31st International Conference of the

TOC Practitioners Alliance - TOCPA

www.tocpractice.com 9 March, 2017 Helsinki, Finland

TOC Thinking
and Management Trends

9 March, 2017
 Bio: Jrgen Kanz

Diplom Ingenieur in Electrical Engineering

Several Certifications from Universities and Institutes
Almost 30 years of experience in Management of
Innovation and Operations in Photonics and Power
Electronics Industries
TOCICO certified in Thinking Processes
Co-author and translator of Do-It-Yourself Theory of
Constraints eBooks for Production, Project
Management and Distribution in German language,
https://leanpub.com/u/juergenkanz
Personal interests: Systems Thinking, Theory of
Constraints, Management Science, and Mathematics Email: juergen.kanz@gmail.com
Web: www.juergen-kanz.de
The combination of analytical and synthetical thinking
skills, called 'Systemic Thinking' , is his preferred way to
get deeper insights into systems.

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 Topics of TOC Thinking for today

1. Refreshment of TOC Thinking & Strategy Tools

2. Clock and Cloud Problems

3. What is Complexity?

4. Types of Complexity

5. Management Trends Source: TOC Club North America | Goldratt Consulting | www.tocclub.org

6. How to tackle trends?

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 Refreshing:
TOC Thinking & Strategy Tools
Goal

1 CSF CSF CSF

Level 2
2.1 2.2 NC NC NC NC
Level 3
3.1.1 3.1.2 3.2.1 3.2.2

Level 4
4.11.1 4.11.2 4.22.1 4.22.2

Level 5
5.112.1 5.112.2 5.112.3 5.112.4
Goal Tree
Strategy & (GT) Current
Tactics Reality
Tree Tree
(SnT / S&T) (CRT)

Need
Obj.

Action
TOC
Need Action
Transition
Tree
Thinking & Evaporating
Cloud
B D
A
Need

Need
Action

Action
(TT / TrT) Strategy (EC / CRD) B D
Need Action
Tools Negative
Prerequisite
Branch
Tree
(PRT) Future Reservatio
n (NBR) Effect
Reality
Tree
MS
(FRT)
MS
Goal

MS


MS

Idea

Inj.

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 Refreshing:
TOC Thinking Full Analysis
Step 5 Step 1
Implementation via Why change?
S&T Tree DEFINE SYSTEM, GOAL & GAP

Step 2
Target
Level
UDE 5 (2%)
UDE 4 (3%)
What to change?
Current Reality Tree

GAP?
UDE 3 (10%)
UDE 2 (15%)
UDE 1 (20%) Need Want UDE 3
Current
Step 4 Level Goal
Need Want UDE 4
How to cause the change? UDE
Conflict 3
UDE 5
UDE 2
UDE 1 Want Need
New Win-Win-Solution Goal
Need Want
(plus new START & STOP Rules) activ Current Situation
Need
Want
Goal
Need Want Want Want
UDE
Yes, but
OBS 5 Step 3 UDE
Conflict 1 Need Need
Conflict 2

IO 5 Yes, but.
What to change to? Goal
OBS 4 Future Reality Tree
Yes, but
OBS 3
IO 4 DE 5
Core Conflict

Win-Win Solution
IO 3 Yes, but
DE 3 DE 4
Yes, but OBS 2
OBS 1 IO 2 STOP DE 2 Yes, but LEGEND
IO 1 DE 1 PUDE UDE = Undesired Effect
PUDE = Potentially Undesired Effect
Win-Win Solution
START DE = Desired Effect
Current Situation STOP = Its not allowed to apply old Rules
Need START Need
START = Only apply new Rules in future
Goal OBS = Obstacle
IO = Intermediate Objective

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 Goal Tree as a Strategy Tool

In order to achieve the Goal,

Goal Tree
Current Goal
Reality Tree
(CRT) I need / I have to ensure (CSF)

TOC In order to have (CSF)

Thinking & Evaporating
Critical Success factor Critical Success factor Critical Success
Cloud
Strategy (EC / CRD) #1 #2 factor #3
Tools I need.
Negative
Branch
Reservation In order to have (NC)
Future (NBR) NC NC NC NC NC NC
Reality Tree Necessary Necessary
(FRT) Necessary Necessary Necessary Necessary
Condition Condition Condition Condition Condition Condition
I need.

1 Goal NC CSF = critical success factor

3-5 CSF Necessary NC = necessary condition
1-3 NC-Levels Condition

adapted from Bill Dettmer, 2007. The Logical Thinking Process, ASQ Quality Press.
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 Snapshot in time - Goal Tree development

In order to achieve an
Expansion of Technology
Leadership
I have to ensure

In order to have

Expansion of Sometimes contradictions Increase

Reduction of Costs
innovation capability
among Necessary Productivity
Conditions may occur.
I need.
They have to be removed
In order to have Reduce cost immediately. Avoid all kind
Expansion of TOC MTO
Reduce Product within the
R&D activities of of contradictions in
costs
organization Goal Tree! Production
I need.

Definition and Set-up of

Increase of Reduce R&D
Deployment of technological
R&D head head count
Product Platform supplier
count
Concept partnerships

TOC CCPM
in R&D

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 Example of a finalized Goal Tree
NCs in Red Boxes are
not in place / not
In order to achieve an working. These are the
areas that contain UDEs
Expansion of Technology that have to be
Leadership considered in Full
Analysis
I have to ensure

In order to have

Expansion of Increase
innovation capability Reduction of Costs Productivity

I need.
In order to have
Expansion of Avoid TOC MTO
Reduce Product
R&D activities additional cost in
of organization costs
Production
I need.

Definition and Increase overall Keep R&D Set-up of

Deployment of performance head count technological
Product Platform with higher supplier
productivity
constant
Concepts
Concept partnerships

TOC CCPM
in R&D

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 Refreshing:
Negative Branch Reservation

Positive Negative I do not achieve my

My spouse personal goals
achieves her goals
Branch Branch

Many goals of my spouse

belong to our common goals I do not work on my
personal goals

I work hard on
the achievement
of our goals

I need a lot of
I work on many
time to achieve
several issues
my personal goals
My spouse works on
the achievement of our We have common goals
goals and her goals in important areas of our lifes

9
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 Refreshing:
Negative/Positive Branch Reservation

I feel fine about

Positive Negative
Positive I do not achieve my
My spouse the progress towards
Branch Branch
Branch personal goals
achieves her goals my own goals

Many goals of my spouse

belong to our common goals I work on our
I do not work on my
common goals
personal goals
and my personal goals

I work hard on
the achievement
of our goals

I work on I need a lot of

I work on many
those issues that time to achieve
several issues
are important to me my personal goals
My spouse works on
the achievement of our We have common goals
goals and her goals in important areas of our lifes I prioritize
the themes in
my life
10
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 Thinking Processes - Clarification

Please, be aware

Cause and effect are often not closely related in time and space.
The TP is NOT a quantitative tool. It is strictly qualitative. It was designed
to express, in a logical way, the intuition of the tree-builder.
The TP is a mental model (mindset) representation of the tree-builder.
Any tree-builders intuition is a function of verifiable fact, experience,
documentary evidence, and his or her ability to integrate all these in their
own mind.
There is no such thing as perfect information. So, any logic tree always
has a risk of inaccuracy in the content information. The conclusions
drawn from the tree are likewise subject to error.
There is no idea creation machine embedded that is automatically
producing injections.

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 Two different types of Problems

Clock - Problems Cloud - Problems

Sir Karl Popper

Philosopher of Science
(1902 1994)

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 Two tasks to explain the differences

1. You must build the highest, most robust tower.

2. You must build the best toy for children.

Source: LEGO System A/S

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 1. You must build the highest,
most robust tower

Clock - Problem

world tallest Lego brick tower in

Brazil
height of 31.09 m
500000 bricks
realized by thousands of children
with a bit of help from parents and
a crane

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 2. You must build the best toy
for children

Cloud - Problem

Source: LEGO System A/S

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 3. What is Complexity?

contains Sometimes also called Complicated

is contained in
Static
Complexity

Complexity adds Time and Space domain

Dynamic
Complexity

Types of adds Human domain

Complexity Social /
Cognitive Wicked
Complexity
and/or
Perceptual adds Evolution domain
Complexity Generative
Complexity

Scientists like Eli Goldratt and Yaneer Bar-Yam define complexity as: Complexity is a
measure of the inherent difficulty to achieve a desired understanding. Simply stated, the
complexity of a system is the amount of information necessary to describe it.
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 Inherent Simplicity

Mini PRT Prerequisite Tree

We have found the

IO Intermediate Objective Inherent Simplicity within
the complex realities.

Obstacle
In order to find the
inherent simplicity within
We are facing an
inherent difficulty to the complex realities, we
achieve the desired apply TOC Thinking
understanding Processes, to achieve the
desired understanding.
We apply the TOC
Milestone Thinking Processes to
gain understanding. The most profound obstacle we need to
overcome is our ingrained perception that
reality is complex.
Eli Goldratt

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 Example: Mass Customization in Static
Complexity
Practice -- Volkswagen A-Platform

Audi A3
(3+ 5-door)

Audi TT coupe

Audi TT roadster

VW Golf IV VW Bora VW Beetle Skoda Octavia

(3+5door, station (Bora sedan, coupe, (New Beetle, (Octavia sedan,
wagon, convertible, convertible, and New Beetle and station wagon)
and Minivan) station wagon) convertible)
Seat Toledo
VW planed for 19 vehicles based on A-platform Successor
(Toledo, coupe, station
60% re-use of components wagon, and convertible)

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 Example: The Story of Eddy

Dynamic
Complexity

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 Wicked Problems

Wicked
Characteristics of Wicked Problems: Complexity

1. every wicked problem can be considered to be a symptom of another wicked

problem
2. the problem is not understood until after the formulation of all conceivable
solutions;
3. they have no stopping rule; there is always a better solution possible
4. their solutions are not right or wrong; only better or worse
5. every problem is essentially novel and unique;
6. there is no ultimate test of a solution for a wicked problem, because a wrong
solution can make the problems symptoms even more wicked.

Based on: Rittel and Weber, Dilemmas in a General Theory of Planning, 1973

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 Examples of Wicked Problems

Wicked
In Business: Complexity

Incomplete or contradicting information

A large diversity of opinions and possible solutions that obstructs the
achievement of any definite strategy
Stakeholders are not fully engaged and have unequal or incongruent desires
and stakes
The real problem is not addressed because suggested solutions are too simple,
too technical or too nave. Those solutions can even worsen the problem.
There is no realistic business case for the solution, so its financial sustainability
is limited
People creating complexity to secure their jobs & positions
Conflicts in general

in other words: all other ill-defined complex problems related to humans

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 Trend Generative Complexity

Generative complexity. Where the problem hasn't occurred often before Generative
and is still evolving. When it is high, you may not even know what the Complexity

problem is or who the key players are to involve.

A Trend implies Generative Complexity,

because it is still evolving.

A trend can have a positive, neutral

or negative impact on the system.

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 General Management Trends

Globalization
The melting of barriers among nations and their increasing interconnectedness,
accelerated by technology, has led to a change in the world order that has had a
profound impact on global business.

Technology
If the current wave of globalization has been the driving force behind the most
far-reaching and powerful changes in business, then information technology has
indisputably been the facilitator.

The Fourth Industrial Revolution will lead to tremendous changes in industrial

and social systems.

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 General Management Trends

Sustainability and Corporate Social Responsibility

For business to be sustainable, and even profitable, our planet has to be sustainable - this
realization has hit businesses perhaps the hardest in recent times. We are likely to see a
lot of focus directed towards applying management principles to solutions of complex
social issues such as environmental sustainability, energy security, access to healthcare
etc. This will also underline the need for increased interdisciplinary interaction and
influence on business management.

The Study of Psychology

Speaking of interdisciplinary influences on business, the study of human psychology -
probing into cognition, motivation, behavior and performance - has become a key
pillar of organizational management. From employee management to customer
satisfaction and social engagement, satisfaction of business objectives requires
effective analysis of both individual and institutional psychology.

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 Key Trends for the Consulting Industry

The Uberization of Consulting

Companies that hire consultants still seem to focus on the cost of hiring a consultant
rather than the value that this professional can bring to the company. There is a
prediction that in the coming years, consulting services may be seen as a more
commoditized, transactional type of interaction rather than as a professional long-term
service partnership.

Potential Disruptors to the Consulting Industry

Disruption in the consulting market will ultimately come from new consulting firms
deploying more flexible organizational structures such as a flexible layer of freelance
consultants, reducing unstaffed time of human capital, and offering similar quality
against a lower price.

Impact of Technology for Consultants

Ever changing and increasingly sophisticated technology -- perhaps performing some
tasks that human beings used to provide -- is yet another trend that will continue.

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 Complexity causes Uncertainty

Uncertainty is a situation in which there is no unique

and objective understanding of the problem.

"The message is that there are known knowns - there are

things that we know that we know. There are known
unknowns - that is to say, there are things that we now 2 3 4
know we don't know. But there are also unknown
unknowns - there are things we do not know we don't
know. And each year we discover a few more of
those unknown unknowns. 1

Donald Rumsfeld, US Secretary of State for Defence, 2004

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 How to tackle trends?

Be Agile

Colonel John Boyd

(1927 1997)

The concept that all combat, indeed all human competition from chess to
soccer to business, involves a continues cycle of Observation, Orientation,
Decision, and Action.
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 How to tackle trends?

From Innovation Management we know the

Traditional Idea Funnel

New Products /
Ideas Management, Evaluation, Selection
Services

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 How to tackle trends?

Part of Business Planning Process

Trend Funnel

Trends Management, Evaluation, Selection Execution

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 Process Alignment

Application Technology Market Business Planning

Intelligence Intelligence Intelligence

Idea Product Innovation Planning

Management Roadmaps

xxx Planning
Programming
Resource Planning

Knowledge Generation Process Product Realization and Introduction Process

Realisation Realisation
B A Preparation Project Brief Preparation 0 Feasibility 1 2 Sales 3
Evaluation Introduction

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 What is the impact and what are the
consequences on system level?

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 Find the Gap during
Knowledge Generation Process

Business Planning Knowledge Generation Process

Goal Goal
UDE 5 (2%)

UDE 4 (3%)

GAP
CSF CSF CSF CSF CSF CSF
UDE 3 (10%)
UDE 2 (15%)
NC NC NC NC NC NC NC NC
UDE 1 (20%)

Dynamic Goal Tree for Trend Vision Static Goal Tree which describes
during Funnel phase situation of today

In parallel:

Positive Branch(es)
Negative Branch(es) Idea
Idea

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 Setup for Full Analysis

DEFINE SYSTEM, GOAL & GAPS

Target UDE 5 (2%)

Constraint Level
UDE 4 (3%)
Management

GAP
GAP UDE 3 (10%)
UDE 2 (15%)
UDE 1 (20%)
Current
Level

one or few Constraints

Past Today Future

UDE = UnDesirable Effect

adapted from Oded Cohen and Jelena Fedurko, 2011

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 System Improvement

Source: unknown

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 Thanks for attention !

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Labai ai Mange takk

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Any question ?
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