Tag Archives: TOC

Precisely Wrong

preciselyLast Thursday marked the fourth anniversary of the passing of someone who, while not typically credited as a “Lean” thinker, nevertheless had a profound impact on many Lean implementers. Eliyahu Goldratt, or Eli, was an Israeli physicist whose PhD thesis on queuing theory led him and many followers on an improvement odyssey based on his first book, The Goal, that paralleled and eventually supplemented the Lean revolution. I do not believe there is a definitive biography of Eli Goldratt, but there are many individual memories and stories. In 2011, I wrote one in my blog just two months before Dr. Goldratt’s death entitled: Epiphanitis. Here is another to commemorate a great thinker and influencer:

Eli Goldratt’s passionate and sometimes-brash approach to teaching was a hallmark, yet he approached his audience with the logic of a physicist. Holding a lit cigar while he challenged listeners to reject status quo thinking, he sometimes accented his points with profanity. As English was not his first language, I think he may not have been aware of which expletives were appropriate for which crowds – or maybe he was.   He was all about confrontation and doing battle with the conventional concepts that he considered to be the root cause of low productivity. I attended a seminar once where Eli’s TOC model was described by a participant as “too complex due to the myriad and flux of constraints in a typical factory.”   Dr. Goldratt shot back with visible anger, “If you think this is too difficult, then think harder.”

“Cost accounting is public enemy #1 to productivity,” he declared nearly ten years before I’d ever heard of Lean accounting. By 1986, with one year of production management under my belt, I began to understand his reasoning: On a daily basis, my factory’s direct labor was being scrutinized, while waste, which ran rampant, was a periodic footnote on a variance report. This confusion led me to attend a five-day Goldratt workshop to seek an alternative approach to production. When Eli entered the classroom as a guest speaker at the workshop, I approached him immediately with questions about standard costing and variances. He responded, “Traditional cost accounting is precisely wrong,” a comment that instantly and forever changed my thinking. We were measuring labor to four decimal places, yet ignoring all but the biggest production problems.   This particular practice unfortunately continues to this day as a major impediment to productivity improvement.

In 1985, Eli did not explicitly align himself with the Toyota Production System. His Theory of Constraints, TOC, was seen by many as competitive to TPS. But his emphasis on the defective underpinnings of traditional manufacturing were mostly in concert with TPS. He focused at a deep level on the root causes of poor performance: behavioral, logistical and managerial (policy-based) constraints. Goldratt’s TOC Effect-Cause-Effect Technique, or ECET (a topic for a later blog post) provided a powerful means for setting improvement priorities that I have used now for thirty years. In his sixty-four years, Eli Goldratt went on to publish nearly twenty insightful books, each developing his Theory of Constraints and broadening its application beyond the factory floor.

In 2007, Eli Goldratt summed up a kind of unified field theory, including TOC and TPS, as well as the Ford System. Entitled “Standing on the Shoulders of Giants,” the clip paid homage to the science of improvement, from one of its greatest if not improbable proponents: a PhD physicist who to my knowledge never worked a day in a factory. It’s seven minutes long and little hard to understand, but worth a listen.

Are you an Eli Goldratt fan? Share a personal story.

O.L.D.

BTW: Speaking of constraints, don’t miss “Teatime with the Toast Dude,” my free monthly webinar, which this month (July 7) will discuss The Politics of Organizational Change. Sign up here.

Also, GBMP has a full schedule of summer Lean learning and benchmarking opportunities – including Plant Tours, one day workshops for manufacturing and healthcare and, as a licensed affiliate of the Shingo Institute, several Shingo Institute workshops planned for Texas, Idaho and Massachusetts. See the full line up of events on our website.

And of course you won’t want to forget about our upcoming September conference – the 11th Annual Northeast L.E.A.N. Conference. Get a sneak peek of the preliminary agenda here or visit the official conference website to read lots more and register.