Focus on strategy
When TOC is implemented in operations, the improvements are substantial to the extent that the constraint moves into the market. The improved performance of operations opens new opportunities to gain more sales. The improvements in operations not only open new opportunities but actually provide the company with a decisive competitive edge.
When the constraint of a company is in the market and at the same time the company has a decisive competitive edge, the obvious interpretation of focus is to concentrate on capitalizing on the existing competitive edge, rather than being distracted with ongoing refinement in operations. You have to shift your focus away from operations and focus on your strategy instead.
To gain the required focus, a clear verbalization of the resulting competitive edge is needed. A decisive competitive edge is gained only when a company satisfies a significant market need to an extent that none of its significant competitors can.
After implementing TOC in operations do not sit back and relax. Shift your focus and concentrate on improving the overall performance of the company. Move on to capitalize on the resulting competitive edge.
Don’t be satisfied with the results of improved operations otherwise you will miss out on the much bigger gains that are now readily available—the profit increase when much more sales are won and serviced with already exposed excess capacity.
The sales meeting should revolve around the client’s environment, exposing its significant need that currently isn’t satisfied by the vendors. Since there are many clients’ environments, an individualist assessment is necessary in order to decipher the causes and effects that govern each of them, constructing the sale cycle in accordance, and finding the way to take the sales people through the required paradigm shift.
Capitalizing effectively on a decisive competitive edge causes the sales to increase sharply.
Now you probably think. “Great! What’s the problem?”
The resulting jump in sales can easily cause the constraint to swing back into operations. If this bounce-back is not properly controlled, it can demolish the competitive edge. It is important to sustain the increase in sales and to synchronize between sales and operations so that the rate of incoming orders will not collapse but continue to grow.
Furthermore it’s important to equally focus on two types of performances: financial growth and stability. Companies should strive to ensure that their financial performance will grow by at least a few percent per year. But, to ensure that such growth will be sustained, companies must ensure that the growth will not degrade their stability.
To “make more money now as well as in the future” it is essential to choose carefully the actions that will not only bring growth in the near future but also increase (rather than endanger) the company’s stability for the longer horizon. The goal is to “become an ever flourishing company.”
The Strategy and Tactic tree (S&T), according to Eliyahu M. Goldratt, founder of the TOC (Theory of Constraints), probably the most powerful tool of the Thinking Processes, helps you to develop the right strategy to become an ever flourishing company.
Generic S&T Tree
The logical structure of S&T trees enables focusing on what really matters. Starting from the company’s strategic objective, it logically derives what actions (and in which sequence) must be taken and which actions should not be taken.
The S&T trees bring clarity to the implementation of the company strategy. They enhance communication through the management levels and synchronization between the various departments. The time to reach results is considerably shortened and the transition, from one stage of implementation to the next, becomes relatively smooth.
Learn more about the importance of Focus in Part 3 “Focus on the core problem”.