hoping to see a cost-cutting plan and discuss this in the meeting today. I hoped to hear where, how much and how fast we will cut. You know, an implementation plan. After all, there is no time to lose.”

Tim and Daniel look at me. They are stunned. These guys have not gotten used to confronting a Board of Directors – with all the different opinions and points of view. They’re lucky they have not seen or heard Ray in action yet. I have no choice; I need to intervene. 

“Charles, thank you for expressing the sense of urgency to my guys. At the same time, CGS remains a company that continuously improves its financial performance – at every level. We are here to take preventive measures to ensure the continuity of our success. As such, we do have a little time.  I agree, not a lot of time, but still enough to go through a methodical approach. This methodical approach has already proven itself at CGS and we want to take that route again.”

While Charles is a university professor, he also has pretensions of being a good businessman. In addition to CGS, he has participated in the start-up of several other ventures. While none have been as successful as CGS, they have all made him quite rich. And though he continues to serve on the Board of many of those ventures, and he is exposed to many business situations, he has never managed a company himself. Of course, this doesn’t stop him from expressing his opinion at any time.

“Roger,” Charles says, not seemingly convinced, “CGS has been in a high growth stage for a long time. Yes, there were good days and less good days, but overall, management has never had to take drastic cost-cutting measures. I applaud your internal goal of a 50% cost reduction. From my point of view, I believe I have more experience than you do in cost cutting, as several of the companies on whose Boards I sit have gone through the process, as painful as it is. This is a business. When you need to cut costs, you look at the heavy cost components and you attack them head on – there is no other way. And I fear that this team here is not utilizing this forum in the best possible way.”

I start to realize that as far as the Board is concerned, this is not an exploration of alternatives, but a tangible operational plan that they are looking for. I need to gain some time here. “Charles, what you say is very clear, and perhaps next time we will have a better chance to communicate before the hearing so that we can all set the expectations correctly. As for now, I suggest we proceed with what Tim and Daniel have worked on.”

“Yes, let’s proceed.” Josef is as irritated as I am and he comes to my rescue. This is a good sign. Perhaps, after all, this is a Ray and Charles issue, and not so much a ‘Board conspiracy’.

Okay, so let’s start from the call handling process,” Tim is luckily back on track, “with oversimplification, one can say that 85% of service calls cover some or all of the following steps. In many cases, calls are closed in the early steps, and the other steps that follow are obviously unnecessary. Yet, we are presenting all of them here.” Tim writes another list on the board.

1. Call is placed by customer to a Response Center Administrator

2. Call-back is done by Response Center Expert

3. Response Center Experts diagnoses the problem and attempts remote closure

4. Call is dispatched to Field Operations

5. Parts are sent

6. Field Engineer arrives on-site

7. Field Engineer orders/brings more/other parts

8. Call is escalated

9. Field Expert is dispatched

10. Field Expert orders/brings more/other parts

11. Field Expert closes call

“Here we want to point out three very important terms: Response Center Call Avoidance Rate (CAR), Response Center Absorption Rate (AR) and Response Center Close Call Rate (CCR). The CAR relies on tools that enable our customers to solve their own service problems themselves, without the need to talk or communicate with CGS directly. Lately, many web accessible knowledge bases are enabling users to submit questions or keywords to a computerized knowledge base that helps them to solve their problem by themselves. We at CGS are not making full use of such tools. Based on customer submissions of problems to what we currently have, we can say with a fair level of confidence that around 10% of the calls are avoided. This is not a high percentage, the capabilities are somehow limited for now.

“The AR reflects the amount of calls that are placed with the Response Center to begin with. We found out that there is a multitude of reasons why customers sometimes bypass the Response Center. Some of them are: (a) there is a repeat call and the specific customer has the cell phone of the engineer that came there the first time;  (b) CGS engineers operate from the customer premises, as it often happens in remote locations. If the engineers are there, then why submit a call to a distant Response Center and not to the local engineer, or (c) the customer developed a close, or friendly, relationship with one of CGS experts and they like to call him or her directly. This may often happen outside of the contractual hours of coverage. There are many ways to overcome that, but as for now, we’ll simply state that the AR of CGS is 80%.

“The CCR is simply the rate of calls that are closed remotely without any need for dispatching an engineer. This is also sometimes referred to as the Dispatch Avoidance Rate. At CGS, we have made dramatic improvements there and our CCR is now at 60%.

“So, to summarize, our field organization is dispatched today to cover the remainder of customer calls, i.e. (1-CAR) x (1 – AR x CCR) or [90% x [1 – (80% x 60%)] = 46.8% of all customer calls. Theoretically, and again, this is pure theory right now, with a CAR of 20%, an AR of 90% and a CCR of 80%, only 22.4% of calls would need to be covered by field operations. That’s lowering the burden by more than half!”

Examples from Danilo

Here is an example mini case:

John Rakow, head of theunderwriter department at Frankem Insurance, has been swamped over the lastyears with complaints from customers.

About 30% of the customers think that the time it takes to process aninsurance application is too long.  The situation is getting even more delicate as he has learned that some insuranceagents do not want to recommend Frankem services (even though their prices arecompetitive) because their smaller competitors are able to respond faster.  John is presenting his case to Alice Smithfor a third time.  Alice is in charge ofmaking personnel decisions.  John thinksthat he needs to increase his department’s personnel by at least 35% to copewith the current demand.  Alice clearlyunderstands John’s concerns but she has made some projections and according toher calculations, the expected benefits do not justify hiring moreunderwriters.  She feels that thedepartment will increase expenses without a good return on investment.  Both want the business to be successful, buta creative solution is needed to ensure that objective.  Can you help John and Alice?

And here is an example of one of Danilo's math problems put in diagram form: Download Goodness of fit test.

Q2. Danilo Sirias

My humble apologies.  Danilo sent this answer a long, long time ago and I lost it in my email.  Really sorry about that.

Q2. It was over 4 years ago now, so my memory is being stretched here, but I recall that during your breakout session at Nottingham you demonstrated how you use a simple Prerequisite Tree - I think it was to come up with a teaching plan? - and Eli Goldratt asked why you'd not yet turned it into a Transition Tree. I remember thinking at the time that it didn't seem to need anymore fleshing out. I've also read as much as I can find about TOCFE and there's no mention of the TT. This is a rather long build up to a simple question: TOCFE seems to rely on 3 TOC TP tools - the cloud, the ambitious target, and the branch - can you explain how you use each of these in education and if you use any of the other tools?

The application you are talking about was using a modified PrT to teach business statistics. The idea is to breakdown the steps of doing statistics problems into a series of intermediate steps so it is easier for students to follow along. I wrote a paper describing the process: "Using Graphic Organizers to Improve the Teaching of Business Statistics" published in Journal of Education for Business. As a result of that research, I wrote a workbook that can be used with a textbook to support teaching stats...the workbook is about to be published. The same idea can be used for a variety of math problems. In the conference, Eli was suggesting that I transform the PrTs into Transition Trees. I disagreed with him because of the time it will require from a teacher (or student) to do this is too much to be practical. The issue is that most teachers would agree that interactive learning is a more effective way of teaching that simply lecturing. In fact, there are a variety of techniques and processes you can use to teach interactively, including simulations, role playing, labs, games, etc. The problem with all these approaches is that they take a significant amount of time and teachers are under a lot of pressure not only to complete a predetermined curriculum but also to prepare students for standardized testing (specially in the US). So my guiding principle to teach using any thinking tools is that they must achieve the learning goals through some type of interactive process in the most efficient manner . The TT does not satisfy that principle.

The main TOC tool I use in my teaching is the cloud. One of the classes I teach is the Information systems (IS) which among other topics include teaching some type of IT solutions. The question is how to teach those solutions without just lecturing from a Power Point presentation. What I do is to write mini-cases, a case of a couple of paragraphs max, which will include some time of dilemma that can be solved using the IT solution I am trying to teach. So I start with the concept to be taught, from there I find a cloud and from the cloud I write the mini-case. Then I assign those mini-cases to small groups in the classroom and ask them to provide a solution to the problem. Students are requested to do a cloud and then present their solutions. This way the class is very interactive and in most cases students end up finding the solution I am trying to teach. My role after that is just to formalize the concept (like telling them the official name of  the solution). There has been some cases where students come up with a very clever idea that I did not know about. That also enhances my learning. The process works very well and is generic enough that can be used to teach other subjects. I did a workshop at a university i nNew York and the participants wrote a mini case for which the solution was trigonometry!

In some instances, I also use a modified PrT. The most common situation is when reviewing case studies that are historical in nature. What that means is that the case is just a description of a company 's journey to solve a given problem. The challenge of this type of cases are twofold. First, can students learn anything from just reading a description of another company's activities? Also, it is the issue of relevance. If I am in the medical industry, what should I care about the car industry? To solve these problems, you need to find a tool that allows you to take the specific actions of a company, then turn that into some generic principles and then use this generic principles to bridge it to your own particular interest. So I use a variation of the PrT to accomplish this. First I ask students to review the case and provide a one sentence summary of the overall solution of the company (this will be equivalent to the target of a PrT). Then, students need to write every action taken by the company as described in the case. Next, students need to figure out the obstacle overcame or the need satisfied by each action. What happens here is that those obstacles/needs tend to be generic. For instance, if an action is "develop a new sales incentive system", the need could have been "motivate sales people." After following this procedure, students have a list of obstacles and needs that the company in the case faced when achieving its ambitious target. Since this list is generic, students can use it to generate their own set of intermediate objectives which are more appropriate for their industry. Not only that, when presenting the cases, students from different teams can compare notes across industries to see how they overcome similar obstacles, which provide a very fertile environment for learning. To sume up, the flow goes from IO to Obstacles then back to IO. Again, the process is generic enough that it could be applied to other subjects such as history and reading. I do not use the branch very often. For some reason, students have a hard time doing a branch from scratch. So, what I do is provide parts of a branch and ask students to complete it. For example, I will provide the trunk with choice for the effects (e.g. data accuracy improves or data accuracy decreases). Students are asked to pick an effect and the provide the explanation why they claim that effect is correct. I have used the branch in other fields other than the one I teach. Branches are very helpful for teaching reading, writing, science and even math.

For many years, I struggled trying to come up with generic principles explaining why TOC tools seems to be so effective. A few years ago I asked several teachers to experiment using TOC in different fields to try to find a pattern and hopefully create a generic process that will allow me to provide clear guidelines so teacher can make improvements in their teaching abilities. In the experiment, we have teachers teaching reading, writing, psychology, math and even grammar. What came up what something very simple which I now called the ABC process. ABC stands for Analyze, Breakdown and Connect. I believe that ABC is the underlying process that can make the TOC thinking tools in teaching very successful. A brief summary: First, you need to Analyze by determining the teaching objective and the issues students faced in learning that specific topic. The purpose is to have some background that will allow you later to make modifications as needed. In other words, a teacher needs to start with the end in mind and not try to force the use of any tool. Next, you need to break down the process into smaller components to be able to make it digestible for students. I think most educators know this but stop there without going into the next step. To achieve a real understanding of the topic, you need to Connect the knowledge in a meaningful manner. I think TOC does an excellent job in accomplishing B and C. But in some instances, you most add A to the equation to be able to make modifications to adapt to the specific issues faced by the students. For instance, in my example above with historical cases, the teaching issues led me to modify the PrT to adapt to my specific learning objectives. I am writing a book with a teacher, Belinda Small, which goes into more details of applications of using the ABC process to make modification to the TOC tools to enhance teaching. We also use ABC as a filter to evaluate other teaching techniques.

[You can see examples by clicking here]