Theory Of Constraints and the Thinking Process

Authored by

Co-authored by Satyashri Mohanty

1.1. Background and underpinnings of the TOC thinking process

Though Theory of Constraints was originally offered by Eliyahu Goldratt as a manufacturing scheduling method, over the course of his career, Goldratt evolved TOC into a systems methodology which encompasses a wide range of concepts, principles, solutions, tools and approaches that strive to ensure any change undertaken as a part of the ongoing improvement will benefit the system as a whole (Dettmer W., 2006). Consistent with the systems philosophy and unlike the classical or behavioral management theories, TOC views organizations as a chain of many links or networks of chains.

Conventional thinking tends to address large systems and its problems by breaking them up into smaller, simpler units, i.e. through the process of “analysis”. This approach is concerned primarily with linear relationships and mostly ignores the possibility of dynamic change and multiple feedback loops. To the contrary, the systems approach is concerned “synthesis”, i.e. the view that various elements of systems are interconnected. In a system, all these interconnected and interdependent parts contribute to the overall goal of the entire system. More importantly, this view recognizes that the system may fail even if a functional division within is successful. Further, TOC emphasizes nonlinear cause and effect with feedback loops since it is possible that actions taken in one part of the organization can have unintended consequence on another.  From this perspective Goldratt’s TOC bears resemblance to the work of other systems theorists like Peter Senge, Jay Forrester etc. who proposed undertaking problem solving while viewing them as part of the overall system rather than in isolation.

Modelling the system world view is complex because as Peter Senge puts it “A system can present dynamic complexity when cause and effect are subtle”. Obvious interventions can produce non-obvious consequences. Though apparently complex, Goldratt identified that these systems are driven by simple rules and the root causes for problems faced by organizations can be identified through convergent thinking. Unlike divergent thinking (where many ideas are generated and evaluated), convergent thinking synthesizes the information available and attempts to drill down to the core issue. For this, Goldratt has developed a set of tools to methodically structure and solve fundamental conflicts in organizations and enable a process of ongoing improvement.

Being a trained physicist, for conceptualizing and designing these “thinking process”, he has borrowed heavily from the hard sciences. This is not surprising since systems theory itself has its origin in the sciences and the belief in the interdependence of all things is fundamental to the natural laws. This bedrock of hard sciences is clearly discernible in Goldratt’s work since traditions and methodologies of the hard sciences as established by philosophers of science like Karl Popper, Max Born etc. have distinct characteristics (Mohanty, Vector Consulting Group, 2013). In theory, these traditions are considered scientific only if it is falsifiable (Popper, 2002). Support for theories can be had if they cannot be falsified by observation and experiment; there is general consistency with which a wide body of data can be explained; and if these theories correctly predict new discoveries or properties. Interplay between tentative theories (conjuncture) and error elimination (refutation through attempted falsification) advances scientific knowledge. These characteristics are generally missing in social science theories which (while they may be valid) are crafted in such a way as to “make it impossible for criticism or experiment”. Unlike the deductive reasoning of the hard sciences, inductive reasoning is more common in social sciences; theories tend to be based on qualitative tools and causal relationships are difficult to establish and validate. More subjective, the social science methods are often criticized of poor generalisability.

Contrary to the general practice of such social scientists, and by adopting the traditions of the hard sciences, Goldratt established tools for TOC which help raise questions regarding accepted practice, existing paradigms and perspectives that are constraints in the path of ongoing improvement. This rigor of the hard sciences is most evident in the logical constructs of these tools or diagrams. The Thinking tools based on these constructs help identify the core conflict or constraints, construct a complete solution and devise plans for implementing this solution by exploring and communicating information and assumptions about the current reality, future reality and how to get there (Cox & Spencer, 1998). The “TOC Thinking Processes” as they were called, were introduced by Dr. Goldratt in a business novel, It’s Not Luck (Goldratt, Its not Luck, 1994) and when used enable the process of ongoing improvement in any organization.

1.2. Process of Ongoing Improvement

Organizations are a chain of interdependent links and therefore managing the constraints effectively through a process of ongoing improvement can result in substantial improvement to the entire system output and can give results with as few as three months of effort (McMullen, 1998). The suite of trees of the “Thinking processes” provides a road map for this change (Dettmer, 1997). No matter what the decision, accelerated improvement or change involves answering the following questions

  • What to change?
  • To what to change to?
  • How to cause the change?

The tools of the thinking process can guide decision makers in answering these questions by facilitating the process of problem structuring, problem identification, solution building, identification of barriers to be overcome and implementation of the solution. The logical constructs of these tools or diagrams are the necessary condition logic, the sufficient cause logic and the strict logic rules that are used to validate cause-effect relationships which are modelled with these tools.

1.3. The Constructs of TOC Thinking Processes

1.3.1. Sufficiency thinking: The TOC thinking process is built up by constructing connections between observed effects and causes. To do so the basic constructs used are the examination of Causality and Necessity. Sufficiency thinking examines these patterns of effect-cause-effect. There can be three types of sufficiency: A is sufficient to cause B; A and B separately cause C or A and B together cause C. the wording used is “If…..then” to express these cause effect relationships. These patterns can be used to visualize the cause-effect relationship and uncover the assumptions and reservations to any of the components in order to facilitate thinking, problem solving and communication with other people.


Figure 1. Sufficiency Thinking

1.3.2. Necessity thinking: Necessary thinking is the thought pattern used when attempt is being made to establish the conditions that need to exist to accomplish something else. Necessary conditions are rules, policies or laws that provide limitations or boundaries to the cause and effect. This thinking uses the wording “In order to achieve A we must have B”. Figure 2 illustrates this necessary condition thinking.


Figure 2. Necessary Condition Thinking

Sufficiency and Necessary condition thinking can be used to surface and challenge assumptions with the help of the eight rules of logic in order to aid in the decision making process.

1.4. Eight rules of Logic

The validity (or invalidity) of the causal connections can be verified by a finite set of rules called the Categories of Legitimate Reservation (CLR). Most of these have their roots in Aristotle’s logical fallacies (Dettmer H. , Goal systems International, 2006). The eight rules are:

1. Clarity (the complete understanding of a word, idea, or causal connection)
2. Entity Existence (the verifiability of a fact or statement)
3. Causality Existence (the direct-and-unavoidable connection between a proposed cause and a particular effect)
4. Cause Sufficiency (complete accountability for all contributing, dependent causes in producing an effect)
5. Additional Cause (existence of a completely separate and independent cause of a particular effect)
6. Cause-Effect Reversal (misalignment of cause and effect)
7. Predicted Effect Existence (additional expected and verifiable effect of a particular cause)
8. Tautology (circular logic, or existence of effect offered as rationale for a proposed cause)

1.5. The Tools of the TOC Thinking Process

Using the constructs for thinking and the eight rules of logic, the six TOC Thinking Process tools allow decision making to be undertaken in the Socratic tradition of questioning the cause and effects relationships and the validity of the underlying assumptions. This comprehensive set of logical tools can be used for analysis, solution development and solution implementation for individuals, groups or organizations. Each tool has a purpose and nearly all tools can be used independently. Figure 3 is the summary of these tools.


Figure 3. TOC Thinking Process Tools

Use of these tools are based on the fundamental beliefs of TOC that organizations are a) inherently simple (interdependencies exist in organizations) b) desire inherent harmony (win – win solutions are possible) c) inherently good (people are good) and have inherent potential (people and organizations have potential to do better). In the book “Through the clouds to solutions” Jelena Fedurko (Fedurko, 2013) states that the major areas for application of TP tools as:

  • To create and enhance thinking and learning skills
  • To make better decisions
  • To develop responsibility for one’s own actions through understanding their consequences
  • To handle conflicts with more confidence and win-win outcomes
  • To correct behavior with undesirable consequences
  • Assist in evaluating conditions for achieving a desired outcome
  • To assist in peer mediation
  • To assist in relationship between subordinates and bosses.

1.5.1. Current Reality Tree (CRT)


Figure 4: The CRT logic tree

When grappling with the decision making variables for solving problems, focus tends to be on the symptoms that are visible rather than the root cause. This approach fails to eliminate the disease and gives at best temporary relief. CRT helps state the current situation and uncover the conflict/s that must be resolved if that situation is to be improved. The primary function of the current reality tree tool is to help unearth the one entity that leads to most of the undesirable effects (UDE) in the organization. (Dettmer H., 1997) states that the CRT is designed to achieve the following objectives:

  • Provide the foundation for understanding complex systems
  • Identify undesirable effects (UDEs) exhibited by a system
  • Link UDEs through a logical chain of cause and effect to root causes
  • Identify the core problem that eventually produces 70% or more of the system’s UDEs.
  • Determine at what points the root causes and/or core problem lie beyond one’s span of control or sphere of influence
  • Isolate those few causative factors (constraints) that must be addressed in order to realize the maximum improvement of the system
  • Identify the one simplest change to make that will have the greatest positive impact on the system.

Using the rules of logic anyone can question the logic presented. Any conflict unearthed by the CRT can be examined with the help of the evaporating cloud.

1.5.2. The Evaporating Cloud or the Conflict Resolution Diagram (EC)

The conflict resolution diagram or the evaporating cloud helps build new insights into the core problem or conflict facing an organization, individual or group. The cloud deals with all kinds of problems that involve a dilemma or a conflict between two mutually exclusive actions or wants. Using five interconnected boxes the cloud guides the user to understand that each of the two conflicting actions is to achieve some need. These needs are required to meet an objective. This allows the user to have a structured framework to analyze the problem (Fedurko, 2013).


The cloud is about the necessity logic. This diagram can be read as

“In order A we (I/they/etc) must B

In order B we (I/they/etc) must D

In order A we (I/they/etc) must C

In order C we (I/they/etc) must D’

D and D’ are in direct conflict

D puts in danger the need C

D’ puts in danger the need B”

The cloud structure is the raw material for finding the assumptions -the reasons why these relationships are thought to hold, and articulating them. These assumptions are represented as thought bubbles on the diagram. Invalidating the weak assumptions can evaporate the cloud. Or “injections” can used to “attack” valid assumptions allowing for resolution of the conflict. Types of clouds

Depending on the purpose clouds have been classified by Jelena Fedurko (Fedurko, 2013) as

Dilemma Cloud: Used for situations when a person has two clear courses of behavior and cannot decide which one to take.

Two sided interest conflict cloud with two subtypes:
Day to Day conflict cloud: for conflicts and disagreements between two people
Organizational interest conflict cloud: for conflicts of interest between two different functions of an organization.

Fire-fighting cloud: for situations when a manager has to put out “fires” and to ensure that it will not reoccur

UDE cloud: for situations when a system has been suffering from certain recurring problems that do not allow it to gain the desired performance.

1.5.3. The Future Reality Tree (FRT)


Once the injections i.e. actions, conditions and solutions needed to resolve conflicts are identified, the FRT can be constructed linking these to desirable outcomes. The logic of these linkages is checked through the sufficiency based logic. It helps clarify what actions and conditions will be necessary and sufficient to bring about desirable effects or change. Thus this logic-based tool is useful for constructing and testing potential solutions before implementation (Kendall, 1998).

The FRT serves the following purposes (Mabin, 1999):

  • Determines whether proposed system changes will produce the desired effects without creating negative consequences
  • Indicates additional actions necessary to prevent any such negative side effects from occurring
  • Provides a means of making beneficial effects self-sustaining through deliberate incorporation of positive reinforcing loops
  • Provides a means of assessing the impacts of localized decisions on the entire system
  • Provides an effective tool for communicating to and persuading decision makers to support a desired course of action
  • Serves as an initial planning tool.
  • Enables testing of new ideas before undertaking implementation

Steps for building FRT

1. Gather all of the needed information and materials.
2. Articulate the desired effects.

  • Positive, not neutral
  • Use present tense
  • Lay out Desired Effects

3. Start with the injection(s) at the bottom.
4. Fill in the gaps (building upward)
5. Add additional injections wherever necessary.
6. Build supporting loops if possible.
7. Look for and trim NBRs

1.5.4. The Negative Branch Reservation (NBR)

FRT may have subtrees constructed to explore negative side effects of proposed solutions. These are called the negative branch reservation. NBR is a logic- based tool using cause-and-effect relationships which formally a sub tree of the FRT but can be used as a stand-alone tool to improve feedback and develop ideas (Dettmer H. , 1998).

1.5.5. The Prerequisite Tree (PRT)

For each of the injections on the FRT, a PRT will answer the question: what currently prohibits its implementation? Therefore, PRT complements the FRT and helps identify obstacles that might block the path of the desired outcomes and then set new actions that can help in overcoming these obstacles.

Dettmer (1997) states that the PRT is used to achieve the following objectives:

    • To identify obstacles that prevent achievement of a desired course of action, objective, or injection).
    • To identify the remedies or conditions necessary to overcome or otherwise neutralize obstacles to a desired course of action, objective or injection.
    • To identify the required sequence of actions needed to realize a desired course of action.
    • To identify and depict unknown steps to a desired end when one does not know precisely how to achieve them.

Steps for a PRT

1. Place “injections” at the top
2. List the obstacles that are expected
3. Ensure that as each obstacle is overcome, an intermediate objective is achieved
4. The intermediate objectives need to be sequenced

1.5.6. The Transition Tree (TRT)

The TRT identifies tasks and actions both necessary and sufficient to meet the intermediate objectives of the PRT. The focus is not on the plan to do but on the plan to accomplish. For each intermediate objective (IO), a specific action or set of actions are determined and initiated. Causing a specific change in reality is the imperative. Thus, the transition tree provides a road map for getting for reaching the goal.

Dettmer (1997) outlines the five elements of the Transition Tree as:

1. A condition of existing reality,
2. an unfulfilled need,
3. a specific action to be taken,
4. an expected effect of the integration of the preceding three.
5. the rationale for a need at the next higher level of the tree.

Each succeeding level of the Tree is built upon the previous level, with the expected effect taking the place of the unfulfilled need. These build progressively upward to an overall objective or desired effect.

Dettmer (1997) states that the Transition Tree serves nine basic purposes, these are:

      • Provide a step by step method for implementation
      • Guide seamless navigation through a change process
      • Detect deviation in progress
      • Adjust or readdress effort, should plans change
      • Communicate the reasons for action to others
      • Implement the injections identified in the FRT
      • Accomplish the intermediate objectives (IO) identified in a PRT
      • Develop tactics for conceptual or strategic plans
      • Prevent undesirable effects from ensuing as a consequence of implementation.

Summary of the TOC Thinking Processes

Despite its origins as a manufacturing methodology, Goldratt’s Theory of Constraints (TOC) methodology is now regarded as a systems methodology with strong foundations in the hard sciences. Through its tools for convergent thinking and synthesis, the “Thinking processes”, which underpin the entire TOC methodology, help identify and manage constraints and guide continuous improvement and change in organizations. This process of change requires the identification and acceptance of core issues; the goal and the means to the goal. Since the thinking tools are designed to address successive “layers of resistance” (refer to Appendix 2) and enable communication, it expedites securing “buy in” of groups. While CRT represents the undesirable effects of the current situation, the FRT, NBR help people plan and understand the possible results of their actions. The PRT and TRT are designed to build collective buy in and aid in the Implementation phase.


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Cox, J. I., & Spencer, M. (1998). The TOC handbook. Boca Raton,FL: St. Lucie press.

Dettmer, H. (1997). Goldratt’s Theoy of Constraints:A Systems Approach to Continuous Improvement. Milwaukee,WI: ASQC Quality Press.

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Fedurko, J. (2013). Through Clouds to Solutions: Working with UDEs and UDE clouds. Estonia: Ou Vali Press.

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Kendall, G. (1998). Securing the Future: Strategies for Exponential Growth using the Theory of Constraints. Boca Raton,FL: CRC Press.

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Appendix 1

Nomenclatures of TOC Thinking Processes

1. Entity (drawn as boxes): a single part of the structure and usually expressed as a complete sentence
2. Arrow: an indicator of a relationship between two entities
3. Cause: an entity at the base of an arrow
4. Effect: an entity at the tip of an arrow
5. Ellipse: groups entities to represent the logical “and”
6.Assumption: the reason for the existence of the cause-effect relationship
7. Entry Point: any entity that does not have an arrow pointing to it.
8. Injections: Entry points that are entities that do not yet exist, and are used to indicate actions that need to be taken to cause a desired effect.
9. UDE: Undesirable effects faced by the organization
10. IO: Intermediate Objective
11. CLR: Categories of Legitimate Reservation

Appendix 2: The layers of resistance

        Layer 1. Disagree on the problem

      • Solution: Agree on the problem (CRT)

Layer 2. Disagree on the direction of the solution

      • Solution: Agree on the direction of the solution (EC)

Layer 3. Disagree that the solution solves the problem.

      • Solution: Agree that the solution solves the problem (FRT)

Layer 4. Yes, But, there are potential Negative consequences.

      • Solution: Agree that the solution will not lead to any significant negative effects (NBR)

Layer 5. Yes. But, there are obstacles to implementing the solution.

      • Solution: Agree on the way to overcome any obstacles that might block or distort implementation of the solution (PRT)

Layer 6. Unverbalized fears

    • Solution: Overcome Unverbalized fears (TT)
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