Theory of Constraints Strategy Flexibility

A Guide to Implementing the Theory of Constraints (TOC)
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Redundancy And Variety

In the section on leadership and learning we introduced some concepts of organizational knowledge creation. There are 5 enabling conditions for organizational knowledge creation; intention, autonomy, fluctuation and creative chaos, redundancy, and requisite variety (1). Of these, two; redundancy and requisite variety are interrelated and have broader implications to organizational success than to knowledge creation alone. Redundancy and requisite variety is an under-recognized attribute in successful organizations.

Let’s see how Nonaka and Takeuchi describe redundancy in terms of organizational information. “The term ‘redundancy’ may sound pernicious because of its connotations of unnecessary duplication, waste, or information overload. What we mean here by redundancy is the existence of information that goes beyond the immediate operational requirements of organization members. In business organizations, redundancy refers to intentional overlapping of information about business activities, management responsibilities, and the company as a whole (1).”

So we have a situation where the reductionist/local optima approach has caused a negative connotation for the term redundancy rather than the positive connotation that we are seeking. Well we shouldn’t have to mince our language to accommodate such concerns so we will continue to use redundancy as intended here – intentional overlapping – not just of information but of all business or organizational activities.

How about requisite variety then? “An organization’s internal diversity must match the variety and complexity of the environment in order to deal with the challenges posed by the environment. Organizational members can cope with many contingencies if they possess requisite variety…(1).”

There is a direct analogy here between organizational members in an organization and organic components in a body which we should investigate. Let’s therefore examine what redundancy and requisite variety means in biological systems.

Redundancy & Variety Are Flexibility

We all know the cliché “survival of the fittest.” In fact, it is somewhat ironic that this term which is now ported from evolutionary biology to business was first coined by Spencer, the father of “Social Darwinism” and ported from social/business concerns to evolutionary biology (2). However, in the last 20 years or more the understanding of “fittest” has undergone major revision. Let’s restrict ourselves to one aspect only – the concept of redundancy.

Darwin argued for two coupled principles (3);

(1) one-for-two

(2) two-for-one

"Both are expressions of a deeper and profoundly important principle ‑ redundancy."

Let’s have a look at these in a little more detail. One-for-two means having one organ for example that can perform more than one function, for example the swim bladder of fish can be used for buoyancy, gas exchange, & sound production – one for three in this case. Two-for-one means having one function performed by two organs, for instance breathing through the nose or the mouth.

"I don't know if the Origin of the Species contains an argument more general or more important than Darwin's recognition that pervasive redundancy makes evolution possible (3)."

If organic redundancy makes evolution possible, then that same flexibility in our business organizations makes business survival and success possible. “What makes a constraint more critical to the organization is its relative weakness. What distinguishes a non‑constraint is its relative strength, which enables it to be more flexible (4).”

Think about it for a moment.

Flexibility Is Survival

In the logistical solutions of Theory of Constraints – the tactical implementations if you will, we recognize and seek to protect redundancy everywhere – except at the constraint. We call this sprint capacity, we need it. When we are internally constrained it allows us to fully exploit the constraint. However, when we are externally constrained – the optimal situation – this flexibility allows us to pursue multiple potential pathways – segmentation.

Let’s return to the organic/evolutionary analogy once more. We tend to regard highly specialized organisms as “evolved,” “complex,” or “specialized.” At the same time they are often restricted in the environments in which they can operate – think of the Panda and the Panda’s “thumb” for instance (5). In business organizations this is the core capability/competence versus core rigidity argument (6, 7).

The more we develop our core competence the more likely it is to become a core rigidity. The key is to maintain redundancy and hence flexibility within the core competency. As a market or a product reduces or closes out there are other options that can be taken up. Maybe this has been expressed more prosaically as just another form of buffering – “establishing a presence in several different markets can protect against sudden changes in market demand (8).”

Survival Is Success

Some organizations have an implicit goal that is “just to survive.” We are not interested in just surviving. We are interested in Boyd’s definition of survival; survival on our own terms (9). If you want to lunch new products faster than anyone else, run a better bottom line than anyone else in the industry, or make more people healthier sooner, then that is survival on our own terms. Survival on our own terms is success – and for that we need redundancy and requisite variety. In other words; flexibility.

References

(1) Nonaka, I., and Takeuchi, H. (1995) The knowledge-creating company: how Japanese companies create the dynamics of innovation. Oxford University Press, pp 80-83.

(2) Gould S. J., (2000) The Lying Stones of Marrakech. A tale of two work sites. Vintage, pg 259.

(3) Gould, S. J., (1993) Eight Little Piggies: reflections in natural history. Penguin, pp 109-120.

(4) Schragenheim, E., and Dettmer, H. W., (2000) Manufacturing at warp speed: optimizing supply chain financial performance. The St. Lucie Press, pg 33.

(5) Gould, S. J., (1980) The Panda’s thumb: more reflections in natural history. Penguin, pp 19-25.

(6) Hamel, G., and Prahalad, C. K., (1994) Competing for the future. Harvard Business School Press, pg 232.

(7) Leonard-Barton, D., (1995) Wellsprings of knowledge: building and sustaining the sources of innovation. Harvard Business School Press, pp 4-30.

(8) Schragenheim, E., and Dettmer, H. W., (2000) Manufacturing at warp speed: optimizing supply chain financial performance. The St. Lucie Press, pp 175-176.

(9) Hammond, G. T. (2001) The mind of war: John Boyd and American security. Smithsonian Institution Press, pg 161.