Theory of Constraints Strategy (Chapter 18 of Theory of Constraints Handbook)

This is an individual chapter of Theory of Constraints Handbook. Over the past 20 years, some remarkable leaders have shared a wealth of knowledge on strategy. If you have read bestsellers such as Collins’ (2001) Good to Great, you may wonder what the difference is in a Theory of Constraints (TOC) strategy. The answer, in one word, is focus. TOC strategy is as much about choosing to not do many things, as it is about focusing on the single biggest leverage point of an organization. TOC assumes that within every complex system, there is “inherent simplicity” and limited resources. This implies that there are very few constraints (leverage points) that determine the performance of a system. With limited resources, a good strategy must identify the constraint and apply those limited resources to squeeze the most out of it. This chapter outlines how the two different forms of TOC strategy ” Strategy and Tactics Trees and Thinking Process ” achieve a good strategy. It illustrates generic strategies in Manufacturing, Distribution and Project Management, showing how marketing and sales are an integral part of any good strategy. Finally, the chapter concludes with how to integrate other methodologies, such as Lean and Six Sigma, and human behavior models, into an overall strategy.