Issue link: https://industrialmanagement.epubxp.com/i/249982
problems and relate them back to the failure to achieve the organization's goal. In the PCB case, the CEO clearly recognized the threat to the company and clearly relayed this message to the rest of the company. Every key player was keenly aware of the five UDEs: 1. PCB profitability is decreasing rapidly. 2. Revenue flow from new products is decreasing. 3. Revenue flow from mature products is decreasing. 4. Major customers have switched to our competitors. 5. New products are arriving late to the market. Thus, at PCB, resistance layer 1 did not exist. Layer 2: Disagreement about the nature of the problem. People are different. They have different training, background, experiences, responsibilities and agendas. So even when faced with a well-defined set of problems, it is reasonable to expect a wide variety of opinions about what should be changed. Thus, the second layer of resistance – disagreement about the nature of the problem – is quite common. And discussing potential solutions must be delayed until there is a consensus about the true nature of the problem. Now let's not confuse the identified problems (UDEs) with their cause(s). The problems are easy to identify, for example: low profitability, poor on-time delivery performance or technologically inferior products. But successfully addressing the problems requires identifying and addressing their underlying cause(s). This is much like a visit to the physician. The doctor needs to know your symptoms (UDEs) to identify the underlying cause of your illness. The recommended prescription treats the cause of your symptoms, not just the symptoms themselves. In the language of TOC, the underlying cause is referred to as the "core 20 Industrial Management problem." The core problem is typically a policy, procedure, operating rule, measurement, behavior or culture that significantly contributes to a majority of the observed UDEs. The core problem is what must be changed. If you address the core problem, the observed UDEs will be improved or eliminated. If you do not address the core problem, the observed problems will not be remedied. The core problem at PCB was, in fact, the bonus policy for vice presidents that had been implemented nearly three years earlier. The CEO conducted a cause-and-effect analysis with his key managers that clearly indicated his bonus policy had created a dilemma for the vice presidents. For example, to stay within the engineering department budget, the engineering vice president reduced the overall head count for design engineers. Several talented design engineers were hired away, and not all were replaced. The result was that some critical design tasks on some research and development projects were not completed on schedule. This caused a number of new products to be released late (UDE 5). Similarly, to meet his annual budget, the sales vice president reduced the number of sales personnel. The remaining sales people could not cover their territories, and several key customers felt slighted and switched to PCB's competitors (UDE 4). The ultimate effects were reduced sales revenue for both new and mature products (UDEs 2 and 3) and declining company profitability (UDE 1). The CEO and his managers came to a consensus that the bonus policy was the core problem that had to be addressed. It encouraged some vice presidents to make decisions that were dysfunctional for the company. Since they did not address the core problem, the proposals for the new materials management system and information system were dropped. Layer 3: Disagreement about the direction of the solution. Our complete solution eventually will His bonus policy had created a dilemma for the vice presidents. include all of the changes necessary to address all of the identified UDEs. However, at this stage, our attention should be focused only on how to address the core problem. Layer 3 resistance is encountered when people in the organization have strong, differing ideas on how to address the core problem. When people strongly disagree, there is nothing to be gained by going into the details of each proposal. This might only entrench people in their own specific proposals. In such cases, the recommended approach is to develop a consensus for the criteria that would define a good solution. Once the appropriate criteria are developed, the team can then evaluate proposals for resolving the core problem. In the PCB case, the key question was whether the current bonus policy for executives should be modified in some way or simply eliminated. Given the cause-and-effect logic analysis that key executives already had conducted, there was unanimous agreement to revoke the bonus policy. Layer 4: Disagreement about the details of the solution. This layer of resistance occurs because resolving the core problem usually is insufficient to address all of the observed problems (UDEs). Our objective at this point is to ensure that the set of proposed changes agreed upon will yield all of the desired outcomes that are missing from the current environment. The formal approach is to develop a complete list of desirable effects (DEs), which typically are defined as the opposites of the main undesirable effects. However, defining an opposite can be far from simple. For example, an opposite for "push" could be either "pull" or "do not push" – two entirely different things. Once the list of DEs is determined, the task is to agree upon a set of changes that collectively are sufficient to achieve those DEs. Several different solution sets could achieve all of the desirable effects. However, when deciding between alternate solutions, one should keep in mind that every