Eliyahu Goldratt & his theory of Constraints

Eliyahu Goldratt & his theory of Constraints... This one again from ET

We asked Eliyahu Goldratt, management thinker and author of bestseller The Goal, what drew him to India. A puff on his trademark pipe and a smile later: “If I told you, you wouldn’t believe me,” he says. Nudged on, he explains, “India has the best education of management in the world and perhaps the largest internal market. You have the potential to be one of the five economic powers. But, are you?” For the creator of the Theory of Constraints, Indian managements are ‘constrained’ by their “admiration of sophistication”, he tells ET.

He’s here to lead managers down a different path. “I told you, you wouldn’t believe me,” he says. Look at IT, those wonderfully complex machines. “People don’t understand that any complex system is based on inherent simplicity. Capitalising on inherent simplicity is what enables incredible improvements within a short time.” Mr Goldratt was in Mumbai to speak on ‘Viable Vision’ at a seminar presented by ET.

His viable vision can translate into “bringing up the company so that in less than four years, net profit equals its current total sales.” Mr Goldratt’s theory rests on the assumption that organisational systems are in fact complex. Made more so by the cause and effect relationships that exist between various components.

“Examine a given system and ask yourself, what is the minimum number of points one has to impact in order to impact the whole system?... For every real-life system there are very few elements governing the entire system.” The fewer the points, the easier the system is to manage. “To get results you have to spend your time finding those elements,” he explains. These elements, or constraints, are also the leverage points of the organisation.So, here’s Dr Goldratt’s five-step agenda to almost immediate performance jumps:
Identify the system’s constraints;
decide how to exploit these;
subordinate everything else to this decision;
elevate the system constraints; and finally,
if in the previous step’s constraint has been broken, go back to step 1.