Theory of Constraints - Innovative Business Ideas for Churches
A Quality Movement
Over the past three decades two very significant movements
in management have revolutionized how businesses function. They are the Total
Quality Movement and the Six Sigma method of quality assurance. It is not my
intention to go into these quality movements. They are essentially movements of
scientific analysis for improvement. There is not really a compelling case for
their use in churches because are basically statistical analysis of work
processes.
However, there is an approach whose roots are in the quality
movement that is built on a similar
philosophy of organizational systems as The
Fifth Discipline. This set of tools goes by the name Theory of Constraints. It
is the brainchild of Israeli physicist and management thinker Eliyahu Goldratt.
Goldratt’s philosophy for organizing business was first
introduced in a book written as a business narrative called The Goal. The Goal
follows the travails of a young plant manager who decides that there are
tremendous resources available in the plant that he has been sent to shut down.
Through the help of his friend and mentor, the plant makes a dramatic
turn-around. While The Goal is not great literature, it does provide a picture
of the kind of issues that manufacturers face.
I was introduced to the Theory of Constraint’s methodology while working on a project for a hosiery mill. The mill had been in decline for a decade, and it was felt that implementing a Theory of Constraints process to their production system that they could turn around the business. At that point, the time required to produce an order of socks was around six weeks. After the implementation of the system, the time frame was reduced to six days. While this dramatic improvement contributed to strengthening the business, the company was not able to meet the opportunity that all that increased capacity provided for them. Within two years of implementing Goldratt’s theory, the company declared bankruptcy and closed.
The
Theory of Constraints
The Theory
of Constraints is a simple idea built upon a systems view of organizations.
Goldratt understands the human dimension of leadership and organization. His
simple idea is that for an organization to grow, it must remove the constraints
that prevent it from growing. The simple focusing goal, and the subtext of
Goldratt’s book of that title, is that business’ number one goal is “to make
money now and in the future.” When I first read this, I thought of Gordon
Gecko’s affirmation that “greed is good” from the movie Wall Street. But
Goldratt’s thinking is not about greed but a very realistic understanding that
every other goal of an organization requires financial resources. This is true of
a hosiery mill as well as a church.
Because “making money now and in the future” is the goal of the Theory of Constraints, the methodology is focused on removing those obstacles that make it more difficult or costly. In the case of the hosiery mill, each station along the manufacturing process operated within their own discrete world, and could not tell you want the next station before or after it did. As a result, their whole view of the business was from their individual perspective, for example, the dyeing of the material. You may have heard this called the silo effect. This happens in churches when programs or ministries become isolated from one another. Because each of the 17 steps of the sock manufacturing process operated as their own business, partially completed socks could be found at every step of the process sitting on pallets throughout the factory. All that inventory was costing the company money. The Theory of Constraints unified the process by cross training all the employees and refusing to make socks for the sake of making socks which produced the idle inventory between each station. As a result, they only made socks when they had orders, and there was no costly inventory sitting on the floor.
The Theory of Constraints is an analytical process that helps the leadership of an organization identify the obstacles that are holding them back. The focus on this thinking process is the answering of three questions:
What To Change?
To What To Change?
How To Cause The Change?
Here is a helpful introduction. It is an intricate process that has many steps that helps to reveal the inner workings of a production process.
Just as The Fifth Discipline is a system for understanding the interconnectedness of organization, so is Goldratt’s Theory of Constraints a system for doing so as well.
The Relevance of Theory of Constraints to Churches
I know the question of the relevance of
the Theory of Constraints has been one you have been asking if you have read
this far. This was also the question that I had when I was first introduced to
the topic seven years ago.
Here are
two reasons why it pays for pastors to have an appreciation for Goldratt and
his Theory of Constraints. Finding a direct application for the Theory of
Constraints in the life of the church is not my purpose here.
1. How to think more realistically about how we handle the
governance side of the church is what I’ve gained from reading Goldratt. There are resources available that
help Sessions operate according to the Book of Order. What is also needed is a way of thinking about governance that is
realistic, and not just focused on process. As Presbyterians, we process ourselves to death, and rarely think at the
governance level about the larger issues of what actually should be the outcome
of our life as a congregation. Goldratt’s system is fintellectually rigorous. Yet, it isn’t simple an
abstract philosophy. It is a system of think that leads to how to make the most
difficult decisions that organizations face. When Goldratt says that the Goal
of a business is to make money now and in the future, he isn’t saying that is
the only goal. He is saying that every other goal is dependent upon having
sufficient financial support to achieve those goals. This realism can be a
healthy antidote to church’s uneasiness about talking about money. What this then means that we have to be very
clear about what our mission is as a church and how we are going to pursue that
mission.
2. Understanding the complex nature of businesses enables us to
care more pastorally for our members. Read this white paper on the Theory of Constraints
Thinking Processes. It is short and demonstrates how Goldratt’s
methodology is used. Now, consider what takes place in your Session
meetings. Think about how decisions are made. I believe it is important to
recognize that elders come to their service with training in business that
affects how the view Session governance processes. It serves no one’s best
interest, nor the church’s, to say churches should be run like a business, or
the corporate approach isn’t the church’s way. The reality – Goldrattian
realism returns – is that business people respect clarity, purpose and
definitive outcomes. When the work of the Session is theological without
leading to discipleship, lacking in a clear mission or simply an endless cycle
of reports of meetings with no clarity about impact, then people who are used
to functioning in a business environment like that Goldratt illustrates in The
Goal will become disillusioned.
The church doesn’t have to mimic businesses in order to be relevant to business people. But demonstrating a sensitivity to business ideas and methods is just as pastoral as one’s sensitivity to family issues. As a result, understanding Goldratt is for the purpose of strengthening the relationships that pastors have with them members. We relate on the level of sports, movies, literature and politics. We should also relate by understanding the ideas that are important in our member’s businesses.
For more information on Eliyahu Goldratt's system, visit the following websites.
"...we have to be very clear about what our mission is as a church and how we are going to pursue that mission."
(With a sly laugh...) But if we don't have a clear mission, then we won't be constrained by the mission...
Our part-time secretary at church provides us with an interesting illustration. Yesterday she was talking with the lady who is in charge of editing our membership "directory" for 2007. PW has taken ownership of putting this out every year.
The secretary is very effecient, in a get it done, OCD manner. (Many things get done before their time...bulletins sometimes get printed on Tuesday, and someone will request something be included on Thursday...)
The secretary was asking the lady in charge of the directory when she might be done with editing the booklet so that the secretary can enter it in the computer, print, copy, staple, and hand the copies to PW to hand out. Well, there are some changes still to be made, but it should be ready to hand out in less than 2 weeks (read: stress upon the secretary, who still doesn't have the final copy in her hands).
During the conversation, the moderator of PW steps forward to announce that she has some changes that need to be made, and that she wants to see the final copy before it becomes "final". (There are 2-3 other women who would like that opportunity as well.)
In theory, it should be a very simple process. The active membership should be listed in the directory. But, some want to include people not on the active membership. And for situations of divorce, with which one are the children listed?
It's interesting to me that one person has responsibility for the directory, that PW officially put that person in charge for this year, yet so many want to influence the outcome (without being in charge and spending the time on parts that aren't of interest to them).
Perhaps this isn't much of an example of the opposite of TOC at work. Yet it was fresh on my mind in regard to the way organizations sometimes work (or don't work).
Posted by: DennisS | December 07, 2006 at 04:38 PM