Goldratts TOC

Thinking Process
Using the TOC Thinking Process to Identify
Problems, Develop Alternatives, and
Implement Solutions
Ed D. Walker II
Department of Management
Langdale College of Business
Administration
Valdosta State University

You graduate and get a good job.

Now what?
You are expected to solve problems.
If the job were perfectly routine they would
not hire a college graduate.

What 3 questions must you

answer to solve a problem?
What to change?
To What to Change?
How to Change?

How do we solve problems?

Too often we treat the symptom..
Shouldnt we treat the underlying problem?
Have you ever been taught a tool for this?

Tools created by
Eli Goldratt
What to change?
Current Reality Tree

To what to change?
Evaporating Cloud
Future Reality Tree & Negative Branch

How to change?
Prerequisite Tree
Transition Tree

The Current Reality Tree

Today we will focus on the first question
What to Change?

There are two types of problems:

Deviations and Dilemmas.
A deviation is easily fixed once the cause is
recognized. For example - the house is too hot.
Why? The air conditioner isnt on. Solution:
turn on the air conditioner.
A dilemma is hard to fix even when the problem
is recognized because a conflict is involved.
Mary wants to watch 60 Minutes. John wants
to finish watching the football game. There is
one TV.

Most business problems are

dilemmas.
If the problems were mere deviations they would
have been solved once the deviation was
recognized. There is nothing to prevent the
solution.
In a business very often the symptoms of the
problem appear in department X (say
production) but the underlying cause is in
department Y (say marketing) and marketing has
no incentive to fix the problem.

Current Reality Tree (CRT)

What to Change?
A CRT is a diagram that links underlying
cause to symptoms via cause-and-effect
arrows.
If the underlying cause involves a dilemma
we will need the next tool (evaporating
cloud) to solve it.

Basic Structure of a CRT

Symptom
a.k.a.
Undesirable
Effect
(or UDE)
UDE

UDE

Underlying
Cause

Definitions -- CRT

Current Reality Tree -- a logic-based tool for using cause-and-effect

relationships to determine root problems that cause the undesirable effects of
the system (APICS Dictionary, p. 19.)
Undesirable
Effect
Undesirable
Effect
Undesirable
Effect

Undesirable
Effect

Undesirable
Effect
Core
Problem

Starting from undesirable effects and

using existing knowledge, this thinking
process enables a person to pin-point
the core problem.

CRT Benefits

Focus
Team-Building
Root Cause Analysis
Systems Thinking
Cross Functional Problem Solving
Effective Communications
Common and Agreed upon Understanding of
the System

Steps in Construction of the CRT

1. List between 5 and 10 problems (called undesirable
effects -- UDE's) related to the situation.
2. Test each UDE for clarity -- is the UDE a clear and
concise statement. This test is called the clarity
reservation.
3. Search for a causal relationship between two of the
UDEs.
4. Determine which UDE is the cause and which is the
effect. Read as "IF cause THEN effect." This test is
called the causality reservation. Occasionally you may
have the cause and effect reversed, check using the
following statement "Effect BECAUSE cause."

Steps in Construction of the CRT

5. Continue the process of connecting the UDEs using the
If-Then logic until all UDEs are connected.
6. Many times the causality is strong to the person feeling
the problem but doesn't seem to exist to others. In these
instances, "clarity" is the problem. Use the clarity
reservation. Generally, entities between the cause and
the effect are missing. The current relationship is stated
as "IF cause THEN effect." The correct structure in its
simplest form may be "IF cause THEN (missing effect).
(Missing effect becomes missing cause at the next
higher level.) IF (missing cause) THEN effect."

Steps in Construction of the CRT

7. Sometimes the cause by itself may not seem enough to
create the effect. These cases are tested with the cause
insufficiency reservation and are improved by reading
"IF cause AND __________ THEN effect." What is the
missing dependent statement that completes the logical
relationship? Add it to your diagram using the "AND
CONNECTOR" (represented graphically by a horizontal
line or an ellipse across both connecting arrows). The
and in this relationship is called a "conceptual and"
which means that both entities connected with the "and
connector" have to be present for the effect to exist. If
either entity is eliminated, the effect is eliminated as well.

Steps in Construction of the CRT

8. Sometimes the effect is caused by many independent
causes. The causal relationships are strengthened by the
additional cause reservation. The problem to be addressed
is "how many of the causes are important enough to
address?" One, two, sometimes three causes frequently
result in creating about 80 percent of the effect. Generally,
eliminating these few causes is enough of a reduction where
the remaining effect becomes minor. Therefore it is not
necessary to have an exhaustive list of causes for an effect.
These cause-effect relationships are called a "magnitudinal
and" for each cause increases the magnitude of the effect.
Each of the causes must be addressed individually to
eliminate most of the effect.

Steps in Construction of the CRT

9. Sometimes an if-then relationship seems logical
but the causality is not appropriate in its wording.
In these instances words like "some", "few",
"many", "frequently", "sometimes" and other
adjectives can make the causality stronger.
10. Numbering of UDEs on the CRT is for ease of
locating entities only. An asterisk by a UDE
indicates that UDE was provided in the original list
of UDEs.

Constructing a CRT
List Undesirable Effects (UDEs)
Many bank tellers quit to take a better job.
Some single parent bank tellers quit to make
more money on public assistance and to be with
their children.
Many bank teller job vacancies occur each year.

Constructing a CRT
List Undesirable Effects (UDEs)
The banks budget for hiring, training, and
raises is quite small.
Some bank tellers (students or their spouses)
quit at college graduation.
Bank teller jobs are low paying entry level
positions.

Constructing a CRT
Search for causal relationships
Desirable
Effect

Desirable
Effect

Desirable
Effect
Injection

Injection

Desirable
Effect

Injection

This thinking process

enables a person to
construct a solution
which, when implemented,
replaces the existing
undesirable effects
with desirable effects.

Constructing a CRT
Search for causal relationships

60 Several bank teller job

openings occur each year.

40 Some bank tellers

(students or their spouses)
quit at college graduation.

Constructing a CRT
Search for causal relationships

60 Several bank teller job

openings occur each year.

30 Many bank tellers quit to

take better job positions.

Constructing a CRT
Search for causal relationships
60 Several bank teller job
openings occur each year.

40 Some bank tellers

(students or their
spouses) quit at college
graduation.

50 Some single parent bank

tellers quit to make more
money on public assistance
and to be with their children.

30 Many bank tellers quit to

take better job positions.

Constructing a CRT
Search for causal relationships
30 Many bank tellers quit to
take better job positions.

20 Many industries have

higher paying entry level
positions.

10 Bank teller jobs are low

paying entry level
positions.

The Bank
Teller CRT

100 The bank has little

money left for raises.

80 The bank's
budget for hiring,
training, and
raises is quite
small.

90 The bank is constantly

hiring and training new
employees.

70 Most bank teller vancacies

are filled with new
inexperienced employees.
60 Several bank teller job
openings occur each year.

40 Some bank
tellers (students
or their
spouses) quit at
college
graduation.

50 Some single
parent bank tellers
quit to make more
money on public
assistance and to
be with their
children.

30 Many bank
tellers quit to
take better job
positions.

20 Many industries have

higher paying entry level
positions.

10 Bank teller
jobs are low
paying entry
level positions.

70 Significant current sales are lost.

75 Significant future sales are lost.

65 Some customers may not like the

quality of service provided.

60 Potential customers leave

because of long lines.

55 Approximately 20% of the tables are

tied up significantly longer than expected.
30 Some customers
don't complain; they
just don't return.

50 An undercooked
steak takes about 10
minutes to correct.

45 An overcooked steak
takes about 16 minutes
to correct.

40 Some customers (3%) request the

undercooked steak be redone. This is
about 10% of tables.

35 Some customers (3%) request the

overcooked steak be redone. This is
about 10% of tables.

25 The customer is dissatisfied with the steak.

20 The cook does not prepare the steak
to the customer's specifications.

5 The grill is too hot.

10 The grill is too cool.

15 The customer does not know what rare,

medium rare, medium, medium well, and
well done means with respect to this
restaurant.

The
Steakhouse
CRT

Categories of
Legitimate Reservation

Clarity
Entity Existence
Causality
Tautology (House on Fire)
Cause Insufficiency
Additional Cause
Predicted Effect

Application of CLR
Correct order for expressing the Catagories of Legitimate Reservation
First
Clarity Reservation
(What does this
word mean?)

Cause Insufficiency
(This doesn't
cause that without
providing another
cause in the "and"
connector)

Second
Entity Existence
(Does that really
exist in your
environment?)

Additional Cause
(I agree but I also
see the effect could
be caused by
another, additional
cause)

Third
Causality Existence
(How/Where does
that come from this?)

Predicted Effect
(If what you say is
true, I should expect
to see another effect
which doesn't exist
in this reality)

Tautology
(These are related
but the arrow is
going the wrong
way OR The effect
is the justification
of the cause.)

List of Undesirable Effects

(problems)
1) Secretaries are frustrated.
2) Secretaries make mistakes.
3) The manager/department appears inept.
4) Work is completed slowly.
5) Secretaries constantly ask managers for
clarification.
6) Managers do not trust the system.
7) Secretaries often change departments.
8) The secretary is not trained.

Test each UDE for clarity

Is the UDE a clear and concise statement?
1) Secretaries become frustrated with their work
assignment/load.
2) Secretaries make mistakes.
3) The manager/department appears inept.
4) Work gets postponed/completed more slowly than expected.
5) Work must iterate between the manager and secretary
several times.
6) Management loses trust in the system.
7) Secretaries are rotated among the managers frequently.
8) Assignments are made for which the secretary is not trained.

The search for causal relationships.

3* The manager/
department appears
inept.

2* Secretaries make
mistakes.

The search for causal relationships.

2* Secretaries make mistakes.

8* Assignments are made for

which the secretary is not trained.

The search for causal relationships.

3* The manager/ department
appears inept.

4* Work get postponed/completed

more slowly than expected.

The search for more causal relationships.

1* Secretaries
become
frustrated with
their work
assignment/load.

2* Secretaries
make mistakes.

6* Management
loses trust in the
system.

3* The manager/
department appears
inept.

4* Work get
postponed/complet
ed more slowly
than expected.

5* Work must
iterate between the
manager and
secretary several
times.

An example of cause insufficiency.

8* Assignments are
made for which the
secretary is not
trained.

7* Secretaries are
rotated among
managers
frequently.

21 Different
departments/managers
require different skill
sets of their
secretaries.

An example of the clarity reservation.

a.

2* Secretaries make
mistakes.

b.

2* Secretaries make mistakes.

23 Secretaries are unable to learn
what a particular
department/manager likes.

7* Secretaries are rotated

among managers
frequently.

7* Secretaries are rotated among

managers frequently.

An example of the clarity reservation.

a.
7* Secretaries are rotated
among managers frequently.

b.
7* Secretaries are rotated among
managers frequently.
52 Secretarial staff supervisor
reassigns work/secretary to
satisfy the secretary.

1* Secretaries become
frustrated with their work
assignment/load.

1* Secretaries become frustrated

with their work assignment/load.

52 Secretarial staff supervisor

reassigns work/secretary to
satisfy the secretary.

6* Management loses
trust in the system.

7 (loop)

3* The manager/
department appears inept.
1* Secretaries become
frustrated with their
work assignment/load.

2* Secretaries make
mistakes.

8* Assignments are
made for which the
secretary is not trained.

21 Different
departments/managers
require different skill
sets of their secretaries.

7* Secretaries are
rotated among
managers
frequently.

4* Work get
postponed/completed more
slowly than expected.

5* Work must iterate

between the manager and
secretary several times.

23 Secretaries are
unable to learn what a
particular
department/manager
likes.

52 (loop)

The initial
Current
Reality Tree.

An example of the additional cause

reservation.
7* Secretaries are
rotated among
managers frequently.

100 In a pool of 16
secretaries, at least one
secretary is absent one
day per week.

52 Secretarial staff supervisor

reassigns work/secretary to
satisfy the secretary.

39 Secretaries are shifted to

cover for absences.

101 Secretaries take time off work

for family/vacation/personal leave.

Another example of the additional

cause reservation
39 Secretaries are shifted to cover
for absences.

101 Secretaries take time off

work for
family/vacation/personal leave.

102 The highest skilled

secretary is always assigned to
the highest level of
management.

7 (loop)

48 The company is less

efficient.

52 Secretarial staff supervisor

reassigns work / secretary to
satisfy the manager(s) /
secretary.

1* Secretaries become frustrated

with their work
assignment/load.

34 Managers dont train their

secretary to handle as many
tasks as might be possible.

27
49 Managers are
less efficient.
81
110 The manager
complains to the secretarial
staff supervisor.

81 Secretaries try
hard to please the
manager(s).

80 The secretarial
staff supervisor
counsels the
secretary about
his/her work
quality.

2* Secretaries make mistakes.

23 Secretaries are unable to learn

what a particular
department/manager likes.

46 The work of the receiving

department is also made late.

109 The manager does not have

time to do things that
cannot/have not been delegated.
107 The manager is
required to do some tasks
his/her self.

4* Work get
postponed/completed more
slowly than expected.

48

5* Work must iterate between the

manager and secretary several
times.

24 Managers cant become

too dependent upon a
particular secretary.

7
31 The work scheduling system is
informal and ineffective.

91 Some secretaries are less

busy than the system would
indicate.

3* The manager/
department appears inept.

49

27 Managers must oversee more

work than he/she should.

50 Secretaries are less

efficient.

81 Some secretaries are busier

than the system would indicate.

99 Managers interrupt the

work currently being
processed by the secretary
to expedite a task.

106 The work of the absent

secretary is delayed.

71 The secretary
assignment system is bypassed.

104 The current work of the

moved secretary is delayed.

105 The moved

secretary is unfamiliar
with the new
department/ manager
and is therefore less
efficient.

61 Managers seek out the

secretary whose skills are
required even if the secretary is
on another department.

37 The secretarys
current workload is not
considered
6* Management loses trust in the system.

21
24
8* Assignments are made for which the
secretary is not trained.

51 Secretarial skill dont necessarily match the

skill sets required by different managers.

52 (loop)
100 In a pool of 16 secretaries, at least one
secretary is absent one day per week.

101 Secretaries take time off work for

family/vacation/personal leave.

41 Manager know which

secretary possesses the skills
required.

44 Managers arent notified

of the shift.

7* Secretaries are rotated among

managers frequently.

39 Secretaries are shifted to cover for

absences.

103 Lower level managers are unable to

chose which secretary is assigned to them.

102 The highest skilled secretary is always

assigned to the highest level of management.

19 There are no formal

initial training
requirements

11 Different secretaries have

different skill sets.

21 Different departments/managers require

different skill sets of their secretaries.

Project 1
You are to use the thinking process tools to
analyze something in your personal life.

School
Relationships
Sports performance
Whatever

This project is an individual project designed

to allow you to become comfortable with the
tools.
In Project 2, each group will find a business
to analyze with the TP tools.