DEFINING Strategy > Business Strategy Workshop - The TOC Way
Business Strategy Workshop - The TOC Way
Theory of constraints, proposed by Dr. Eliyahu Goldratt has been very popular and successfully adopted across the world with excellent results. TOC says that for every system there will be at least one bottle neck which determines the throughput of the system. TOC also significantly departs from traditional cost accounting practices and considers only inventory, Operating expenses and throughput as the only parameters for performance measurement and management decision making.
Using Current Reality Tree, we can construct and depict the current systemic problem. Wherever we find a constraint; it is usually due to management policy. We identify such policies and question the validity of the assumptions behind these policies. Using TOC thinking process and Decision clouds; we can eliminate constraints by exposing the assumptions and providing injunctions to negate these assumptions.
A future Reality Tree is then constructed to map the future activation and consequences; based on the solution. A Negative Branch Tree is then constructed; bringing out all the negative possibilities. Here again, the underlying assumption are exposed and injunctions are provided to address all the negative fallouts of the FRT. This way, the TOC thinking process provides a sound mechanism and methodology for new strategy formulation.
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