Disabling & Enabling

On constraints

Friends,

The word constraint is, much like the words strategy and complexity, one that is often misunderstood and misused in everyday language. However, as our grasp of the various kinds of systems improves, so too does our understanding of the functions of constraints – and the implications for strategists are nothing short of profound.

Thus, in our next series of three posts on one topic, we are going to dig deep into what a constraint is, what kind of constraints there are and how they can be used in strategy to create a competitive advantage. Part one will introduce the concept, part two will break down the various kinds of constraints that exist and part three will detail how to practically map them in organizations.

So, let us begin with the basics.

Historically, constraints have been thought of as limiting and restricting. In Goldratt’s original theory of constraints, introduced in The Goal (1984), they were defined as anything that prevents a system from achieving its goal.

Given how much of traditional strategic doctrine revolves around goals, performance indicators and key results, it is entirely understandable that constraints thus took on a negative connotation in the strategy community.

Yet as much as optimizing the workflow is a worthwhile endeavor in, say, high-speed automated production lines, attempting to apply it to the organization as a whole will inevitably lead to issues. That is not to say that many executives (and consultants whispering in their ears) do not attempt it nonetheless - usually in the name of efficiency - but companies are not machines, nor are employees cogs.

Rather, as we have previously discussed, organizations are complex adaptive systems and thus much closer resembling ecosystems than machinery. While parts may be ordered in and of themselves, the whole cannot be broken down into pieces, optimized, and put back together. The law of unintended consequences comes into play, effectively ensuring that changing one interconnected part of the system without affecting others in unpredictable ways is impossible.

To paraphrase Trefil and Hazen, the fact is that whenever we alter something in an ecosystem other changes are sure to follow, but we will not be able to know in advance what they might all be. Examples can be seen in the news almost daily: building levees on the Mississippi River caused unintended intensification of flooding; extracting petroleum and water from underground reservoirs caused unintended land subsidence; building jetties into the ocean resulted in unintended erosion of beaches, and so on.

This inherent uncertainty in complex adaptive systems has, of course, a fundamental impact on strategic management - the traditional approach of establishing an idealized future state where (magically and conveniently) all of one’s problems have gone away, and then drawing a straight line to the present, turns unrealistic to the point of silliness. It should therefore not come as a surprise that constraints also take on a completely different role.

In complexity, constraints do not restrict action. They enable it.

Although the topic admittedly is a very difficult one, it is actually not that hard to understand why. Anything that makes us do one thing and not another is a constraint – by blocking one course of action, we are forced to take another.

If the system is causal and linear, it makes sense to disable and remove the constraints as blocks lead to inefficiency and unwanted detours, even potential catastrophic failure if the obstruction grows large enough. And there are, clearly, situations where that applies. But complex adaptive systems are not demarcated by linear causality. In fact, they are partly defined by their lack of causality. This means that although a constraint can prevent a company from achieving one result, it can also enable it to achieve another, superior, result. 

Understanding how and when to use constraints can be even more important than removing them. To illustrate, by defining strategic boundaries (a key aspect of my ABCDE framework) – which effectively are enabling constraints in that they create direction of operational action by limiting fringe behavior – one can ensure that the company acts coherently to its strategic ambition without sacrificing innovation or movement by forcing people to align and “stick to the plan”.

Another way of thinking about it is that constraints alter the probabilities of subsequent events. In and of itself, this should pique the interest of any strategist; after all, the essence of strategy is to move from equiprobability and improve the likelihood of a favorable outcome.

Put differently, by deliberately utilizing constraints to our advantage, we can nudge the system in a desired direction and enable the conditions that will allow the outcomes that we are looking for to emerge. 

In short, it means asking the following three questions:

1.     What constraints can I change?

2.     Among the things that I can change, where can I monitor the impact?

3.     Among the things that I can monitor, how can I amplify the things that provide promising returns and dampen those that do not?

In order to answer the questions properly, we need to understand what kinds of constraints there are in general, what constraints there are in the organization, and how one can manipulate them to serve an overarching strategic purpose. Next week, we will begin to explore that in detail.

Until then, have a lovely weekend.

Onwards and upwards,
JP