Sunday, July 3, 2011

Learning the theory of Constraint - "The goal" Review

Yesterday I finished the book:The Goal: A Process of Ongoing Improvement. The book is so fascinating, when I read it, I can not put it down, just like reading one of Agatha Christine's books. I never imagine that a business book can be written like this.
What I am most interested is the principle described in book: the theory of constrains. Here I copied some key points from the TOC WIKI:

Key assumption
The underlying premise of Theory of Constraints is that organizations can be measured and controlled by variations on three measures: throughput, operational expense, and inventory.
Throughput is the rate at which the system generates money through sales.
Inventory is all the money that the system has invested in purchasing things which it intends to sell.
Operational expense is all the money the system spends in order to turn inventory into throughput.
"The Goal" itself is to "make money". All other benefits are derived, in one way or another, from that single primary goal.

The five focusing steps
Theory of Constraints is based on the premise that the rate of goal achievement is limited by at least one constraining process. Only by increasing flow through the constraint can overall throughput be increased.Assuming the goal of the organization has been articulated (e.g., "Make money now and in the future") the steps are:

  1. Identify the constraint (the resource or policy that prevents the organization from obtaining more of the goal)
  2. Decide how to exploit the constraint (get the most capacity out of the constrained process)
  3. Subordinate all other processes to above decision (align the whole system or organization to support the decision made above)
  4. Elevate the constraint (make other major changes needed to break the constraint)
  5. If, as a result of these steps, the constraint has moved, return to Step 1. Don't let inertia become the constraint.
Applying to software development
This book is about manufacturing, but I found it can be easily applied to the software development. And I found it is very similar with Kanban method: Kanban help us visualize the bottleneck, improve the productivity by limiting the Work-In-Progress. Which is exactly the same as the theory of constraints. I feel that the TOC can be regarded as the scientific theory behind the Kanban system. Before when I learn Kanaban, I just accept the principles and conclusion from the Kanban, but I never thought of why it is like this or that,  Since this book uses lots of examples and step by step from question to conclusion. Now I understand more about Kanban. So I can say Kanban is an implementation of TOC.
If you knows Lean/Agile, you will find there are lots of concepts shared between lean and TOC:
  • lead time
  • Inventory is bad
  • WIP (Work-In-Progress)
  • small batch increase the productivity
  • local optimization is not working only optimize the whole works.
  • The dependent event queue can be mapped to the value stream map, or Kanban Queue.
Even the subtitle of the book - "A Process of Ongoing Improvement", which is perfectly match one of the lean philosophy - Kaizen, which means continuous improvement.

I just found David J. Anderson's book: Agile Management for Software Engineering: Applying the Theory of Constraints for Business Results. I haven't read that, but based on the title, it must be about applying the TOC into software development. In his recent blog post: REFLECTIONS ON THE PASSING OF ELI GOLDRATT,  he describe how TOC inspired him for his book and Kanban system.
Actually when I read this article from twitter last week, and this is the reason to let me read the book of "The goal".

And I found this youtube video is interesting: Standing on the Shoulder of Giants by Eliyahu M. Goldratt, Godratt talks about the TOC, Kanban and Toyota Production System.

I realized I need to read this book one more time. the TOC is so powerful, but I still have lots of questions, like:
- How can we apply it into our daily software development?
- How to find the bottleneck?
- What are the measurements we need?

Hope I can find the answers from the goal, kanban and Lean.

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