"Every conflict can be removed. The question is not whether it's possible, but whether we are willing to challenge our basic assumptions." - Eli Goldratt
As a CTO and entrepreneur, I've often wrestled with seemingly unsolvable dilemmas. Should we invest in growth or profitability? Do we choose speed or quality? These are questions every business leader knows, and they can be paralyzing. That was until I discovered Eli Goldratt's work and learned that many of these dilemmas don't have to be dilemmas at all.
The Man Behind the Theory of Constraints
Eli Goldratt (1947-2011) was a remarkable thinker. As a physicist, he brought a fresh perspective to business processes and organizations. What he saw turned the management world upside down. Instead of seeing organizations as a collection of separate problems each needing a solution, he saw them as interconnected systems.
A Revolutionary Take on Improvement
Goldratt's genius lay in his simple yet powerful insight: in any system, there is only one constraint at any given time that determines throughput. Just like the weakest link in a chain determines how strong the entire chain is.
This might seem obvious, but the implications are enormous:
Focus your energy on strengthening that one constraint, and the entire organization improves
Improvements elsewhere in the system are meaningless until you address the constraint
When you resolve one constraint, it shifts to another part of the system
Theory of Constraints in Practice
Let me share an example from my experience at TomTom. We faced a challenging dilemma: should we invest significant resources in an open-source project that was crucial for our future? The traditional approach would be a simple yes/no decision, with either major commitments or none at all. But when we applied Goldratt's method to analyze this dilemma, we discovered a different path. Instead of viewing it as a binary choice between full investment or no investment, we identified our real constraint: our understanding of where and how we could add value to the open-source community.
By creating an Evaporating Cloud, we realized many of our assumptions about open-source investments could be challenged. Did we really need a large initial investment? Was it true that meaningful contribution required a full team? Our solution was to start with a small, focused investment: actively participating in the community to understand where we could add the most value. This allowed us to gain experience, build relationships, and make informed decisions about future investments. By first removing the constraint of limited community knowledge, we could make better decisions about larger investments later. This approach transformed what seemed like an either/or decision into a learning journey, leading to better outcomes for both TomTom and the open-source community.
The TOC Toolbox
Goldratt developed several tools that remain highly relevant today:
1. Five Focusing Steps:
Identify the constraint
Exploit the constraint
Subordinate everything to the constraint
Elevate the constraint
Start over (because the constraint shifts)
2. Thinking Processes: Tools for systematically analyzing complex problems
Current Reality Tree: Where are we now?
Future Reality Tree: Where do we want to go?
Prerequisite Tree: What do we need?
Transition Tree: How do we get there?
And of course: the Evaporating Cloud
3. Throughput Accounting: A different view of financial decisions, focused on throughput rather than local cost savings
The Power of Evaporating Clouds
An Evaporating Cloud is much more than a simple diagram - it's a powerful tool for dissecting and resolving dilemmas. Let's look step by step at how this works using a relatable example: the "dog dilemma." Many people struggle with the question of whether or not to get a dog.
Step 1: Mapping the Dilemma
First, we map out the basic elements and gather all relevant considerations:
In this basic diagram, we see:
1. The overarching goal: lead a happy and fulfilled life
2. Two important needs that support this goal:
- Maintain flexibility and freedom
- Have companionship and structure
3. The conflicting requirements that arise:
- Don't get a dog
- Get a dog
4. All considerations related to both needs
Step 2: Identifying Facts, Assumptions, and Interventions
Now comes the magic of Goldratt's method: we analyze which considerations are facts and which are assumptions. For the assumptions, we can then devise interventions.
This second diagram shows:
1. Facts (blue): These are objectively true and difficult to change
- "Dogs need daily care"
- "A dog enforces routine"
- "Walking is healthy"
2. Assumptions (red): These seem true but can be examined or challenged
- "Dog care cannot be shared"
- "You must have the dog full-time"
- "You can never leave spontaneously"
3. Interventions (purple): Concrete actions to test or transform assumptions
- Test professional dog walking services
- Research dog boarding options
- Try dog co-parenting arrangements
The Power of Interventions
The brilliance of this approach is that it forces us to look beyond the apparent dilemma. By systematically:
1. Accepting facts as boundaries
2. Identifying and challenging assumptions
3. Devising concrete interventions
we can often find solutions that fulfill both needs. In the case of the dog dilemma, a solution might be to start with part-time dog sitting, which:
- Lets you experience the benefits of dog ownership
- Maintains flexibility
- Allows you to test your assumptions
- Enables gradual growth toward a final decision
Why Goldratt Is More Relevant Than Ever
In our complex, rapidly changing world, Goldratt's approach provides more value than ever:
1. Focus in Abundance:
- In a world of endless possibilities, TOC helps focus on what truly matters
- It prevents the "improvement paradox" of trying to fix everything at once
2. Systems Thinking:
- Organizations are more interconnected than ever
- TOC helps see the connections and intervene effectively
3. Pragmatic Approach:
- No complex frameworks or lengthy implementation trajectories
- Directly applicable to real problems
4. Conflict Resolution:
- In a polarized world, the Evaporating Cloud offers a path to understanding and solutions
- It helps look beyond positions to underlying needs
For Those Who Want to Dive Deeper
Read "The Goal" - Goldratt's classic in novel form, or start with the illustrated version if you're short on time and follow Alex Rogo as he saves his factory using TOC principles.
You can also read "It's Not Luck", the sequel that delves deeper into the Thinking Processes. This book is especially valuable for understanding Evaporating Clouds and it is perfect for learning about strategic decision-making.
In Conclusion
Goldratt taught us that most dilemmas aren't dilemmas at all, but invitations to look deeper. By using his tools, we can look beyond surface contradictions and find solutions that previously seemed invisible.
Are you struggling with strategic dilemmas? I regularly help organizations unravel these kinds of issues using these and other strategic tools in my workshops.