Product Management Toolset — Part 1: Theory of Constraints

This article is part of series on Product Management Toolset

Eliyahu Goldratt, in his business-fiction: The Goal, developed the Theory of Constraints (TOC), which actually teaches us a management philosophy, centered on finding and fixing problems (or constraints) that prevent an organization from reaching its full potential. TOC stresses how important it is to find and focus on the bottleneck or constraint in a system, since this is the one place where improvement will have the biggest effect on performance as a whole.

TOC can be used in product management to discover market or customer needs that limit the product, which then can help shape the product strategy. For example, in a product about logistics if the constraint is that the courier drivers are only willing to deliver one order per day, the logistic product organization may decide to focus on developing product solutions to increase the driver’s motivation.

TOC Five Focusing Steps

The Theory of Constraints gives a specific method, called as the Five Focusing Steps, for discovering and getting rid of constraints.

1. Identify the constraint
   The first step is to find the constraint that is making it hard for the organization to reach its desired outcome. This could be a problem with the way the product is developed, the market, or what the customer needs. It’s important to be as specific as possible when identifying the constraint and to use data to support it.
2. Exploit the constraint
   Once the constraint has been identified, it’s important to take advantage of it as much as possible. This means making the most of the constraint’s capacity, making sure it works as well as possible, and using it to its fullest potential.
3. Subordinate the constraint
   Once the constraint has been exploited, everything else in the product needs to be put under the constraint. This means aligning the product strategy to support the constraint and ensuring that nothing else is preventing it from working at optimal efficiency.
4. Elevate the constraint
   The next step is to elevate the constraint. This means finding a way to permanently get rid of or reduce the constraint so that it no longer limits the organization’s ability to achieve the desired outcome. It could be done by changing the solutions that delivered by the product to the customers
5. Repeat to avoid inertia
   TOC is a process of continuous improvement, so it’s important to repeat the process of identifying, exploiting, subordinating, and elevating the constraint. As the organization and market evolve, the constraint will also evolve and the main point is to continuously improve on the most important constraint to reach the desired outcome.

TOC Three Questions

Furthermore, the creators of TOC saw the necessity for a set of basic reasoning tools in the form of three seemingly straightforward yet fundamental questions:

1. What to change
2. To change into what
3. How to cause the change

They did this by adapting the rational thinking process used in the Scientific Method and making a set of “Thinking Process” designed to answer this question. The “Thinking Process” is based on “Sufficient Cause” thinking and “Necessary Condition” thinking, which are two ways of thinking about cause and effect.

TOC Thinking Process Toolset

1. Current Reality Tree (CRT)
   is a technique to map the interconnections between problems that are related to each other. It helps to figure out what problems are really about and how they are connected.
2. Future Reality Tree (FRT)
   is a tool used to figure out where the product wants to be in the future and what changes need to be made to get there. It helps the product strategy to come up with a clear vision that can be put into action.
3. Evaporating Cloud (EC)
   is a method that helps to find and resolve goals and objectives that conflict with each other. It helps figure out what trade-offs need to be made in order to get to the desired outcome.
4. Prerequisite Tree (PRT)
   is a tool used to find and manage the things that need to happen before the desired future state can be reached. It helps figure out the most important steps that need to be taken.
5. A transition tree (TT)
   is a tool to plan the changes needed to get to the desired state. It helps figure out the exact steps to be taken to make the change.
6. Decision Tree
   Helps decision-making based on facts by showing the possible outputs of different options and how likely each one is to happen.

Next article will dive deeper on each of the Thinking Process Tool