🏭 Theory of Constraints

The Theory of Constraints (ToC) aims to identify and address bottlenecks in business processes. It involves focusing efforts on improving a process's most important limiting factor until it is no longer a constraint.

Daniel Jarjoura
Daniel Jarjoura

Let's talk about the Theory of Constraints.

💡
The Theory of Constraints (ToC) aims to identify and address bottlenecks in business processes. It involves focusing efforts on improving a process's most important limiting factor until it is no longer a constraint.

🤔 Why you should care about it

"A constraint is anything that prevents the system from achieving a higher level of performance. In manufacturing, the constraint is often a machine that limits the rate at which products can be produced. In a service organisation, the constraint might be a bottleneck in the process of handling customer orders. In either case, the constraint is the limiting factor that determines the performance of the entire system." - Dr Eliyahu M. Goldratt, Israeli management consultant and business theorist, in The Goal.

By identifying the constraints limiting the organisation's ability to develop software efficiently and effectively, CTOs can focus on improving those constraints and increasing the organisation's overall performance.

😫 Problem(s)

Low throughput —> when organisations grow, development processes become longer and involve multiple teams, often from different departments, making improving more difficult.

High defect rates —> inadequate testing or a lack of experienced engineers generates an exponential number of defects, especially when systems become more complex.

Difficulties scaling —> lack of infrastructure or inadequate planning usually prevent scaling the development processes to meet increased demand.

😃 Solution

CTOs and technology leaders can leverage the Theory of Constraints to improve their organisation's ability to develop software efficiently and effectively. To do so, they should:

  • Identify the constraint, or bottleneck, in the process (e.g. resource shortage, slow code review process, high technical debt, etc.);
  • Exploit the constraint, making quick improvements to the throughput of the constraint using existing resources;
  • Subordinate the constraint, reviewing all other activities in the process to ensure that they are aligned with and truly support the needs of the constraint;
  • Elevate the constraint, taking further actions to eliminate it from being the constraint;
  • Repeat the process, as improving a constraint may also create a new constraint elsewhere in the system.

💡 Key Concepts

Throughput —> the rate at which a system produces output.

Constraint —> anything that prevents a system from achieving a higher level of performance.

Inventory —> work-in-progress and tasks that are held by a system.

Continuous improvement —> constantly identifying and addressing constraints to keep improving a system's performance.

😡 Detractors

"The Theory of Constraints is more suited to manufacturing and does not apply to software engineering" —> while it's true that the theory of constraints was initially developed in the context of manufacturing, it can be applied to any business process that can be defined as a system.

"The theory of Constraints is too simplistic and does not adequately take into account the complexity of real-world systems" —> the Theory of Constraints is indeed a micro, not a macro, framework. Middle managers best use it to optimise sub-systems rather than large complex systems.

"The Theory of Constraints ignores other important factors that impact business success such as culture, leadership, and strategy" —> the Theory of Constraints is a local tool, usually shot to medium results. Leaders should use other tools and frameworks to change an organisation in the long term.

📚 Top book

Critical Chain: A Business Novel - Eliyahu M. Goldratt

🗂 See also

➡️ Systems Thinking

⚙️ Output vs Outcome

⏰ Brooks's law

📝 Top content

Theory of Constraints 105: Drum-Buffer-Rope at Microsoft - Tiago Forte

Theory of constraints - the story of bottleneck, introducing change & win conflicts resolution - Pawel Kaminski

How the Theory of Constraints can help you manage bottlenecks in your software delivery process - Lubo Drobny


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Daniel Jarjoura

Helping CTOs scale their team and grow as leaders | Founder @ The Unicorn CTO | Solopreneur