📖The Logical Thinking Process: A Systems Approach to Complex Problem Solving

Dettmer, H. William
  • Goldratt’s Theory of Constraints (GTOC) is the previous edition of this book

    • what’s different in this edition:

      • improved process for logic trees

        • possible because of Intermediate Objectives Map—it’s now the first step of the process
      • a new way to integrate Current Reality Tree with the Evaporating Cloud
      • retires Transition Tree in favor of more detailed Prerequisite Tree + Critical Chain Project Management
      • starts to cover the psychology of change (“But it’s only a start. The psychology of change is a field unto itself.”)

        • Executive Summary Tree
        • Six-stage model for handling the psychology of change
  • Transformation Logic Tree—software for charting logic trees

Chapter 1. Introduction to the Theory of Constraints

  • p.5 Systems exist to achieve a goal

    • (that’s quite an anthropocentric point of view and doesn’t seem to scale well for “natural” systems)
    • (how this plays out with evolutionary purpose of teal organizations?)
    • in human systems, that’s the owner of the system (owners, stockholders, taxpayers)

      • (are there human systems without goal setters? probably very large groups without clear owner)
  • p.5 the responsibility of satisfying the goals rests on the managers (from CEO all the way down to the frontline supervisor)
  • p.5 effective managers deal less with the present and more with the future. fire preventing vs. fire fighting. proactive vs. reactive
  • p.6

    Have you seen them? Which way did they go? I must be after them, for I am their leader!

  • p.6 a manager needs to know:

    • the ultimate goal
    • critical success factors to reaching that goal
    • where they currently stand w.r.t to the goal
    • the magnitude and direction of the change needed to move to the goal
  • p.6 for this book,

    • goal = the result or achievement toward which effort is directed
    • necessary condition = a circumstance indispensable to some result, or that upon which everything is contingent

      • you must satisfy the necessary condition to achieve the goal
    • critical success factor (CSF) = major intermediate progress milestone / “show-stopper”

      • there won’t be too many of them (3–5 or even less)
  • p.7 the relationship between the goal and CSF is actually interdependent—if you change the goal to one of the CSFs, the previous goal will likely become a new CSF

    • therefore, the goal is really a constellation of CSFs arbitrary selected for primacy

      • (re: the goal of business is making money vs. producing value—they both are, and you cannot satisfy one without the other)

        • (is primacy selection really arbitrary?)
  • p.8 systems as chains

    • p.9 there is usually only one constraint in a system at any given time (the weakest link)

      • (what if system’s chain is dynamic, so each link’s strength is not constant but a range of possibilities?)
  • p.10 having all people on board for transformation is likely not productive because every team but one work on non-constraint

    • p.11 interest, motivation, and commitment to continuous improvement die from a lack of intrinsic reinforment
  • (business as a multiplication: you can work simultaneously on all of driving the CAC down, increasing LTV, customer retention, etc. and all the individual results multiply. they are not one chain)
  • p.12 TOC principles

    • systems as chains

      • If systems function as chains, weakest links can be found and strengthened” (emphasis mine)
    • local vs. system optima: system optima is not equal to sum of local optimas
    • cause and effect
    • undesirable effects and critical root causes

      • undesirable effects that we see are usually just indicators. we need to fix the root causes
    • solution deterioration

      • the solution deteriorates over time because system’s environment changes. “Yesterday’s solution becomes today’s historical curiosity.” (Goldratt)
    • physical vs. policy constraints

      • policy constraints are harder to identify and eliminate but usually produce more improvement

      An organization must have some means of combating the process by which people become prisoners of their procedures. The rule book becomes fatter as the ideas become fewer. Almost every well-established organization is a coral reef of procedures that were laid down to achieve some long-forgotten objective. —John W. Gardner

    • ideas are not solutions

      • ideas have to be implemented and they can fail at implementation stage
  • p.14 focusing steps of TOC

    1. identify the system constraint
    2. decide how to exploit the constraint

      • “What can we do to get the most out of this constraint without committing to potentially expensive changes or upgrades?”
    3. subordinate everything else

      • adjust the rest of the system, so that constraint operates at maximum effectiveness
      • this might require “detuning” some components

        • this means sacrificing individual efficiencies of non-constraints
        • care must be taken so that detuned component do not become new constraints
    4. elevate the constraint (only if step 2 and 3 did not eliminate the constraint)

      • only at this step we entertain the idea of a major change to the system
      • it’s not uncommon for organization to jump from step 1 to step 4, but this usually incurs more expenses than necessary
    5. go back to step 1, but beware of “inertia”

Throughput, inventory, and operating expenses

  • p.16 how do we know whether our intervention has had a positive effect on the system?

    • p.16 sensitivity analysis—changing one variable while holding others constant

      • p.16 by doing the same with organization, we

        1. maximize system improvement from the least investment in resources
        2. learn exactly how effective our interventions are

        I suspect Deming would consider this “appreciation for a system” of the highest order.

        • (this seems to focus on efficient use of resources which does not necessarily lead to maximizing the performance)

          • (some companies need to maximize the performance as fast as possible)
  • p.16 recommended books on the concept of Throughput, Inventory/Investment, and Operating Expense (throughput accounting, constraints accounting, cash flow accounting)

    • Management Dynamics by John A. Caspari and Pamela Caspari
    • Throughput Accounting by Steven M. Bragg
  • p.16 Throughput (T) is the rate at which the entire system generates money through sales, or “all money coming into the system”

    • in cases where T cannot be expressed in dollars, it might be defined in terms of delivery of a product/service to a customer
  • p.17 Inventory/Investment (I) are all the money invested in things the system intends to sell, or “all money tied up within the system”

    • inventory/investment can eventually be sold out even if at a smaller price
    • if assets depreciate, the depreciated value remains in the “I” column, but the depreciation is added to Operating Expense
  • p.17 Operating Expense (OE) all the money the system spends turning Inventory into Throughput, or “the money going out of the system”
  • p.17 T/I/OE are interdependent—a change in one will automatically result in change in one or both of the other two

    • p.17 goal: increase T, while decreasing I and OE
    • p.17 if something does not eventually increase T, you’re wasting your time and money
  • p.17 Increasing T should likely be a priority and decreasing I and OE are secondary priority:

    • I/OE cannot be below 0, so there is a limit on how much you can decrease them
    • T is limited by the size of the market but the potential improvement is likely higher than in I/OE

  • p.19 money is the closest thing to universal measure of value
  • p.19–21 applying T/I/OE to not-for-profits. Goldratt suggested a dual approach:

    • Operating Expense is still measurable in $
    • Inventory

      • passive

        • acted upon
        • for non-profits, it is often people, so it cannot be measured in money

          • instead, it is “processed” through non-monetary side of the system to becomes “throughput” (e.g., well people, happy people, etc.)
      • active (Investment)

        • facilities, equipment, tangible assets that act upon passive inventory
        • measurable in $
      • p.20

    • “Without a universal non-monetary measure of value, Goldratt maintained that measuring T and passive I in not-for-profits isn’t ever likely to be practical. So, he says, don’t bother trying to do it.”

      • Instead, work on eliminating the undesirable effects (UDE) associated with Throughput

        • Use UDEs as indicator of progress. If you eliminate UDEs, a progress toward the goal can be assumed

The Logical Thinking Process

  • p.22 The Intermediate Objectives (IO) Map is a “destination finder.” A map of goal, Critical Success Factors and Necessary Conditions
  • p.23 The Current Reality Tree (CRT) is a gap-analysis tool. How and why the existing reality different from the terminal outcomes expressed in IO Map. Undesirable Effects (UDE) and Critical Root Causes
  • p.24 The Evaporating Cloud (EC)—a conflict resolution diagram. EC is predicated on the idea that an unresolved conflict underlies every root cause—otherwise it would have been solved a long time ago.
  • p.25 The Future Reality Tree (FRT). Verify that an action will produce the ultimate results we desire. Enables us to identify any unfavorable new consequences.
  • p.25 The Prerequisite Tree (PRT). In what sequence we need to complete activities. Identifies implementation obstacles and suggests ways to overcome them.
  • p.27 The Transition Tree (TT). Detailed step-by-step instructions.

    • In this edition, a comprehensive examination of TT is omitted. Instead, a three-phase project management approach to implementing policy changes is introduced.
  • p.28 The Categories of Legitimate Reservation (CLR) are the “logical glue” that holds the trees together

    1. Clarity
    2. Entity existence
    3. Causality existence
    4. Cause sufficiency
    5. Additional cause
    6. Cause-effect reversal
    7. Predicted effect existence
    8. Tautology (circular logic)
  • p.29

    State of ChangeApplicable Logic Tree
    What’s the desired standard?Intermediate Objectives Map
    What to change?Current Reality Tree
    What to change to?Evaporating Cloud, Future Reality Tree
    How to cause the change?Prerequisite Tree, Transition Tree
  • p.29

    It is wise to keep in mind that no success or failure is necessarily final. —Unknown

  • p.30

Chapter 2. Categories of Legitimate Reservation

  • p.33 roles

    • tree builder
    • scrutinizer. did not participate in building the tree. must have content knowledge, but not necessarily CLR
    • facilitator. selected by tree builder to ensure that strutinity is done according to CLR. must know CLR, but not necessarily have content knowledge
  • p.33 assumptions

    • tree builders often attach to their trees (“pride of the inventor”)
    • cause-and-effect connection are often intuitive for tree builders, but not others
    • “Presenters are sensitive to criticism of their work.”
    • facilitators are only concerned with the logical process and not with subject matter content

1. Clarity

  • validity of logic / content is not addressed until mutual understanding is achieved
  • indicators / examples

    • listener does not understand the meaning of statement
    • … does not understand the significance of statement
    • … does not understand the meaning or context of specific words or phrases
    • … does not recognize connection between stated cause and effect
    • … doesn’t see some intermediate steps (sometimes called “long arrow” in cause-effect trees)
  • tests:

    1. “Is any additional explanation required for the cause or effect, as written?”
    2. “Is the connection between cause and effect convincing “at face value”?”
    3. “Is this a “long arrow” (that is, are intermediate effects missing)?”

2. Entity Existence

  • entity is a complete ideas expressed as a statement
  • indicators

    • The statement is an incomplete idea (e.g., statement is not grammatically correct)
    • … is not structurally sound (e.g., multiple ideas in a single entity, or it contains and embedded “if-then” statement)
    • The statement, at face value, does not seem valid to the listener
  • Completeness

    • should be grammatically correct sentence
    • at a minimum, subject and verb must be present. (often an object as well)
    • impersonal pronouns (it, this, those) are not acceptable
  • Structure

    • no compound entities (one ideas per statement). i.e., no “and”
    • no embedded “if-then” statements.

      • indicators: “if-then,” “in order to,” “because”
      • (expressing everything in if-then might miss the intention. “I do this in order to …” is different from “If I do this then …”)

        • (“He insults me because he doesn’t like me” is not the same as “If he doesn’t like me, then he insults me”)
  • Validity

    • Content of the statement is sound, or well founded. “… must have real meaning in the experience of the listener, or it must be a conclusion that the listener can reasonably accept.”

      • i.e., it is true
    • normally established by evidence
    • validity can only be challenged in a Current Reality Tree—it cannot be challenged in Future Reality or Transition Trees

3. Causality Existence

  • “Does the cause really result in the effect?”
  • Is the cause tangible? i.e., is cause statement observable?

    • (how is this different from validity?)
  • If effect is observable but cause is not, verifying the cause-effect requires identifying the presence of at least one other directly measurable effect attributable to the same cause (“predicted effect existence”)

4. Cause Insufficiency

  • when cause is not enough to produce the effect
  • an ellipse is “and”
  • common constants may be excluded (“oxygen”)

5. Additional Cause

  • additional cause is “or” condition that could result in the same effect
  • (how to filter out irrelevant additional causes?)
  • magnitudal “AND” — when multiple causes are additive (symbol: bow-tie with “mag”)
  • exclusive “OR” (symbol: “<OR>” between branches)

6. Cause-Effect Reversal

  • Is cause really causing the effect or it’s the other way around? or is cause is caused by effect and that’s how we know effect exists? (symptom vs diagnosis)
  • “could the stated cause really be an indicator, rather than a source?”

7. Predicted Effect Existence

  • expectation — the effect should be present or absent as predicted
  • coexistence — can proposed effect coexist with the existing predicted effect
  • magnitude — is actual magnitude of the effect significantly greater or less than expected
  • (re: intangible cause needs another tangible effect — a second tangible effect does not verify the cause unless the diagram is complete and there could be no other causes for the second effect)

    What if the cause is tangible? Predicted effect existence can also be used to support or refute the logical connection, or arrow, between cause and effect. For example, “Quality has deteriorated” may be a quantitatively verifiable fact (see Figure 2.27). “Sales are going down” may also be substantiated by numbers. But has deteriorated quality necessarily caused decreased sales? One additional predicted effect of poor quality might be “Customers’ complaints increase.” Does this quantitatively verifiable effect exist? If so, the causality relationship between poor quality and decreased sales is likely to be valid.

    (“Customers’ complaints increase” can support “Quality has deteriorated” but it does not support the causality itself between “Customers’ complaints increase” and “Sales are going down”) (Also, the figure 2.27 is actually title “Another predicted effect: verifying a tangible cause”)

  • (how to know you have enough other predicted effects?)

8. Tautology (Circular Logic)

  • The effect is offered as the rationale for the existence of the intangible cause
  • The effect is offered as the rationale for the causal connection to the tangible cause

Sufficiency-based vs. necessity-based trees

  • Current Reality Tree, Future Reality Tree, and Transition Tree are sufficiency trees.
  • Intermediate Objectives Map, Evaporating Cloud, and Prerequisite Tree are necessity trees.

Standard set of symbols


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