32nd International

Conference of the
TOC Practitioners Alliance - TOCPA
www.tocpractice.com 23 March, 2017 Milan, Italy

Shock and awe in a family business:

overcoming resistances and leading
major organizational changes with TOC

Michela Rea, Independent pro, Italy

23 March, 2017
 Michela Rea

Michela Rea holds a degree in Materials

Engineering/Science. Her professional path
has developed in consulting according to
Theory of Constraints (MST and ILUT) and
Systemic approach, mostly in Italy, with
significant experience in the US and Canada.
She has worked in technical fields
(engineering, metals, plastic materials), and
in service companies, healthcare, IT/sw
houses in a wide range of areas:
checking/making a diagnosis of a company
state of reality, planning, teaching, managing
projects, fostering a climate positive toward Contact info
change, dealing with human resistances,
developing strategies, finding right
measurements.

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 Transforming a family
business: an overview

There are some serious challenges

and issues that can be traced
back to:
- The size of the implementation
(all the processes at the same
time are involved)
- The weakness of the company
in the market
- The intensity of family ties, love
and friendship relationship
- The competence required

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 More on time and
sustainability
- The old processes (those you
find at the beginning) allow a
certain (although unsatisfying)
level of performance

- Changing them in the short

term sure increases entropy
and may worsen results

- The small company is not

protected by the market
position or brand so sales are
at risk

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 More on the challenges for
the consultants
- The depth and width of the implementation
requires mastery of the theory and tools at the
technical, strategical, deeply organizational and
human level

- At least until people sponsoring and believing in

the change will become a critical mass some
people will personally hate the consultant(s) due
to the amount of resistances and feeling

- Although the consultant is a facilitator there are

personal mastery and leadership issues involved

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 A small business story: how and
why we start

The impasse is not only the crisis, in fact we will talk about a small
manufacturer of printing machines that was in the fortunate situation of
having multiplied its turnover and number of employees over two years
after decades of honorable service as a very small workshop
mechanics.

As good as it gets? No, because management views and entrepreneurial

intuition were no longer sufficient to work in quality, so that even simple
and routine processes such as basic accounting cycles showed flaws
and problems, not to mention complex processes such as technical
customer service or research and development.

Family conflicts, personal rivalries, difficult cohabitation between the new

and old staff made the environment further problematic.

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 The companys portrait

- About 22 million euro total sales

- Around 80 employees

- About 35 machines/year produced (20 of them basic

machines, 15 custom very expensive)

- Machine price range 100k euro 1million

- An organizational culture that is very much common in

small, family owned, firms
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 The path toward
change

- We gather the Process owners (some historical, some

newly hired) and the family owners around a table and start
listing and discussing the UDEs, then we develop the Core
Conflict Cloud with all the assumptions

- Lets have a look at the main dynamics at play.

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 Unstable processes, too much
effort to reach basic results

Sample UDE: Often our discussions and

meetings are inconclusive and / or
arrive at solutions that are then changed
almost immediately (the results of the
meetings does not justify the time
spent)

Note: Even basic processes like invoice

management show clear holes and
flow interruptions

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 Lack of standardization,
engineering, innovation

Sample UDE: It takes longer than

needed to create new products and
they are not innovative

Note: The sudden growth was due to

an innovation but it turns out it was
not repeatable

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 Strong, unprofessional
feelings among people
Sample UDE: The disgraced
champion effect: resources
typically experience a
"honeymoon start" with the
property and then a period of
falling out of love

Note: The misalignment between

the husband and the wife
owners was not personal, it
can be traced back to two
different company models
innovation-centered vs
traditional/artisanal

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 A lot of personal commitment,
customers not impressed

Sample UDE: It happens that

customers do not pay, especially
the last 10%

Note: Technical Problems showing up

during the first days of machine
usage at the customers site were
not detected before and can be
traced back to several
development and production
steps.

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 Behavioral Issues

Sample UDEs:
Lack of trust among people,
People have fear of becoming
unnecessary

Note: The culture was to charge the error

to the individual and there were roles
that are natural candidates to be
scapegoats, which leads to a fear of
Witch-hunting. Most managers do not
have a strong professional background,
although they were very dedicated to
the company, they do not feel strong in
their competences and standing. Lack
of trust among each other worsen the
dynamic
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 Completing the change process
with TP Tools

Working with the same group we follow

the process almost by the book
and:

- Write the injections

- Develop the Future Reality Tree
- Deploy the injections further with
Prerequisite Trees
- Obtain a Gantt-like planning and
start the implementation

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 Next practical step: process
reingineering according to TOC

SUPPLIERS
WAREHOUSE AND
LOGISTICS
Withdrawals and deposits
Physical consistency check stock
and data
PURCHASING - Transport and physical flows
- Purchasing for stock and made
to order
- Suppliers Scouting
- Stock sizing & management PRODUCTION
Assembling
Wiring
Testing
- Coverage of stock in the production support
We list sub- processes
and start mapping and
reengineering them CUSTOMER
SERVICE
trying to give logical Printing Test & machine installations
order to such level of Demo and pre-press
Help desk and service
disorder Retrofit and value-added services

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 From completely made to order to
mass customization

It was very inefficient to manage the basic printing machine model as a

complete make to order. We tried to standardize this basic model
and manage according to a drum buffer rope/critical chain hybrid
scheduling

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 More on DBR/Critical chain
hybrid scheduling

- Once one transitions from a complete make to order to

a mass production- like planning, lead times do
decrease. A machine requires around 1-2 weeks lead
time
- A similar lead time is conceptually and practically in the
middle between the two algorithms

- Our approach was to manage according to a multi-

project critical chain model, in other words exploit the
critical resource/constraint and release the machines
according to the critical resource availability like in DBR

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 Dealing with individual
resistances
Using the conflict cloud and miscellaneous coaching techniques we
focused on:

- Eliminate misalignments between authority and responsibility with

Process Owners
- Solve/Mitigate the chronic conflict between the husband and the wife
- Empower key people

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 The problems that arose

- It takes many months to actually reengineer the

processes considering the level of mistrust, the difficult
communication, the lack of personal responsibility
- The company was badly hit by 2008 crisis and lost many
customers
- The debt contracted became unsustainable due to tight
bank money

- IN AUTUMN 2008 THE PROJECT WAS ABRUPTLY

INTERRUPTED AND THE COMPANY WENT
BANKRUPT

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 At lasthappy ending

- A couple of years later the company was rebirth with a

smaller team, mostly with those who were the
champions of the implementation

- The company became successful again and in 2014 it

was sold to a Corporate with surprising profit

ALTHOUGH NOT EVERY CASE HISTORY IS FULLY

SUCCESSFUL, DONT FORGET THAT TOC IS BASED
ON CONTINUOS IMPROVEMENT

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