(2021-02-15) Sproull Goal Tree

Bob Sproull: The Goal Tree Part 1: A complaint I have heard many times is that a full TP (Logical Thinking Process) analysis typically takes several days to complete and let’s face it, a regular executive team simply doesn’t have that kind of time to spend on this.

I have hope for you. That hope for you is another logic diagram currently known as the Goal Tree

Bill (William Dettmer) is passionate about this tool and believes that it defines the standard for goal attainment and its prerequisites in a much more simple and efficient way.

what I really like about the IO Map/Goal Tree is that it can be used as a stand-alone tool resulting in a much faster analysis of the organization’s weak points and a rapid development of an improvement plan for your organization.

The Goal Tree Part 2 The Goal Tree Basics

when using any of TOC’s TP’s, there are two distinctly different types of logic at play, sufficiency and necessity.

Sufficiency logic tools use a series of if-then statements that connect cause and effect

Necessity logic uses the syntax, in order to have x, I must have y or multiple y’s. The Goal Tree falls into the category of necessity based logic

Dettmer had been teaching the LTP to a wide variety of clients for more than six years, and had been dismayed by the number of students who had substantial difficulty constructing Current Reality Trees and Conflict Resolution Diagrams (CRD) of sufficient quality. He claimed they lacked reference to a “should-be” view of the system—what ought to be happening.

if we don’t define our boundaries of the system, we risk “wandering in the wilderness for forty years.”

CSF’s must be in place and functioning if we are to achieve our stated goal. The final piece of the Goal Tree are entities referred to as Necessary Conditions (NCs) which must be completed to realize each of the CSF’s.

The Goal and CSF’s are worded as though they were already in place while the NC’s are stated more as activities that must be completed.

Dettmer also makes it very clear that the system’s owner is who determines what the goal of the system should be.

requirements are referred to as Critical Success Factors (CSFs). Dettmer recommends no more than three to five CSF’s. Each of the CSF’s have some number of Necessary Conditions (NCs) that are considered prerequisites to each of the CSF’s being achieved. Dettmer recommends no more than two to three levels of NC’s, but in my experience, I have seen as many as five levels

The Goal Tree Part 3. The Case Study Example

The company in question here is one that manufactures a variety of different products for diverse industry segments.

This company had plenty of orders to fill, but unfortunately they were having trouble not only filling them, but filling them on time. As a result, this company’s profitability was fluctuating.

The Goal Tree Part 4. Define the goal of the system which was “Maximum Profitability.”... maximum profitability both now and in the future

the CEO decided that it would be helpful if he explained the basic principles of both the concept of the system constraint and Throughput Accounting

After much discussion, his staff offered three Critical Success Factors which the CEO inserted beneath the Goal.

maximizing throughput had to be one of the CSF’s.

minimizing OE had to be another one.

because Return on Investment (ROI) was equal to Net Profit divided by their Investment (i.e. NP = (T ÷ I), they needed to include minimum investment as one of the CSF’s.

The Goal Tree Part 5

what was needed next were the corresponding Necessary Conditions (NCs) so he started with, “In order to have maximum throughput, what do we need?” His CFO put his hand up and said, “We need to maximize our revenue.”

you explained that Throughput was revenue minus Totally Variable Costs, so minimal totally variable costs has to be a Necessary Condition too

“In order to maximize revenue, what must we do?” The Operation’s Manager said, “We must have satisfied customer,” and before he could say another word, the Marketing Director added, “We must also have sufficient market demand.”

The Goal Tree Part 6. "In order to have satisfied customers, we must have what?” The Quality Director raised his hand and said, “We must have the highest quality product.” The Logistics Manager added, “We must also have high, on-time delivery rates.” And before the CEO could add them to the tree, the Customer Service Manager added, “We must also have a high level of customer service.

what do we need to supplement or support sufficient market demand?” The CFO said, “We need a competitive price point and by the way, I think would also help satisfy our customers.”

If we’re going to have sufficient market demand, don’t you think we also need effective sales and marketing?”

three of the ways we could have effective sales and marketing would be related to the three lower level NC’s assigned to satisfied customers

good way for us to minimize TVC?” Without hesitation, the Quality Manager said, “That’s easy, we need to minimize our scrap and rework.”

optimum manpower levels and maybe also minimized overtime.”

So what about our CSF, minimum investment

minimized WIP and Finished Goods inventory?”

What about an NC underneath that on?” The Plant Manager looked at him and said, “We need to synchronize our production around the constraint and demand.” “What do you mean?” asked the CEO. “I mean we need to stop producing parts on speculation and start building based on actual orders

The Goal Tree Part 7. We’re going to use a color-code scheme to actually evaluate where we stand on each one,” he said. “If you believe that what we have in place is good and that it doesn’t need to be improved, I want you to color it green.

While you’re considering the state of each entity, I also want everyone to also think about a way we can measure many of these in the future,”

The Goal Tree Part 8. When developing your improvement plan, we always start with the NC’s color-coded as red first and then yellow. We also focus our improvement efforts on the lowest level NC’s simply because if we make improvements at low levels, the improvement should flow to the next highest NC and continue moving upward until the impact finally impacts the goal. This prioritization doesn't seek a single bottleneck/constraint? This case has 2/3 of CSFs in red, and 7 NCs.

Does anyone have any ideas on how we can take our bottom three reds into either yellows or greens?” “In other words what can we do that might positively impact delivery rates, customer service and synchronize production to the constraint and demand?”

scheduling method called Drum, Buffer Rope

if we implement DBR, we will minimize WIP

We should also see our on-time delivery rates jump up

if we effectively slow down in our non-constraints, we should see our scrap and rework levels improve significantly

we should see our overtime levels drop which will also improve profitability,”

The Goal Tree Part 9. Before we develop our performance metrics, let’s first discuss the purposes of an organization’s performance metrics. In general, we need some type of feedback mechanism

The metric of choice for this Goal Tree/IO Map then is NP which we insert into our “goal box.” In addition, I prefer to give most of the metrics a target to attempt to achieve which in this metric we will include, NP >15% (i.e. Net Profit greater than 15%)

We then look at each CSF and NC and select appropriate performance metric targets for as many as might be appropriate. (KPI)