Theory of Constraints: Why Improving Everything Fails

When an organization struggles to increase output or throughput, it sometimes falls into a common improvement trap. Leaders communicate the need to increase performance, and teams respond by trying to improve every process simultaneously.

Continuous improvement teams are beginning to run projects across the organization. They start searching for waste, improving workplace organization through 5S, and optimizing individual processes. After all that effort, however, overall system performance often changes only slightly. These efforts result in suboptimization. What is Suboptimization? Suboptimization means improving parts of a system that aren’t constrained to the system’s overall performance. We can avoid suboptimization by applying the Theory of Constraints. 

In many organizations, each department focuses on improving its own work. If the department meets its daily targets, it considers that a success. The focus becomes keeping everyone busy and improving local processes.

What many teams eventually discover is that even after improving several areas, the overall system performance has not improved, and throughput has not increased. Improving parts of a system does not always improve the system’s overall performance.

What Is the Theory of Constraints?

In every organization, at any given time, there is one main constraint that limits how much the system can produce or deliver. The organization can only move as fast as its slowest process. This limiting step is called the constraint.

A simple way to understand this is by thinking about traffic on a highway. We have all experienced accidents or construction that suddenly reduces several lanes to one. That narrow section becomes a bottleneck.

It does not matter how fast cars drive before the construction zone. The number of cars that can pass through the area is limited by that one narrow point.

Processes in organizations behave similarly. If one step in the process takes longer than all the others, it becomes the constraint that limits the entire system.

The Theory of Constraints teaches us to find that limiting step and focus improvement efforts there. When we improve the constraint, we improve the performance of the entire system.

The Five Focusing Steps of the Theory of Constraints

1. Identify the Constraint
2. Exploit the Constraint
3. Subordinate Everything Else
4. Elevate the Constraint
5. Repeat the Process

Step 1: Identify the Constraint

Identify the step that limits the system’s performance. This step is the bottleneck that determines how fast the entire system can operate.

Step 2: Exploit the Constraint

Ensure the constraint is used as effectively as possible. This means minimizing downtime and making sure only the necessary work reaches the constraint.

Step 3: Subordinate Everything Else

Align all other processes to support the constraint. The rest of the system should operate so that the constraint works smoothly.

Step 4: Elevate the Constraint

If necessary, increase the constraint’s capacity. This might involve adding additional resources, improving the process, or investing in new equipment.

Step 5: Repeat the Process

After improving the constraint, another part of the system will eventually become the new constraint. Continuous improvement requires repeating the process.

Why the Theory of Constraints Is So Powerful

When improvement efforts focus on the constraint, they have the greatest impact on the system’s overall performance. Increasing the constraint’s capacity increases system throughput and helps the organization better meet customer demand.

However, if teams focus on improving non-constraining processes, they often create unintended consequences. These improvements can lead to overproduction, excess inventory, higher labor costs, and lower profitability.

When you are challenged to increase throughput, it is important to think about the entire system. Focus on the process that limits the system, not on improving individual departments in isolation. The goal should always be to improve the overall system or the flow of value to the customer.