Business to the Buddha

Tag: Theory of Constraints

  • Theory of constraints






    Prof Moradian taught us concept of the Theory of Constraint. He also suggested us to read a book by Eliyahu Goldratt – The Goal. In the novel, protagonist is struggling with the operational inefficiencies of his plant and therefore facing a constant fear of management decision to close the plant.

    Well, what is this theory of constraints (ToC)? In brief ToC states that “A chain is no stronger than its weakest link”. I was thinking that this concept is applicable to our society too. We are evolving, we are constantly developing some thing or the other, society is a sort of factory. And the concept of the ToC applies equally to our life. Look at it this way if rich becomes richer the poorer would become weaker link of the society. Have you heard that during recession crime rate increases? This is ToC for our society. Lately, lot of demonstrations are happening across world by the title Occupy Wall Street. This is where I think that ToC can be applied in the society.

    I thought about interdependent co-arising and the Theory of Constraints in conjunction. My understanding of interdependent co-arising is that – we are all dependent on each other and for growth of each individual other has to necessarily grows. In other words, if society wants to evolve, everyone in the society has to evolve. The weakest link of the society may hamper the growth of society in total. Here I see a solution to the constraint, perhaps a socialistic one. We as a society have to help each other to grow (strengthen the weakest link), otherwise we would see increasing “Occupy Wall Street” kind of movements or increasing crime rates in future.

    I shared these thoughts with Prof Moradian and he said the idea is good why don’t you think about throughput and operating expenses and develop this concept of ToC in society further? This made me dig deeper. It is said that ‘a stitch in time saves nine’. If we rewind to 2008, after months of searching for alternatives Mr Barnanke, Mr Paulson and others had to bail-out banks of USA. Why not we start doing something now and for future. I see the operating expenses of this approach as deferred expense of brand building (building society) exercise for future. The throughput of the exercise would be availability of competitive, capable and intelligent work force for companies. These capable people would be the spenders of tomorrow – moving the wheel of consumerism forward – effectively, the solution may not be as socialistic as I think.

    Related blog – Ideate – save the sinking ship

  • Fruit will arrive in its season…







    We talk about long term sustainability, but want to gain in short term. Shareholders want quick dividends as well as long term performance of the company. If reserves and surplus (R&S) are given in dividends where would company get money for growth. In such cases our actions and desires conflict. I initially thought about the Japanese currency crises in similar fashion (common cause Vs individual gain). Though later Prof Mankad told me that the reason of the appreciation of Japanese Yen could be the computer triggered buying/selling, the way people put stop loss trigger in share trading.

    In operations, different departments try to optimize their performance, what happens to the overall performance? It is synergy that matters rather than the individual performance. Thats where ‘Theory of Constraints’ plays an important role to achieve global optimum against the local optimum.

    I was thinking about the same for some time in a different fashion. What is long term goal of an organization and an individual? How do both the goals meet and how to build synergy between individual’s aspirations and organizations perpetuity? Why did the question arise at the first place? A branding expert told us that marketing managers want to start new brand building exercise (to gain in short term for writing on their resume – ‘I started this initiative’) and move to next level. New manager comes he/she too does the same. Short term gains are there for the marketing manager; yet for long term the brand is diluted perhaps no one knows what would the brand stand for in future. I believe, Sataym fiasco started similarly – to show the investors that Satyam is growing, numbers were made up.

    Effectively, the question to ask is – how many times we look at the bigger picture? The question goes back to Why are we doing what are we doing? I recall Prof Lopez digging deeper and probing us to the fundamental reasons and the importance of asking right questions. Where does the bug stop?

    In school we learnt couplets (termed as Doha in Hindi) of a mystic Kabir, one of them was –
    धीरे धीरे रे मना धीरे सब कुछ होय
    पानी सीचे रे घणा ऋतू आये फल होय
    Literal translation (courtesy) of the same is –
    O mind! everything happens at its own pace, slowly
    Gardner may water a hundred buckets, fruit arrives only in its season.

    I am hopeful that some day those questions would be answered and we individually and collectively would balance between the long term Vs the short term perspective. there would not be much (if not any) of opportunism. We as human beings will evolve. I am optimist, “…fruit will arrive in its season…” and we are nearing the season.