A Guide to Implementing the Theory of
Clouds And Silver Linings
A cloud is an elegant graphical means of displaying and
solving an apparent conflict or dilemma between two actions. It is also sometimes known as a conflict
resolution diagram; however, its correct name is a cloud. Central to the use of clouds as a problem
solving device is the assumption that there are no conflicts in nature – only
erroneous assumptions. "There must be an erroneous assumption that we make about reality
that causes a conflict to exist (1)."
Let’s look at this from another perspective and
another culture – Japan; “Problems exist because people
believe they exist. If there were no
people there would be no problems.
People are also the ones who decide that a problem has been solved. Problem solving is the most typical human
The apparent conflicts that do arise and which we do
want to solve are likely to be of two types (3);
(1) Opposite conditions – conditions
that are mutually exclusive.
(2) Different alternatives –
conditions that preclude one another.
Day and night are mutually exclusive, more money or
shorter hours are different alternatives.
In fact we have been using clouds fairly liberally
throughout these webpages so far to describe numerous different
situations. This should help to
underline their intuitive nature.
We might use a cloud for everyday “free-standing”
conflicts or dilemmas, or as a tool to resolve the core problem or core
conflict made apparent as a result of the construction of a current reality
tree. You can learn to do clouds on
the back of a piece of paper or in you head. Such a skill can be a formidable advantage
to the user.
The key point, however, is that you must want to
solve your problem or dilemma. Without
the will to solve the problem, the way to do it won’t be apparent at all.
The cloud is the tool of choice in seeking to obtain
understanding and agreement on the nature of the core problem or core
conflict, especially the unstated assumptions that give rise to the
problem. This is often described as
the “direction of the problem.”
Breaking the cloud by developing an injection builds understanding and
agreement on the “direction of the solution” to the problem at hand.
An injection is any new idea that we introduce into
our current reality to produce a new and desirable outcome. On the previous page we saw how Taiichi
Ohno used the 5 whys method to drill down to the core problem “Otherwise,
countermeasures cannot be taken and problems will not be truly solved
(4).” The countermeasures were his
“injection.” However, countermeasures
are limited conceptually to mitigating a currently undesirable effect by
removal or replacement with something else.
Injections go one step further – they may in fact create a totally new
and desirable step as well as mitigating the currently undesirable
effect. If the word “injection”
doesn’t do it for you, think “countermeasure” for the moment until you are
more familiar with the concept of clouds.
Think of clouds armed with countermeasures as formidable weaponry.
The cloud is formidable, but it is also enigmatic. It is used both to formulate the nature of
the problem and also to formulate the direction of the solution.
Previously, on the page on agreement to change, we
developed a composite 5 layer verbalization of the layers of resistance. This is what we wrote;
(1) We don’t agree about the extent or nature of the
(2) We don’t agree about the direction or completeness
of the solution.
(3) We can see additional negative
(4) We can see real obstacles.
(5) We doubt the collaboration of
We discussed the subdivision of layers 1 & 2 in
more detail in the page called “more layers” accessed off the agreement to
change page. In essence we can
subdivide layers 1 & 2 into two based upon Senge’s differentiation of
detail and dynamic complexity;
(1a) We don’t
agree about the extent of the
problem – detail complexity.
(1b) We don’t
agree about the nature of the
problem – dynamic complexity.
(2a) We don’t
agree about the direction of
the solution – dynamic complexity.
(2b) We don’t
agree about the completeness
of the solution – detail complexity.
The current reality tree addresses the detail
complexity of the extent of the problem.
The future reality tree addresses the detail complexity of the
completeness of the solution. The
cloud, however, addresses both the nature of the problem and the direction of
the solution. As such it is a
transitional tool or a pivot in the whole process. If we accept that there are two distinct
phases to the cloud it is much easier to understand.
We can draw a simple model of this situation.
The sequence; what to change –
what to change to, is drawn as a closed loop – a process of on-going
improvement. Essentially it is a
decision loop addressing the problem and the solution without going into the
detail of executing the solution. We
can see that the cloud is the pivotal part of this construction.
There are interesting parallels between this
decision loop and the OODA “Loop.”
Colonel John Boyd developed the concept of the OODA Loop (observe,
orient, decide, act) as a way to describe his ability to win a dog-fight –
any dog-fight – in 40 seconds (5). The
OODA Loop (and maneuver warfare) has found its way into the more general
business literature as well. Although
in the process it has sometimes lost its proper attribution. For example, “The U.S. Air Force has
studied … (6)” or mention of the use of “commander’s intent” in the U.S. Army
and Marines (7). Boyd is in the
background, but not acknowledged, and we are the poorer for it, we fail then
to see the continuity of the theme.
Boyd’s argument is that he could out-maneuver his
opponents by working within his opponent’s decision cycle. As we shall see this works at two
levels. The first level is that the
sooner that we can define the cloud and break it with an
injection/countermeasure, the more likely we are to be able to work inside of
our opponent’s business cycle, and the more likely we are to succeed on our
own terms rather than that of our opponents.
We could consider this incremental
improvement. The second, deeper level,
is that if we understand the dynamics of the environment in a different and
more realistic way than our opponent, then once again, we can work inside our
opponent’s decision cycle but this time at a more elementary and deadly level. This is fundamental
The OODA Loop has much to offer although it is often
misinterpreted. If you already
understand clouds and wish to understand the OODA Loop better, then click here. Otherwise
don’t worry we will return to the OODA page further on when we discuss
strategy – in particular; paradigms.
How many of us have sat around a table while some
consultant told us to “think outside the box.” Ha, whatever that meant! Yeah, like this is a special time for
thinking outside of the box before we all go back to work inside of one as
Cynicism aside, what if we got rid of the box
completely? Then we wouldn’t have to
think about it at all. What if the
cloud was the tool that let us do that in a structured way? If you would like to see a graphical
representation of this click here. In any
case, come back here after you reach the end of this page. It is a valuable mental image for
We construct a cloud out of 5 entities (3, 8, &
9). The first is a common objective
which we want to satisfy. In order to
satisfy the common objective it is necessary that we fulfill two needs. In order to satisfy the needs it is
necessary that we fulfill the two wants.
However, the two wants are in conflict with each other as indicated by
Thinking in terms of needs and
wants is often easy in the English language.
However some people like to use the terms “requirement” and
“pre-requisite.” It makes no
difference, but let’s redraw the diagram for completeness.
This shows us the shape of a cloud
but it doesn’t teach us how to make one or how to break one. The whole point of making a cloud is to
break it – to break the conflict with a no-compromise win/win solution.
So let’s do this by using a real example that is
familiar to most people. Have you ever
had the conflict “ask for a wage-salary rise/don’t ask for a wage-salary
rise? I’m sure there most people
have. Let’s draw it.
Now, we need to ask ourselves,
what are the needs that we are trying to address? Let’s assume for instance that the need for
wanting to ask for a salary rise is “my happiness.” And the need for not wanting to ask for a salary
rise is “my boss’s happiness.” Let’s
draw these in.
That just leaves us with the
objective to complete. In these types
of cases something general will usually do.
The theme seems to be happiness, so let’s make the objective “maintain
happiness.” Let’s draw that as well.
So now we have constructed a cloud
from scratch, starting at the conflict, and building forward to the needs and
the common objective. We should also
learn how to read this diagram.
We read it from objective to need to want as
follows, you will need to learn the form of reading them, and soon it will
become second nature. In order to
maintain happiness it is necessary to keep the boss’s happiness. And in order to keep the boss’s happiness
it is necessary to not ask for a salary rise.
Looking at the other side.
In order to maintain happiness it is necessary to
keep my happiness. And in order to
keep my happiness it is necessary to ask for a salary rise.
Finally, we come to the conflict, the crux of the
However, not asking for a salary rise and asking for
a salary rise are in direct conflict with one another.
What are we going to do about the conflict?
Well, Goldratt argues that there are no conflicts in
nature and therefore in business there can be no conflicts – only erroneous
assumptions. Therefore, we need to
search out the assumptions upon which our conflict is based.
Where are the assumptions in the cloud? Under each of the arrows.
Let’s draw them in.
And now, let’s add some real
assumptions to the needs/wants arrow.
Reading the cloud with assumptions
included is not much different. For
instance, In order to keep my happiness it is necessary to ask for a salary
rise because my living expenses are rising.
You can check if your assumptions are verbalized correctly by reading
them through one by one.
Ah, now we have something to work with. Once the verbalization is correct, we must
ask how many of these assumptions are valid, how many are invalid, and can we
overcome any of the remaining valid assumptions with a new idea or
reality. We will call this new idea or
reality an injection.
I think we must assume that it is true that the
company has no money; we saw last quarter’s results. I think that we must assume the boss will
resent my asking, the boss will be in a difficult position of turning my
request down even if he wants to action it.
So the assumptions on the top side are valid and must remain.
Let’s look along the bottom. “My living expenses are rising.” Are they really? Maybe, if I was more honest with myself, I
should have said that my discretionary expenses are rising. Let’s keep going.
“My pay parity is decreasing.” Ah this looks like a real problem. There is someone else in the company who is
younger or less experienced who is on the same or greater salary. If that is the case then it is quite likely
that I feel my expenses are rising – because I want to justify my increase in
A possible injection then becomes “Increase my
Let’s draw these in.
Let’s clean the diagram up, so
that we can see that the conflict has been broken.
So the cloud lets us identify a
way to satisfy both needs and the common objective without a conflict, and
with a win/win injection.
You may not agree with this simple example, it may
be a little too self-virtuous. But it
does show the essentials. Identify the
needs and the common objective and the underlying assumptions. Remove any invalid assumptions and then try
to overcome any remaining ones. In
doing so you move from agreement about the core problem to agreement about
the direction of the solution.
Here are some common clouds that you will most probably have experienced in business.
Next we must
see how to build out from this direction of the solution to nullify all of
the undesirable effects that we listed in the construction of our current
reality tree. This is the function of
the future reality tree.
(1) Goldratt, E. M., (1999) How to change an
organization. Video JCI-11, Goldratt
(2) Kawase, T.,
(2001) Human-centered problem-solving: the management of improvements. Asian Productivity Organization, pg 193.
H. W., (1998) Breaking the constraints to world class performance. ASQ Quality Press, pg 104.
(4) Ohno, T., (1978) The Toyota
production system: beyond large-scale production. English Translation 1988, Productivity
Press, pp 126-127.
G. T. (2001) The mind of war: John Boyd and American security. Smithsonian Institution Press, 234 pp.
(6) Stalk, G.,
and Hout T. M., (1990) Competing against time: how time-based competition is
reshaping global markets. The Free
Press, pp 180-183.
M. J., (1999) Leadership and the new science: discovering order in a chaotic
world (2nd. edition). Berrett-Koehler
Publishers, pp 107-108.
H. W., (1997) Goldratt’s Theory of Constraints: a systems approach to
continuous improvement. ASQC Quality
Press, pp 120-176.
Scheinkopf, L., (1999) Thinking for a change: putting the TOC thinking
processes to use. St Lucie Press/APICS series on constraint management, pp
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