Logical Thinking Process : A Systems Approach to Complex Problem Solving book/process from William Dettmer ISBN:0873897234 (2007), updating/refining Eli Goldratt's Theory of Constraints process (see ToC Thinking Processes).

Excerpts (partial)

Preface

Books are snapshots in time. The previous edition of this book, Goldratt’s Theory of Constraints (GTOC), was a snapshot of “the state of the art” of the Thinking Process in 1996. But time passes, and people and things evolve. The Thinking Process is no exception

while the Thinking Process has its roots in the Theory of Constraints, it has since realized a much broader applicability in system analysis and systems thinking

Introduction

Whereas Current Reality Trees (CRT) once took several days to complete, a better-quality tree is now possible in a matter of several hours. When used as part of an integrated Thinking Process, all of the trees are now more precisely and seamlessly aligned with one another.

This better integration is possible because of a new application of an old (and little used) tree: the Intermediate Objectives Map. An hour or less spent perfecting an IO Map at the beginning shaves days off completion of the rest of the process, and the results are much more robust. So, with this book, the IO Map takes its place as the first step in the Thinking Process.

Chapter 5 explains an easier, more logically sound way to integrate the Current Reality Tree with the Evaporating Cloud

dispense with the Transition Tree altogether and instead incorporate more detail into their Prerequisite Trees. Not only did implementations become faster and easier, but there was no deterioration in their quality. And everyone preferred this approach because of its speed. Because almost without exception the people I work with are competent professionals, it’s no problem for them to execute change from comprehensive Prerequisite Trees alone. The Transition Tree became superfluous

There’s another “elephant in the parlor” that attends any system improvement methodology, including (but not limited to) the Thinking Process: change management

I’ve tried to start that process in Chapter 8, “Changing the Status Quo.”

There are two components to this push. The first is the concept of the executive summary tree, a tool for reducing complete, complex Thinking Process analysis to a streamlined version

The second is a six-stage model for handling the psychology of change. Executive summary trees are described in detail in Appendix B. The behavioral change model is introduced in Chapter 8.

Part I The Destination

1 Introduction to the Theory of Constraints

SYSTEMS AND “PROFOUND KNOWLEDGE”

W. Edwards Deming maintained that real quality improvement isn’t possible without profound knowledge

According to Deming, profound knowledge comes from: • An understanding of the theory of knowledge • Knowledge of variation • An understanding of psychology • Appreciation for systems

THE SYSTEM’S GOAL

in human organizational systems, which are the primary focus of this book, the goal setter ought to be the system’s owner—or owners.

THE MANAGER’S ROLE

In a general sense, the Theory of Constraints (TOC) is about management

we’re all managers

No manager can hope to succeed without knowing four things: • What the ultimate goal is • What the critical success factors are in reaching that goal • Where he or she currently stands in relation to that goal • The magnitude and direction of the change needed to move from the status quo to where he or she wants to be (the goal)

Goal, Critical Success Factor, or Necessary Condition?

For the purposes of this book, a goal is defined as the result or achievement toward which effort is directed.19 But in complex systems we normally can’t jump directly to desired outcomes without satisfying some necessary conditions. A necessary condition is a circumstance indispensable to some result, or that upon which everything is contingent.18 Inherent in these definitions is a prerequisite relationship: you must satisfy the necessary conditions in order to attain the goal.

there are clearly some intermediate progress milestones along the way—some “show-stoppers” without which we won’t be able to reach the goal. Normally there aren’t too many of these. I submit that there are no more than three to five, and perhaps fewer than three.

We could call these critical success factors (CSF).

Most of what people might consider necessary conditions actually support (are required to satisfy) these critical success factors. As we’ll see in Chapter 3, “The Intermediate Objectives Map,” the goal, critical success factors, and subordinate necessary conditions can be configured as a hierarchy

THE CONCEPT OF SYSTEM CONSTRAINTS

What keeps your system from doing better? Would it be fair to say that something is constraining your system—keeping it from realizing its maximum potential?

Goldratt likens systems to chains, or to networks of chains

the chain will fail at its weakest link

Constraints and Non-constraints

Goldratt contended that there is usually only one constraint in a system at any given time...Everything else in the system, at that exact time, is a non-constraint.

Now let’s assume we’re smart enough to figure out which link is the weakest, and let’s say we double its strength. It’s not the weakest link anymore

RELATION OF CONSTRAINTS TO QUALITY IMPROVEMENT

Most organizations having formal improvement efforts include employees, in the process usually in teams. Let’s assume that these improvement teams are working on things that “everybody knows” need improving. If we accept Goldratt’s contentions about constraints and non- constraints, how many of these team efforts are likely to be working on non-constraints? Answer: probably all but one

interest, motivation, and eventually commitment to continuous improvement die from a lack of intrinsic reinforcement.

CHANGE AND THE THEORY OF CONSTRAINTS

Goldratt’s Theory of Constraints is essentially about change. Applying its principles and tools answers the four basic questions about change that every manager needs to know: • What’s the desired standard of performance? • What must be changed? (Where is the constraint?) • What is the appropriate change? (What should we do with the constraint?) • How is the change best accomplished? (How do we implement the change?) Remember that these are system-level questions, not process-level

one of the fundamental assumptions of systems theory: the whole is not equal to the sum of its parts

TOC PRINCIPLES

TOC is a prescriptive theory, but we’ll look at the descriptive part first

Systems as Chains

Local vs. System Optima

Cause and Effect

Undesirable Effects and Critical Root Causes

Treating an undesirable effect alone is like putting a bandage on an infected wound: It does nothing about the underlying infection, so its remedial benefit is only temporary

Figure 1.7 Partial list of TOC principles

Solution Deterioration

A process of ongoing improvement is essential for updating and maintaining the efficiency (and effectiveness) of a solution

Physical vs. Policy Constraints

Physical constraints are relatively easy to identify and break. Policy constraints are much more difficult, but they normally result in a much larger degree of system improvement than does the elimination of a physical constraint

Ideas Are Not Solutions

The best ideas in the world never realize their potential unless they’re implemented. And most great ideas fail in the implementation stage.

THE FIVE FOCUSING STEPS OF TOC

1. Identify the System Constraint

2. Decide How to Exploit the Constraint

wring every bit of capability out of the constraining component as it currently exists

3. Subordinate Everything Else

adjust the rest of the system to a “setting” that will enable the constraint to operate at maximum effectiveness. We may have to “de-tune” some parts of the system

4. Elevate the Constraint

If we’re doing Step 4, it means that Steps 2 and 3 weren’t sufficient to eliminate the constraint

This step can involve considerable investment in time, energy, money, or other resources, so we must be sure we aren’t able to break the constraint in the first three steps.

5. Go Back to Step 1, But Beware of “Inertia”

go back to Step 1 and begin the cycle again, looking for the next thing constraining our performance

The Five Focusing Steps have a direct relationship with the four management questions pertaining to change: What’s the standard, what to change, what to change to, and how to cause change? They tell us how to answer those questions

THROUGHPUT, INVENTORY, AND OPERATING EXPENSE

A burning question we must address is, “How do we know whether our constraint- breaking has had a positive effect on our overall system?”

Goldratt conceived a simple relationship for determining the effect that any local action has on progress toward the system’s goal. Every action is assessed by its effect on three system-level dimensions: Throughput, Inventory, and Operating Expense.11:58-62 Goldratt provides precise definitions of these terms (see Figure 1.8).

a detailed examination of this approach is beyond the scope of this book. Readers are strongly encouraged to educate themselves about this crucial topic. The two best of several sources for doing so are Management Dynamics by John A. Caspari and Pamela Caspari and Throughput Accounting by Steven M. Bragg

Throughput (T): rate at which the entire system generates money through sales... marginal contribution to profit (contribution margin)

Inventory/Investment (I): money tied up within the system

Operating Expense (OE)

Goldratt contended that these dimensions are interdependent. That is, a change in one will usually automatically result in a change in one or both of the other two

Which Is Most Important: T, I, or OE?

the theoretical limit in reducing OE and I is zero.

Theoretically, there’s no upper limit to how high you can increase T, but from a practical standpoint there is a limit to the size of your market. But still, it’s highly probable that the potential for increasing T will always be much higher than the potential for decreasing I and OE.

T, I, and OE: An Example

aerospace defense industry

T, I, and OE in Not-for-Profit Organizations

Goldratt himself has offered what may be the best solution to the problem of assessing the progress of not-for-profits toward their goals

Universal Measures of Value

Inventory, he proposed, should be differentiated as either “passive” or “active.”

Passive inventory, as the name implies, is acted upon

passive inventory isn’t measurable in monetary terms because the “raw materials” are often people. Figure 1.11 shows customers (patients) going through the non-monetary side of the system and becoming “Throughput”: well people.

Active inventory might actually be better defined as investment

Managing T Through Undesirable Effects

Without a universal non-monetary measure of value, Goldratt maintained that measuring T and passive I in not-for-profits isn’t ever likely to be practical. So, he says, don’t bother trying to do it. Instead, work on eliminating the undesirable effects (UDE) associated with

Throughput

THE TOC PARADIGM

Applications and Tools

Drum-Buffer-Rope

Critical Chain Project Management

Replenishment and Distribution

Throughput Accounting

Throughput accounting basically refutes the commonly used concept of allocating fixed costs to units of a product or service

The Logical Thinking Process

The Thinking Process comprises six distinct logic trees and the “rules of logic” that govern their construction. The trees include the Intermediate Objectives Map, the Current Reality Tree, the Evaporating Cloud, the Future Reality Tree, the Prerequisite Tree, and the Transition Tree. The rules are called the Categories of Legitimate Reservation. These trees, the Categories of Legitimate Reservation, and how to use them, are the subject of this book.

THE INTERMEDIATE OBJECTIVES MAP

The Intermediate Objectives (IO) Map is a “destination finder. ” Stephen Covey contends that one should always begin any endeavor with the end in mind

It begins with a clear, unequivocal goal statement and the few critical success factors that are required to realize it. It then provides a level or two of detailed necessary conditions for achieving those critical success factors.

Chapter 3 describes the IO Map in detail

THE CURRENT REALITY TREE

The Current Reality Tree (CRT) is a gap-analysis tool (see Figure 1.13). It helps us examine the cause-and-effect logic behind our current situation and determines why that situation is different from the state we’d prefer to be in, as expressed in the IO Map.

The CRT begins with the undesirable effects we see around us—direct comparisons between existing reality and the terminal outcomes expressed in the IO Map. It helps us work back to identify a few critical root causes that originate all the undesirable effects we’re experiencing

The CRT tells us what to change

Chapter 4 describes the Current Reality Tree in detail

THE EVAPORATING CLOUD: A CONFLICT RESOLUTION DIAGRAM

a conflict resolution diagram, to resolve hidden conflicts that usually perpetuate chronic problems

Chapter 5 describes the Evaporating Cloud in detail

THE FUTURE REALITY TREE

First, it allows us to verify that an action we’d like to take will, in fact, produce the ultimate results we desire. Second, it enables us to identify any unfavorable new consequences our contemplated action might have, and to nip them in the bud.

Chapter 6 describes the Future Reality Tree in detail

THE PREREQUISITE TREE

Once we’ve decided on a course of action, the Prerequisite Tree (PRT) helps implement that decision

THE TRANSITION TREE

The TT was designed to provide detailed step-by-step instructions for implementing a course of action. It provides both the steps to take (in sequence) and the rationale for each step. The TT could be considered a detailed road map to our objective.

Chapter 7 also describes the Transition Tree

NOTE: With this edition, a comprehensive examination of the Transition Tree and instructions for constructing it are omitted. A historical perspective for doing so is provided in Chapter 7. Instead of a Transition Tree, a three-phase project management approach to implementing policy changes is introduced.

THE CATEGORIES OF LEGITIMATE RESERVATION

The Categories of Legitimate Reservation (CLR) are the “logical glue” that holds the trees together. Essentially, they are eight rules, or tests, of logic that govern the construction and review of the trees. To be logically sound, a tree must be able to pass the first seven of these tests

THE LOGICAL TOOLS AS A COMPLETE “THINKING PROCESS”

Figure 1.18 shows the relationship of the logical tools to the four management questions about change.

Figure 1.19 The six logical tools as an integrated thinking process.

2 Categories of Legitimate Reservation

A lot of problem-analysis tools use graphical representations. Flowcharts, “fishbone” diagrams, and tree and affinity diagrams are typical examples. But none of these diagrams are, strictly speaking, logic tools, because they don’t incorporate any rigorous criteria for validating the connections between one element and another

PURPOSE

The Categories of Legitimate Reservation are the foundation upon which logic in general, and the Logical Thinking Process in particular, are built

ASSUMPTIONS

Tree builders/presenters often express cause-and-effect connections that are intuitive to themselves but not to others (that is, intermediate steps appear to be missing)

DESCRIPTION OF THE CATEGORIES OF LEGITIMATE RESERVATION

1. Clarity

Clarity is not, strictly speaking, a logic-based reservation. Its roots are in communication.

Seek to understand before seeking to be understood

A clarity reservation means that a listener doesn’t comprehend the speaker

Validity of logic is not addressed until mutual understanding is achieved

Up to this point, we’ve spoken of clarity as though we were referring to conversation among two or more people. Like the other categories, clarity is certainly useful in this respect. However, the primary focus of this chapter is on using the Categories of Legitimate Reservation in constructing, validating, and streamlining logic trees. As we proceed into more details on logic trees, what we’ve called “statements” by speakers (or writers, for that matter) will be referred to as entities in logic trees. “Entities,” as used this way, are defined in the next section. Figure 2.1 presents an abbreviated test and example of the clarity reservation.

a. Is any additional explanation required for the cause or effect, as written? b. Is the connection between cause and effect convincing “at face value”? c. Is this a “long arrow” (that is, are intermediate effects missing)? TES

2. Entity Existence

an entity is a complete idea expressed as a statement

the statement is not expressed in a grammatically correct sentence.

The statement is not structurally sound; that is, it expresses multiple ideas in a single entity, or it contains an embedded “if–then” statement within it.

Completeness

For example, the phrase “economic recession” can’t stand alone as an idea. It raises the inevitable question, “What about economic recession?” To be effective in a logic tree, the entity must make sense when read with “if” or “then” preceding it. “Economic recession occurs” would be an acceptable entity from the standpoint of completeness.

Structure

No compound entities

No embedded “if–then” statements

Validity

The validity test normally applies only to conditions of reality, not actions

3. Causality Existence

Does the cause really result in the effect?

Verbalizing the arrow often helps

must have

Is the cause intangible? To be “tangible,” a cause must be measurable or observable

“My boss is dissatisfied with me” is not really observable in and of itself (unless the boss happens to tell you so). But “I stop watering the lawn” is observable. In both cases, the effects are measurable or observable, but in the first case, the cause is not.

4. Cause Insufficiency

Because the world is a network of intricate, complex systems, cause insufficiency is the most common deficiency found in logic trees or human dialogue. In complex interactions, relatively few effects are likely to have a single, unequivocal cause

In this section, we see how several dependent factors combine to produce cause sufficiency, and how to know when there is a cause insufficiency.

The cause insufficiency reservation is raised when a listener believes that a presenter’s stated cause is not enough, by itself, to produce the stated effect

The Ellipse

How are multiple dependent causes expressed in a logic tree? In portraying such a relationship, contributing entities are linked to their resulting effect with arrows passing through an ellipse

enclose the major contributing causes that are sufficient in concert but not alone to produce the effect

Relative Magnitude of Dependent Causes

The idea of relative magnitude in a true dependency has no real meaning. Both (or all) causes are needed to produce the effect, and removing any one eliminates the effect

Theoretically, there is no limit to how many arrows can pass through an ellipse. But there is a practical limit. At some point it becomes extremely difficult to depict and keep track of an expanding number of component causes

As a rule of thumb, however, try to limit the number of contributing causes to three if possible, or four at most

One of the most common points of contention concerning cause insufficiency is the exclusion of some cause factor that is so basic to the situation that it is “transparent” to the presenter—but maybe not to the listener or scrutinizer.

But a presenter might respond, “True, but since oxygen is always present in the situation where my fire might occur, I consider it a constant that doesn’t have to be shown.” So the concept of “oxygen” connotes a factor that is accepted as present-but- transparent by anyone with intuitive knowledge of the system under examination.

5. Additional Cause

The key words are “either” and “or.”

Magnitude

In order for the additional cause reservation to be valid, the suggested additional cause must produce the stated effect in at least as much magnitude as the presenter’s originally stated cause

A magnitudinal causality implies addition. In the preceding example about decreasing sales, more than one independent cause produced an effect that increased in magnitude as each was added to the causality.

Because a magnitudinal cause is a unique variation of a basic additional cause, it requires a distinctive depiction. For this, we’ll use a “bowtie” symbol with the letters “MAG” inside it

A Unique Variation of Additional Cause

COMPLEX CAUSALITY

complex causality is a situation in which a given effect might have more than one cause

realize that complex causality is more likely to be the rule than the exception

SIDEBAR

Figure 2.20 Magnitudinal “AND.”

Figure 2.21 Exclusive “OR

6. Cause-Effect Reversal

7. Predicted Effect Existence

Conflict or Differences in Magnitude?

Most causes in the “real world” result in more than one effect

Tangible or Intangible?

A scrutinizer taking issue with the existence of an intangible cause would use predicted effect existence to show that another expected effect of the same cause is absent

If either of these predicted effects doesn’t exist, then the originally stated cause is invalid, and the scrutinizer’s reservation is valid

What if the cause is tangible? Predicted effect existence can also be used to support or refute the logical connection, or arrow, between cause and effect. For example, “Quality has deteriorated” may be a quantitatively verifiable fact (see Figure 2.27). “Sales are going down” may also be substantiated by numbers. But has deteriorated quality necessarily caused decreased sales? One additional predicted effect of poor quality might be “Customers’ complaints increase.” Does this quantitatively verifiable effect exist? If so, the causality relationship between poor quality and decreased sales is likely to be valid. If not, decreased sales may have another cause

To avoid confusion, verbalize a predicted effect existence reservation this way: “If we accept that [CAUSE] is the reason for [ORIGINAL EFFECT], then it must also lead to [PREDICTED EFFECT(S)], which [do/do not] exist.”

8. Tautology (Circular Logic)

Tautology is most likely to surface when causality existence is questioned and the cause is intangible

USING THE CLR IN A GROUP

review of first or second drafts.

one of two situations applies

CLR Known by All

A scrutinizer can merely say, “I have a causality existence reservation about the connection between entities 104 and 105.”

On the other hand, if you want to see the scrutiny process grind to a near-halt, invite four or more scrutinizers conversant in the CLR to participate

people knowledgeable in the CLR tend to “nit-pick” every little deficiency they find.

CLR Known Only by the Tree Builder

This need not be a problem. In fact, it could be a definite advantage

can be extremely helpful, for two reasons. First, they’ll be inclined to explain their concerns about the logic in the same terms as the eventual intended audience. Second, they’ll be better focused on the content of the subject matter and their intuition about what causes what.

puts a larger burden on the tree builder.

SUFFICIENCY-BASED VS. NECESSITY-BASED LOGIC TREES

The Current Reality Tree, Future Reality Tree, and Transition Tree are considered sufficiency trees. They’re read in an “if–then” form.

The Intermediate Objectives Map, the Evaporating Cloud, and the Prerequisite Tree are considered necessity trees. They’re read in an “In order to . . . we must . . . because . . .” format. The validity of their cause-effect relationships depends on meeting minimum necessary requirements

SYMBOLS AND LOGIC TREE CONVENTIONS

Logic trees are not flowcharts

Figure 2.32a Thinking Process as an engineering flowchart

Figure 2.32b Thinking Process as a logic tree

A Standard Convention for Logical Connections

Figure 2.36 Categories of legitimate reservation: self-scrutiny checklist.

3 Intermediate Objectives Map

(Note: Dettmer later switched to calling this the Goal Tree.)

INTRODUCTION

The most insidious contributor to the failure of continuous improvement effort is what might be called the “Nero syndrome”—fiddling while Rome burns, or rearranging deck chairs on the Titanic. In other words, focusing on the inconsequential instead of the critical. In Theory of Constraints terms, this is known as working on a non-constraint.

DEFINITION

An Intermediate Objectives (IO) Map is a graphical representation of a system’s goal, critical success factors (CSFs), and the necessary conditions (NC) for achieving them.

things you must do if the goal is to be achieved

SYSTEM BOUNDARIES, SPAN OF CONTROL, AND SPHERE OF INFLUENCE

We must be able to define precisely what system (and level) we’re addressing. In other words, we need to be able to define a boundary for the system we’re trying to improve, or we risk “wandering in the wilderness for forty years.”

Span of Control

Sphere of Influence

The External Environment

Control vs. Influence

In the systems in which we operate, we can influence far more than we can control, and we can influence far more that most of us realize that we can

DOING THE RIGHT THINGS vs. DOING THINGS RIGHT

Who Sets the Goal?

the system's owner

DESCRIPTION OF THE INTERMEDIATE OBJECTIVES (IO) MAP

Figure 3.6 Production process IO Map.

2. Determine the System Goal

the underlying purpose of the IO Map is to identify a destination that we’re trying to reach—a benchmark against which we can assess what’s actually happening within the system. This means that the goal statement should reflect outcomes

The logic trees that use sufficiency statements are Current Reality, Future Reality, and Transition. The IO Map, the Evaporating Cloud, and the Prerequisite Tree are necessary condition trees—they indicate minimum essential requirements, not all elements sufficient to produce the result. These trees may be expressed as short phrases rather than as complete sentences.

3. Determine the Critical Success Factors

without which the goal can’t be achieved. Normally, there aren’t more than three to five of these, and there may be fewer

critical success factors, by definition, are high-level “show- stoppers.” If they don’t happen, we don’t reach our goal

4. Determine Key Necessary Conditions

the CSFs are functional subsets of the goal they’re supporting, but they’re not “actionable” in and of themselves. In other words, the discrete activities needed to make the CSFs happen lie below the level of the CSFs themselves. These activities are necessary conditions for the satisfaction of the CSFs. We might call them “building blocks.”

It’s not likely that any CSFs will need more than three to five NCs. Because these NCs themselves are hierarchical, there could be more than one layer of them below the CSFs, but as an arbitrary rule of thumb, we’ll try to limit the NC to no more than two layers, if possible

5. Arrange the IO Map Components

6. Connect the Goal, Critical Success Factors, and Necessary Conditions

The details will emerge in Future Reality Trees and Prerequisite Trees.

Almost all your connections will be oriented vertically—that is, from a lower layer to the one above it. But some connections may be lateral as well. In other words, look carefully to identify any NC that is required for more than one CSFs, and add connections as required.

7. Verify the Connections

Even though this is a necessity-logic tree, you can check for some of the same logical elements that you find in the CLR.

Figure 3.13 Strategic-level IO Maps (examples).

Consider the CSFs, for example. Are they really indispensable to realizing the goal?

Is the proposed CSF the last thing that must happen (that is, a terminal outcome) before you can safely say the goal will be achieved? Or does it actually produce some intermediate outcome, which would likely be the real CSF?

The “10,000-Foot Test”

Do the NCs that support a particular CSF all seem to be part of an integrated pattern, and does that pattern reflect your intuition about how life is, or must be?

8. Enlist Outside Scrutiny of the Entire IO Map

Figure 3.14 provides an illustrated, abbreviated checklist for constructing an IO Map.

SUMMARY AND CONCLUSION

Take a look at Figure 3.15 on the next page. This is the kind of outcome you should be striving for: not too detailed, not too high-level, two or three layers of necessary conditions at most. Clearly the critical success factors are high-level terminal outcomes without which the company goal can’t be reached. This example is for a commercial manufacturing company.

Part II: Gap Analysis and Correction

4 Current Reality Tree