Theory of Constraints — A Concise, Expert Management Briefing

Applies to 50% to 80% of all manufacturing businesses Careful buy-in process establishes high degree of confidence through knowledge All education, training, consulting, software and even financing provided 90 - 95% of fees payable only on achieving results

An Outrageous Concept: your profit in 4 years to meet or exceed your sales revenues today ... with 90% of the risk assumed by the consultants

Eli Goldratt has been seeking ways to make Theory of Constraints the dominant management strategy in organizations of all kinds, world wide, for decades; a fairly ambitious goal, as is usual for Eli. At the same time, he has probably felt a little frustrated at the superficial comparisons between Lean and Theory of Constraints, Six Sigma and Theory of Constraints, made by managers who understand Lean or Six Sigma but who only think they understand TOC.

The Viable Vision program is Eli's answer to both of these.

TOC's scope is without equal

A unique facet of the Theory of Constraints is it's scope. There is a production solution, which generates large reductions in lead time, high on-time delivery performance, provides plant stability, and very high plant productivity. A finance and measurement application provides effective decision support and induces the correct behaviors in a workforce. A distribution and supply chain solution provides for fast flow through a whole supply chain with superb on-time performance, low inventories, short lead times. A project management solution provides a project scheduling approach that shrinks project durations by up to (and sometimes beyond) 50% while moving on-time completion levels into the same range as manufacturers can achieve. There's a marketing solution (the Unrefusable Offer) that any company can use to construct a competitive edge so large that customers simply cannot reject a sales approach. And there's a sales solution developed that "sells" the Unrefusable Offer very effectively. Then there's the strategic planning, and the people skills ... there is simply no equivalent in other bodies of knowledge.

EStablishing both the "Vision" and the "Viable" elements

What Eli has done with the Viable Vision is to practice what he preaches. Approximately 80% of manufacturers, for example, can take advantage of the different TOC applications in such a way that they can create a massive competitive edge, one that will genuinely enable a company to grow sales such that there is the potential for the net profit in 4 years to match or exceed the Gross sales revenues today. This is the "Vision" part of the program. At the same time, the TOC applications are so powerful that they make the vision entirely achievable, in real terms ... the "Viable" part of the equation.

Making it an "Unrefusable Offer"

Then he starts to make the whole thing "Unrefusable" by offering to provide EVERYTHING the company needs to achieve that target. Education? Naturally. Consulting? Naturally. Resources? Of course, throughout the implementation, as many as are needed. Project management? Yes, using the most modern techniques and tools. Software? If appropriate, yes; part of the package, acquisition, training, & implementation support. Sometimes he'll even arrange for financing when that's a necessary element of making the Vision a reality. What makes it truly unrefusable are the terms; all the above, with 90 - 95% of the fee performance dependent. If the results are there ... the fee is large, but still negligible in comparison to the benefits. If the results aren't there ... the majority of the fee is not paid. However, in reality the TOC NEVER fails if it is implemented correctly, and rarely even if a company makes a pig's ear of the whole thing — it's simply that powerful.

Both sides can check each other out

Now, Eli doesn't send his organization into these deals blindly. There are some structured stages between the first contact and the detailed contract for implementation that are highly effective at making sure that the company "buys in" to the program and, equally important, making sure from a consultant's perspective that the company has the characteristics necessary for success.

Perspective

So, relating this back to the starting point; the Viable Vision has generated so much attention that it genuinely offers hope for the Theory of Constraints to become the main way of running an organization in the future. The scale of buy-in from businesses has been staggering; as I write this, perhaps 20 months after the first tentative market "soundings" were taken for the concept, I believe that close to $1/2 Billion of implementations are in the pipeline.

And as for the comparisons with Lean and Six Sigma ... TOC implementers know the power of these technologies (or philosophies, as you wish) and they can be used extremely effectively within TOC implementations. But I believe with the sheer scale of the Viable Vision program Eli Goldratt is making his point that the Theory of Constraints stands alone in its scope and its power.