"The Goal" by Dr. Eliyahu Goldratt, is a best-seller in the management sphere and directly relates to an organization's understanding of its own Balanced Scorecard. One interesting thing about "The Goal" is that it's actually a novel – you might even call it a "business thriller." Although it explores in-depth academic theories, it does so via an engaging fictional story.

In the book, the main character Alex Rogo is promoted to be a plant manager and quickly given an ultimatum: improve productivity in three months, or the plant will be shut down. As the book progresses, he goes through a dramatic process of reinventing the plant, rethinking his assumptions about how the plant's work is mapped and measured, and finds ways to align previously conflicting demands. He accomplishes all this by listing the many garbled metrics he is responsible for and then begins to analyze each one for opportunities.

One of the important management principles explored in Eli Goldratt's book is his idea of the "Theory of Constraints." This theory holds that within any organization, there are several key constraints preventing that organization from achieving optimal performance. In the manufacturing world, throughput and quality are key. In service organizations, throughput is still key, but people are the focus and customer service is analogous to quality. In a service oriented business, you want to find the constraints that are preventing the organization from serving more customers with an ever higher level of satisfaction.

Similar to Balanced Scorecard, the Theory of Constraints also uses the idea of "mapping" to create a visual representation of the organization's tactical objectives and develop a clear course from the "present reality" to the "future reality." The Theory of Constraints helps identify the "Core Conflict" at the heart of a problem (similar to the idea of root cause analysis), and helps leaders realize ways to adapt their policies, methods and metrics to achieve the desired changes in their organizations.

Ultimately, by identifying the constraints, leaders can then restructure their organizations around the constraints. Constraints are not limitations, they are road signs, showing the directions that an organization can turn and adjust.

One of the biggest challenges in changing an organization is overcoming resistance to change – even if top management want to make a change, the people directly involved might have other ideas. Sometimes people like the way a certain process is done – or they fear the possible implications for their jobs. Other times, there might be leaders or peers who have conflicting agendas or competing goals, which can result in resistance to change.

By incorporating the Theory of Constraints to better understand the road blocks Balanced Scorecard, and organization is much more likely to succeed.

Ascendant has decades of combined experience identifying and overcoming key constraints. If your organization would like more information or help on the subjects, please feel free to contact us!