NEWS RELEASE
January 25, 2007
For Immediate Release
Contact: Chris Allen
(310) 263-3018
callen@cmtc.com
DR. ELI GOLDRATT, BEST SELLING AUTHOR AND
CREATOR OF THE THEORY OF CONSTRAINTS TO
APPEAR IN LOS ANGELES
TORRANCE, CA -- In partnership with California Manufacturing Technology Consulting
(CMTC), Dr. Eli Goldratt will be making a rare public appearance in Southern California on
March 13, 2007. Goldratt has joined forces with CMTC to advance his latest concept, Viable
Vision, and will present area manufacturers with an opportunity to experience exponential growth
in a day long event at the Ritz-Carlton Huntington Hotel in Pasadena, CA.
Dr. Goldratt is perhaps best known as the inventor of the Theory of Constraints (TOC).
Goldratt's groundbreaking book The Goal has been a best seller since 1984. The Goal has sold
more than 4 million copies worldwide and has been translated into 27 languages. He is also the
author of It's Not Luck, the sequel to The Goal, Critical Chain, The Haystack Syndrome, and The
Race.
Goldratt is also an internationally recognized leader in the development of new business
management philosophies and systems. He developed a unique set of logical and systematic
thinking methods designed to understand the true goal of an organization, to identify and improve
the root causes of problems, and to implement continuous improvement strategies that lead
organizations to reach their goals. His theories are sought after by many of the world's largest
corporations. Eli Goldratt's Theory of Constraints is used worldwide by thousands of companies,
and is taught in hundreds of business schools, universities and colleges.
Viable Vision is Goldratt’s newest innovation designed to help companies get the maximum
financial payback from their TOC-based improvements by achieving, within 4 years, net profits
equal to their total current sales. Viable Vision is the comprehensive step-by-step process,
developed by Goldratt himself that successfully leads companies on a systematic improvement
journey.
-- MORE --
The opportunity to meet and experience Dr. Goldratt and his Viable Vision for manufacturing
companies is limited. Attendance will be capped at 150 people to ensure access of attending
companies to Viable Vision’s possibilities. The cost for this full day event is $595. Interested
parties should register by calling Sunny Lopez at (310) 263-3009 or online at
www.cmtc.com/event_registration.html.
-- 30 --
ABOUT CALIFORNIA MANUFACTURING TECHNOLOGY CONSULTING
A private, nonprofit corporation, CMTC was established in 1992 to provide high value consulting services to
California’s high tech and traditional small and medium-size manufacturer to increase their competitive advantage
through improved methods of management and manufacturing. Today, through its regional teams, CMTC provides
consulting services in the practice areas of Strategic Business, Lean Enterprise, Information Technology, Energy
Services, Quality, Distribution and Supply Chain Management. CMTC’s regional teams cover Los Angeles, the Inland
Empire, Orange County, Ventura/Santa Barbara County, the San Fernando/San Gabriel Valley, the San Joaquin Valley
and San Diego/Imperial County.

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Proceedings of the Academy of Strategic Management, Volume 2, Number 2 Las Vegas, 2003
THE APPLICATION OF GOLDRATT’S THINKING
PROCESS TO PROBLEM SOLVING
Lloyd J. Taylor, III, P.E., Ph.D., University of Texas
taylor_l@utpb.edu
R. David Ortega, University of Texas
ABSTRACT
The “Thinking Process” as introduced Dr. Eliyah Goldratt, in The Goal and further
expounded upon in, It’s Not Luck, is based on the Socratic teaching method of if …then reasoning.
This type of deductive reasoning is extensively used in the field of medicine, in the diagnosis and
treatment of disease and for determining clinical pathways and other fields of science. Even though
medical professionals find it easy to map out the cause and effect relationships when dealing with
a disease process, few have explored the benefits of using their highly developed intuitive thinking
skills in the area of solving problems in management. This paper will detail the use elements of the
Thinking Process, as outlined by Dr. Goldratt, in an attempt to elicit a logical, comprehensive
solution to a multifaceted, intricate problem.
INTRODUCTION
The emphasis of this paper concerned it’s self with the Thinking Process brought to light, by
Elli Goldratt. Goldratt feels that companies should not be broken up to create efficiencies at any part
of production. He suggests that by disturbing a link in the chain of production one could cause
problems with production (Goldratt 1992-c).
GOLDRATT AND THE THINKING PROCESS
In the 1980’s, Dr. Eliyahu Goldratt [1992-c], a physicist, wrote a book entitled “The Goal.”
In his book, Goldratt relates the story of an embattled plant manager searching for ways to improve
plant performance. With the help of an old college professor, the plant manager not only learns how
to improve the performance of his plant but also a new method of identifying and resolving
problems. Goldratt’s Theory of Constraints (TOC) focuses on the efficiency of all processes as a
whole rather than the efficiency of any single process.
The principles of the Theory of Constraints and the Thinking Process are not new to the
world. They have been used for many years in the sciences and medicine. What is new is the fact
that Goldratt has applied the process to manufacturing and other areas of the business world.
Dettmer [1998], Lepore and Cohen, [1999] and Roybal, Baxendale, and Gupta [1999], all report the
Theory of Constraints (TOC) is an emerging philosophy that offers some distinct advantages, both
page 10 Allied Academies International Conference
Las Vegas, 2003 Proceedings of the Academy of Strategic Management, Volume 2, Number 2
theoretical and practical. While TOC was developed for manufacturing through Goldratt’s Thinking
Process, the Thinking Process system holds true for all processes and problems whatever the
situation may be.
In the study of Goldratt’s Theory of Constraints, a given group of processes will have a
slowest process and the slowest process controls the rate of system production. In order to maximize
the system production, the slowest process must be improved and all other processes regulated to
the speed of the slowest process. The slowest process is referred to as the constraint. In the case of
outsourcing, there are several steps involved. In order to be successful in outsourcing, all steps must
be examined together to determine the constraint.
Since the constraint is not always obvious, Goldratt [1992-c] developed the Thinking
Process, which is a series of steps to locate the constraint (What to Change?), determine the solution
(What to change to?) and how to implement the solution (How to make the change?). It is these steps
that are actually referred to as the Thinking Process. Goldratt’s next book “Its Not Luck” [1994]
describes the Thinking Process in much more detail.
WHAT TO CHANGE?
If the symptoms of a root cause are undesirable effects (UDE's), then the undesirable effects
must be brought on by the root cause itself. This root cause needs to be exposed and eliminated.
The methodology employed in the search for root causes is based on a cause and effect relationship.
This cause and effect relationship is the method used to uncover the core problem associated with
the UDE's. The core problem is also the weak link in the operation when it concerns obtaining the
goal of the organization.
By determining the true core problem in a situation, it is helpful to write the current state in
a diagram format. This displays a logical picture of the situation. With practice and logical based
common sense, the major UDE’s can be interconnected through cause and effect relationships in a
Current Reality Tree (CRT). Creating this tool brings about this process of determining “What to
change.” Goldratt [1992-a] claims, the analytical method of the CRT is used in the attempt to reveal
the Archimedes point - the identification of the root cause.
This method of analysis also provides us with a tool to understand the existing nature of the
cause. It does this by discussing and scrutinizing our basic intuitive sense, which exists in our
environment. This method of analysis is somewhat different from the management approach of
correlation and classification. All past unsuccessful efforts to eliminate the undesirable effects failed
to attack and eliminate the core problem. That's why the symptoms returned. In general, employees
want to do a good job. They want to do what is best for the organization but don't always feel
current procedures allow for core problem elimination.
UNDESIRABLE EFFECTS
Goldratt [1994-c] states that the first step of the process is to list several UDE’s that exist
currently. The process of building the CRT does not focus on the severity or ranking but on the
effect-cause-effect relationships of the list of UDE's. These UDE’s were then used to create a CRT.
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Determining the cause and effect relationships of the various UDE’s is what allows the CRT to be
developed. Once these relationships were mapped out, it was possible to identify the one core
problem that was under the control of the facility. The core problem, as defined by Rack [1992] as
the UDE, that when solved, will have the biggest positive impact on the performance of the entire
chain.
THE CURRENT REALITY TREE
The current reality tree is comprised of all of the undesirable effects (UDE’s) that are in the
current situation. They are linked together by effect-cause-effect relationships that naturally occur
in a system of problems. Insufficiencies and clarities are added to aid in the logical thought-flow of
the tree. Insufficiencies are bits of information that are coupled with UDE’s that assist in the flow
of effect-cause-effect analysis. Clarities are bits of information that are inserted between two UDE’s
or clarities that allow for a smoother flow of the effect-cause-effect analysis. After the entire tree
is constructed there will emerge one undesirable effect that stands alone at the bottom of the tree.
This UDE is considered the core problem of the system. Once the core problem is identified an
evaporative cloud must be constructed. After organizing the UDE’s in an effect-cause-effect
analysis, a tree took shape that will identified the UDE at the bottom of the tree as the core problem.
To read the CRT, you start to read from the bottom up using if…then statements in a logical format.
WHAT TO CHANGE TO?
A conflict generally emerges in the CRT and usually pulls the employee in two directions.
The most common tendency in managing conflict has been to compromise in some fashion. If
compromise were a true alternative, the conflict would have been eliminated a long time ago.
Therefore the tendency to look for a compromise should be overcome and the true core problem
should be eliminated. Goldratt [1992-a] writes, since a vacuum does not exist, eliminating the core
problem means creating a new reality, in which the opposite of the core problem exists. To eliminate
the core problem, a tool called the Evaporating Cloud (EC) should be used. An EC, according to
Goldratt [1993] is the thinking process that enables a person to precisely present the conflict
perpetuating the core problem, and then directs the search for a solution through challenging the
assumptions underlying the conflict. The EC starts with an objective, which is the opposite of the
core problem. From the objective, the requirements (minimum of two) are listed. Each requirement
will have at least one prerequisite. It is the prerequisites that depict the tug-of-war. All the
requirements and prerequisite are based on assumptions that have been ingrained in our minds over
time. It is these assumptions that keep us in this tug-of-war environment. What is needed is a set of
injections that can be used to break the validity of any one of the assumptions. This is the first step
in freeing our self from the binding controversy.
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EVAPORATING CLOUD
The EC is the tool that is used to determine what action is needed to resolve the conflict of
alleviating the export of our competitive advantage and thereby eliminate all of the undesirable
effects experienced during the process. Once the EC was developed, and then each assumption was
scrutinized to find the one that seemed susceptible to questioning. Injections were identified that
could break the validity of one of assumptions. Goldratt holds that compromising does not solve the
core problem though short-term success may be realized. He suggests using the EC to search for real
solutions that are win-win for everyone.
HOW TO CAUSE THE CHANGE
Next consider whether the injections will direct the desirable effects. With the injections and
the logical based common sense cause and effect relationships, the desired effects can be connected
and the future outcome developed. This technique is called building the Future Reality Tree (FRT).
The FRT according to Goldratt [1993] is the thinking process that enables a person to
construct a solution that, when implemented, replaces the existing undesirable effects by desirable
effects with out creating devastating new ones. Goldratt [1992-b] goes on to add, the analytical
method of the FRT is used to construct and scrutinize such a solution. Step-by-step the solution is
created, and each stem is scrutinized to guarantee that over-enthusiasm doesn't carry us into
dreamland. This tool will logically show that once the injections are implemented, the desirable
effects can be accomplished. When the EC is broken, the FRT is built using the injections from the
EC. The injections are connected with the effect-cause-effect logic and use clarities and
insufficiencies where additional information is required. This process tests the solution and is
enhanced by criticism and negative comments. If criticisms, negative comments and UDE’s can be
overcome by the proposed solution then this provides proof of the solution and leads to the next step
in the process. This process taps into the natural tendencies of criticism and negativity.
FUTURE REALITY TREE
A FRT is constructed in an effort to assure that all of the UDE’s would be eliminated using
the injections identified in the EC. The FRT is essentially the same as the CRT; however the
injection(s) identified in the EC are placed into the tree to create a vision of the “future reality.” The
FRT is read from the bottom up using if…then statements in a logical format just as the CRT.
SUMMARY
This procedure, although somewhat different from the normal methods of analysis, is so
practical, that it can be applied to any problem anywhere at anytime. According to Goldratt [1992-
b], you start with an effect in reality. Then hypothesize a plausible cause for the existence of that
effect. Since the aim is to reveal the underlying causes that govern the entire subject, try to validate
the hypothesis by predicting what else this hypothesis must cause. Once such predictions are found,
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concentrate efforts to verify whether or not each prediction holds water by asking questions. If it
turns out that one of the predictions doesn't hold up, find another hypothesis. If all of them hold up,
continue until the entire subject is understood through the bonds of cause and effect.
Bob Fox [1989], (past) President of the Goldratt Institute, states: I do not believe any longer
that the challenge is the technology of what to do. That has been well developed - maybe not
disseminated very well yet, but developed. The issue is the resistance to change once we know what
to do, and I believe there is a solution to that. This method of problem solving requires ability that
everyone has and stems from the systematic methods and thinking processes. It provides you with
the framework necessary to direct these efforts and to verbalize your intuition to gain a better
understanding of managements "intestinal sensations."
Everyone has self-doubt. This self-doubt makes it very difficult to use the scientific method
of analysis. Goldratt [1992-b] reveals, the scientific method involves reaching into the unknown;
speculating a cause and determining predicted effects probably requires an awkward personality that
thrives on the unknown. But we are dealing with the known, with current reality. There must be an
equivalent method, a thinking process that facilitates building a current reality tree within the known,
and we can effectively use it on any subject that we have intuition for and care about. This cause and
effect approach is used in many areas of science and math. The demonstrated thinking process is
what managers need the most. To carry out a successful process of ongoing improvement there is
nothing more important than the ability to answer: What to change, What to change to, and How to
cause the change. The results are well worth the required investments.
REFERENCES
Dettmer, H.W., (1998), “Breaking the Constraints to World Class Performance,” Milwaukee, WI, ASQ Quality Press.
Fox, Robert E., (1989), "The Constraint Theory," Internal working paper, Avraham Y. Goldratt Institute, New Haven
Connecticut.
Goldratt, E. M., (1992-a), "An Introduction to Theory Of Constraints: The Production Approach," Avraham Y. Goldratt
Institute.
Goldratt, E. M., (1992-b), "An Introduction to Theory Of Constraints: THE GOAL APPROACH," Avraham Y. Goldratt
Institute.
Goldratt, E. M., (1992-c), The Goal, (2nd revised edition), Massachusetts, North River Press.
Goldratt, E. M., (1993) "What Is The Theory Of Constraints?" APICS The Performance Advantage, June 1993.
Goldratt, E. M., (1994), It’s Not Luck. Massachusetts: North River Press.
Lepore, D., and Cohen O., (1999), “Deming and Goldratt, The Theory of Constraints and the System of Profound
Knowledge,” Great Barrington, MA, North River Press Publishing Co.
Rack, Kevin, (1992), “Using The Theory of Constraints The Systems Thinking Approach” Managing Change Inc,
December, pp.1-20.
page 14 Allied Academies International Conference
Las Vegas, 2003 Proceedings of the Academy of Strategic Management, Volume 2, Number 2
Roybal, H., Baxendale, S.J., and Gupta, M., (1999), “Using Activity-Based Costing and Theory of Constraints to Guide
Continuous Improvement in Managed Care,” Managed Care Quarterly, 7, 1-10.

• Q&A

between JIT and DBR methods.12 First, JIT requires the

effort.”13 DBR produced approximately 2% more units of

DBR outperformed JIT in a number of categories.14 DBR

would be ready for shipment.15

management method that identifies and manages Constraints within the production process. A constraint is

performance relative to its goal.”Without any constraints, a system can produce and

decrease inventory. In TOC, throughput is defined as the

sales.” Operating expenses include all production costs

be needed to meet current customer needs.

The drum, in Drum-Buffer-Rope, is the constraint.

serve the constrained resource.” The buffer is a time

on-time deliveries. The rope is a schedule that dictates the

workstations perform at the pace of the drum.

catch up after a disruption.” Next, the schedule of raw

of the DBR time relationships.For a job in a job order shop to be completed, it may be necessary for it to be processed through a particular department more than once. DBR first identifies the

-five tasks (or visits to the constrained department). When

 constraintsnt is

Without any constraints, a system can produce and

decrease inventory. In TOC, throughput is defined as the

sales.” Operating expenses include all production costs

be needed to meet current customer needs.

use.”1 This calls for a major change in procurement activities.

order is received.”2

of unnecessary inventory.3

Management accountants are familiar with the use of

􀂋 JIT is limited to repetitive manufacturing

􀂋 JIT requires a stable production level

􀂋 JIT does not allow very much flexibility in the products produced

􀂋MRP uses backward scheduling

􀂋Synchronous manufacturing uses forward scheduling

􀂋Capacity

– Available time for production

􀂋Bottleneck

– Capacity is less than demand placed on resource

􀂋Nonbottleneck

– Capacity is greater than demand placed on resource

􀂋Capacity-constrained resource (CCR)

– Capacity is close to demand placed on resource

􀂋A bottleneck

– (1) with no setup required when changing from one

– (2) with setup times required to change from one

􀂋A capacity constrained resource (CCR)

– (3) with no setup required to change from one

– (4) with setup time required when changing from one