Theory of Constraints, Part 2

Interview with Michael A. Dalton, author of Simplifying Innovation
By Vern Burkhardt
Vern Burkhardt (VB): Last week we briefly talked about the concept of the bottleneck and the "critical chain" project management in improving the process of innovation. Is there anything more related to those concepts we haven't talked about?

photo of Michael DaltonMichael Dalton: It might be helpful to cover the idea of the leverage point, which is what the bottleneck is. It's something that Goldratt refers to as inherent simplicity. No matter how complex a system is it tends to be governed or ruled by just one step in the overall process. If the output in that step can't be increased then the rest of the system can't either. The total system is dependent on that one step, which is why it's called the bottleneck.

You can't get it out of the bottle if it doesn't go through the bottleneck.

So that becomes the leverage point for all improvements. Identifying the bottleneck and the things constraining it is the first step in the process of improvement. The second is deciding how you're going to operate the bottleneck, how you're going to exploit it to achieve or obtain all of its ideal capacity.

VB: "Traditional improvement provides less leverage since it encourages improving the entire process. Since real improvements must increase the global system's throughput, none of the efforts to improve non-bottleneck resources can deliver real improvements." Would you talk about the idea that "an hour saved at a non-bottleneck is worthless?"

Michael Dalton: That's right as Goldratt says, "It’s a mirage." It's a 'feel good' activity, but making any parts of your process that are not the bottleneck more efficient doesn’t reduce your cost, and it doesn't improve the total output.

VB: And it could cost you money in the process of making the changes to the non-bottleneck operations.

Michael Dalton: It can absolutely cost you. The evidence from Just In Time and Lean [manufacturing or production] shows that releasing work ahead of the required lead-time actually increases the lead-time required to complete the whole job.

If I let the non-bottleneck resources operate at their own pace or, even worse, if I operate them for maximum output to achieve "efficiency," they’ll work faster than the bottleneck. As a result unnecessary work will pile up at the bottleneck.

In a Lean production system the ideal inventory level ahead of every step in the process is one unit. As soon as I finish working on one unit, and I turn to grab the next one there should be one sitting there – not two, not three, not ten.

If you think about it from a time and motion perspective, the more things that people are working on the greater the chance that a project can go stale. Yes, innovation projects can go stale!

The longer you take to get a project done the higher risk competitors will come along with a product that makes your innovation obsolete. Markets can change; lots of things can happen as time lapses. Operating the non-bottlenecks at their full productive pace, instead of at the bottleneck's pace, adds to risk.

VB: On time and on budget – if one has to compromise most often the on time aspect is the one you don't want to compromise.

Michael Dalton: That's right. Usually if you have to compromise do it on the budget. Often there's less of an impact on the overall cost, and the reason I say this is because the earlier you finish an innovation and get the resultant products to market the sooner you see cash flow in return.

VB: Is change in the innovation process always about fixing the bottleneck?

Michael Dalton: At a simplistic level, yes. It's the way you start improving the profit picture.

A better way to put it is that it's about respecting the bottleneck, because in many cases we don't want to fix the bottleneck. We want to fully exploit the bottleneck but we want to keep it where it is.

You may have heard the term constraints management used instead of Theory of Constraints. Constraint management means that you pick where you want to manage the bottleneck, and then use that limitation to run everything else quickly, efficiently, and as the centerpiece for improvement. I guess that's the best way to put it.

And why would you let the bottleneck set the restriction on capacity? I'll give you an example. Let’s consider a company that has a capital-intensive and expensive prototyping step in the innovation process. For instance the chemical industry often uses pilot plants to scale up new products and also for early sampling. They may do some small scale development but almost everything goes through a pilot plant before it can be tested with a customer.

Such a pilot plant, because of its capital cost, might be where you would manage the bottleneck. Running that capital-intensive bottleneck effectively to key in your innovation process if you want to contain costs. This approach can make sense anywhere inside your organization where there may be a costly bottleneck to be managed.

It's probably also worth saying that in almost every case where we're talking about improving innovation the real bottleneck is the market bottleneck – meaning that you have more capacity than you have market demand. If your bottleneck is not in the market, then improving your innovation capabilities may not be as important as improving your capability to produce. While I'm not saying don't spend money on innovation, if there's more demand in the market than you can produce then the best way to make more money, at least in the short to mid-term, is to improve your capability to produce.

VB: Produce more. I thought you were thinking of the market bottleneck in terms of marketing, your ability to sell.

Michael Dalton: If the bottleneck is in the market, then the focus should be on selling more, which requires both marketing and innovation. Early on it may be about finding the best new opportunities to work on. Later, once you are through development and have a product, then you have to sell it effectively. How do we derive more profits through the sale of existing products?

In fact, Richard Klapholz and Alex Klarman wrote a book called, The Cash Machine: Using the Theory of Constraints for Sales Management, which is a great novel about how to improve the sales function. They applied Theory of Constraints to a sales process. Their focus was more on selling existing products, not about creating new demand and new products.

VB: Is it possible for an organization to ever identify and address all the bottlenecks in their innovation process?

Michael Dalton: As I mentioned earlier, from a practical standpoint most companies won't need to address each and every bottleneck. The right thing at some stage is to identify where the best place to manage the bottleneck is.

Now that doesn't mean continuous improvement stops. When we improve the bottleneck to a certain point, we're going to outstrip the rest of the organization. In most cases, we want to make sure the rest of the process has at least 25% more capacity than the bottleneck and isn't operating at anything more than about 80% of its total capacity in order to allow for flexibility in keeping the bottleneck running at full capacity.

When you start getting up above 80%, you start to get queuing and create inconsistency of output from the non-bottleneck processes which begins to cascade down and ends up decreasing the throughput of your entire system.

This means that at a certain point we have to stop improving the bottleneck, and direct some effort at improving the non-bottleneck elements in order to build protective capacity. Then we can go back and try to drive the bottleneck capacity higher. But it's a balancing act in that every time you bring the bottleneck up to a new capacity level you have to think of what you're eventually going to need to do to raise the capacity of your non-bottleneck functions.

VB: People in R&D often argue that the solution to delays in new product development, or other innovation processes they are working on, is to add more resources, usually employees. How can business leaders determine whether they are right?

Michael Dalton: It's very simple. If you haven't been through the first three steps of the focusing process, then you can't say you need to add people.

You start by identifying the bottleneck, and figuring out how you’re going to exploit it. The chance that the bottleneck is being operated to its maximum potential is very slim, and there's almost no situation where you can't get more throughput by operating it differently. In most cases it's not that the people in the bottleneck are not working hard or don't have good intentions.

I had a client whose R&D employees were languishing. They were trying to do too many projects, and most never got finished. It was very demoralizing for these people because this was their life's work, they believed in what they did, they thought they added value, and then they saw things go nowhere because projects didn't get finished. But it was the company's choices, it's policies, that were keeping projects from reaching completion, not the employees.

To squeeze everything you can through the bottleneck there's only room for the most promising projects. A uniform innovation process is needed with an early assessment to ensure that only the highest quality projects make it to the innovation bottleneck. It's like an assessment hopper, a funnel of potential projects at the front end of your innovation process. The hopper has a sieve at the exit that diverts losers and only releases potential winners to the constraint.

So until you've gone through those first three focusing steps, you can't say you need to add people.

VB: You talk about the negative effects of multitasking in the innovation process, and say, "The false economy of multi-tasking is like heroin to an activity junkie." Are those who think they are "superheroes" just fooling themselves if they think they can work concurrently on a large number of innovation projects?

Michael Dalton: The data shows that they're completely fooling themselves – not just the data, but the science too. Studies on multi-tasking show that people have to switch from one task to another – even simple tasks – because you can't do two tasks at the same time. This applies to anything that takes cognitive ability, even something as simple as driving and speaking on a mobile phone at the same time. Even hands-free doesn't improve one's ability to drive safely and talk on the phone at the same time. You're trying to use two cognitive abilities at the same time, which is not possible.

VB: Your brain can only focus on one thing at a time.

Michael Dalton: That's right; it can focus on only one thing that takes cognitive ability. Walking and chewing gum at the same time is a different matter, but there's a time lag to switch back and forth. For activities that are highly cognitive and require creativity, it can take 20 minutes to get back into a flow state after switching.

There's an argument that says people should have a couple of projects, because with creativity you sometimes need to have a fresh perspective. Working on two projects is okay, but when you get above two projects, your ability begins to fall off in terms of productivity. People may feel more productive but it's all 'feel good.' It's not real productivity in terms of creativity or efficiency.

VB: You have said you learned about doing one task at a time from watching your wife teach kindergarten – finish playing with the old game and put it away.

Michael Dalton: That's right. It's amazing the things you can learn by watching kids play. Good teachers know how to manage a classroom in keeping kids focused on one thing at a time – finishing one activity and putting it away before starting the next.

VB: Would you talk about the problem that occurs when too many ideas are allowed into the new product development process at the same time? It's another form of multi-tasking, isn't it?

Michael Dalton: In a way, yes it is. It's organizational multi-tasking. It's a different problem because it's less about being able to focus on one thing at a time and switching back and forth. It's more related to the benefits of Just-in-Time. Too much inventory, too many things in the process at one time, hurts visibility.

VB: How can a member of an innovation team determine when to resist or oppose change?

Michael Dalton: I'd like to turn that around and ask, 'How can leaders effectively lead change?' Part of the answer is by getting people involved in making the change. This includes getting people involved in deciding what needs to change, what it needs to change to, and how you're going to cause the change. Those are the three elements of change from a Theory of Constraints perspective.

People don't automatically resist change. They resist change because they feel it is a threat to their security and their livelihood. The critical question is how to involve and help them understand the rationale and reason for the change, so they become part of the solution. This is what leaders have to do in order to effectively manage change versus trying to force an idea into their organization, and later wondering why it didn't work.

VB: Sometimes the change or the innovation does threaten the individual's employment and livelihoods.

Michael Dalton: Well certainly if we’re talking about implementing innovations that might cut the number of people. All too often organizations look for ways to cut people, whereas what they need is a Theory of Constraints approach. The idea is not cutting people; it's much wiser to consider how to get more out of our existing resources including staff resources.

From a Theory of Constraints perspective there are three elements to consider. Did it increase our throughput? Did it decrease our investment? Or did it decrease our operating expense? Throughput is number one and operating expenses is the last one, because throughput is unbounded. Increasing cash flow is only limited by what we can sell. This relates to the limits of the market and whatever new markets we can find or develop. Continually reducing operating expense is very difficult. Even if you cut operating expenses by 20% – try to do that again the next year.

VB: Try to cut operating expenses six years in a row!

Michael Dalton: Unfortunately, I think you're seeing that played out in many private equity-owned companies today. Some companies have been owned by private equity for years and years, and when the private equity companies finally exit, they've drained off all the available cash on hand. All that's left is a smoldering shell with no product pipeline, no R&D, and no capability for growth. Everything has been cut by 20% years on end, regardless of the fact that they were growing cash flow.

VB: Cutting operating expenses by laying off employees may decrease your throughput by an even higher percentage, because it has a negative impact on the whole organization.

Michael Dalton: Absolutely.

VB: How can passive aggressive behavior impact a team working on an innovation project, and do you have some tips for addressing this type of dysfunction?

Michael Dalton: You have to look at any innovation project as a change – the team is trying to affect change on the market. The same thing I previously mentioned about the change process applies here as well. It's critical to get all of the team members who are going to be doing the project involved early. This includes putting together the project plan, and having input into what some of the undesirable effects of that plan might be.

I teach something called Guided Innovation Mapping where I walk people through this project planning process. We start by asking what might seem like an odd question, 'What are all the possible things that you can dream of that might go wrong with this project?' We come up with a list of each and every potential obstacle, and then the team members work to evaluate whether they’re real obstacles, or just gripes. If any is a real obstacle we need to plan our way around it.

By asking people the negative question first, you’d be amazed that even the people you thought were positive will come forward with things they would not have otherwise identified or would have been afraid to raise because they didn't think it was politically correct; they didn't think management wanted to know or would be willing to consider the issue.

They come up with a solid implementation plan by going through this process. Most importantly, they come up with a plan the team participated in developing. Now there's no saying, 'I told you so' later. They've got skin in the game.

VB: Why is "Customer Value Lens" a key feature of the innovation process?

Michael Dalton: It relates to the definition of innovation, which is an organization-wide process of finding and profitably serving unmet and unexpressed customer needs. The customer value lens helps identify what customers value and, as we talked about earlier, it means moving away from asking what's in it for us.

In a lot of innovation processes a financial analysis is done up front. It asks a number of questions. 'How much are we going to sell?' 'How are we going to price the product?' 'What's it going to cost us to make the product?' 'What kind of a profit will we make?' 'How much should we invest?' At the end of this financial analysis, you end up with either an IRR or an ROI calculation that gives you the projected return on investment. (Vern's note: "IRR" is "Internal Rate of Return")

For me there's something missing in this approach – a failure to concentrate on asking 'what's in it for them?' The financial analysis approach is very much about us, and not about what's in it for the customers or clients. A better idea is to start with our customer value lens; to start by asking, 'What’s in it for them?'

I had already mentioned that the three elements of what Theory of Constraints calls the "ΔT, I, and OE" – the increase in throughput, the reduction in investment and inventory, and the reduction in operating expense. If your innovation doesn't do one of those three things for your customers then there's very little chance it will create value for them. (Vern's note: "Δ" is the uppercase fourth letter in the Greek alphabet – "delta" and is used to indicate a change)

We teach our clients to answer three key questions to look at innovation using a customer value lens. The first is, 'What job is the customer hiring our product to do?' It's a Clayton Christensen concept from The Innovator's Solution, and is very powerful for understanding what the customer is trying to get done, how they do it today, and how it could be improved.

The second question is, 'What value can we create for our customers?' This is the ΔT, I, and OE which I mentioned earlier.

The third part is, 'What value does that create for us as a company?' It's not where we start; it's where we end up – the third question. 'What problems can we solve for the customer?’ ‘What job are they trying to do where we can create some value by providing a solution?' It cascades down to the fundamental issue of how can we share in that value?' And this takes us back to our original definition of innovation and its relationship to profitably.

Sometimes you go through this exercise and say, "Wow! I can see how the customer would want the solution we have identified, but the fact is we can't make any money doing it." In this case we would conclude it's not a winner for us. This exercise needs to be done early and be built into the assessment process, because you want to know an innovation's potential profitability before you start dedicating expensive product development resources to the project.

VB: In your most recent eZine you say, "Customers often don’t know what they want and asking can lead your new product development astray. Instead, focus on understanding what customers need by watching them in action and asking what they want to maximize and what they want to minimize. It is an interesting observation.

Michael Dalton: Yes I had a few people who read that say, “I was a little put off by the title "What Customers Want – and Why You Should Never Ask" until they read the rest of the article."

I'm not saying you shouldn't do ample customer interview work as part of new product development. Just the opposite – you should complete much of that work before you spend any of your constrained resources on new product development. However, what customers think they want usually isn't what they actually need or what they end up buying. But it's not their fault. It's not their job to know what they need.

The customer doesn't know what they want, and this is particularly true in technology industries. They know what their problems are, and they know what they're struggling with. They won't necessarily know what their needs are in terms of what you could provide, or how you could manipulate the technology to solve their problems and struggles.

Often times, I've seen people ask their customers what they think would be the right solution, and clearly the customers don't know. On the other hand, I've seen customers who thought they knew but they were wrong. I give an example in the eZine article where the customer was asking for something in particular which they thought they needed, but their model was built on the wrong assumptions.

The example was taken from when I worked in the polymer industry. We had a pigment-manufacturing customer that asked us for the lowest molecular weight polymer that we could make. Well that's a prescription, not a need. The technical service person on the account asked what he was trying to accomplish. The customer explained that he wanted to get more color out of the pigment and thought a lower molecular weight would solve his problem related to the pigment dispersant. It turned out that his working model was the opposite of our scientific fundamentals – he actually needed our highest molecular weight material. He was a pigment chemist, not a polymer physicist. He knew he wanted more color from his pigment. But trying to design the right polymer to help do that was well outside of his expertise. He needed our expertise to create the right product for him.

VB: You recommend using throughput and cycle time to measure innovation performance. Why?

Michael Dalton: The innovation process is complex because you're managing two things: process, and within that process you're managing projects.

The way to measure improvement in a project is primarily by how quickly it's done so you can begin to realize a return on the project investment. This leads to throughput – how much throughput you get over and above the cost of developing the product.

Those two are the most critical measurements, and I also like to keep it simple. I've seen articles that suggest up to 35 different innovation metrics you can use depending on your situation. While there is some value in looking at some of those additional measurements in specific situations, I think the big picture of cycle time – how quickly you’re getting your projects done – and the amount of throughput you're getting from your innovation projects, if looked at together, are pretty powerful.

VB: The idea is to have metrics that give you the big picture and don't drive innovation activities just for the sake of achieving high measures in your metrics.

Michael Dalton: That's right. Instead, the goal is to ensure your measures relate to the primary goal of the company, which, if you recall we talked about earlier, is to make more money now and in the future.

VB: You say, "Since developing this [5 step Guided Innovation System] framework, we've helped companies use these methods to cut time to market by more than half, nearly double new product profits, and get more results than they ever thought possible from their new product development investments." Are companies able to maintain this level of success after you leave and they must continue on their own? As you said near the beginning of our conversation, you continue to provide coaching for your clients for a period of time, but is it sustainable?

Michael Dalton: It's not a panacea, so the answer is: 'not always.' It depends on the discipline of the company leadership, and whether they make the 5-step continuous improvement system part of their culture.

In one case that comes to mind, when I went back to visit a client six months later I was impressed that in the lobby of the R&D building there was a large sign, 'Here are the five key projects we're working on. If you're not working on one of these, then what are you doing here?' It was little blunt but it indicated that the Guided Innovation System had become part of their culture. It was gratifying to see that some of the things we had discussed, worked on, and implemented had taken hold.

It's much easier for companies to maintain the System after we're finished implementation if we continue to provide support compared to our clients doing continuous improvement on their own. A coach can almost always help with continued improvement because of their ability to see things in a different light. It gets back to one of your very first questions about challenging assumptions.

VB: Who should read Simplifying Innovation?

Michael Dalton: I'd say anyone that wants to grow their business, but specifically leaders involved in, or responsible for, development and implementation of a company's strategy for organic growth. This includes CEOs, General Managers, marketing leaders – whether they're the Chief Marketing Officer or Marketing Director, and R&D leaders. Actually anybody that's involved with new product and service development for a company can benefit from some of the things that they'll learn by reading the book.

VB: Also anyone interested in business administration. Or young people relatively new to the work force who want to advance by learning about the innovation process, and how to make a contribution in their organization. Its appeal goes beyond business leaders.

Michael Dalton: Good point. People who are up and coming in an organization can benefit. The earlier we get them thinking about some of these issues, maybe there's hope to significantly reduce that $75 billion number related to under delivered R&D investment.

VB: That's an interesting way to put it – everybody who's involved in spending, controlling, or receiving their salaries from the $150 billion dollars devoted to research should be concerned about reducing the apparent waste of those R&D expenditures.

Michael Dalton: Yes, it should be a motivation to drive improvement, especially given the competition for innovation and new product development in the global marketplace.

VB: Did you enjoy researching and writing your book?

Michael Dalton: I loved the research process because so much of it was experience-based. This was not a concentrated process of doing the research and then writing the book. I did the research over many years, beginning with reading Eliyahu Goldratt and Jeff Cox's The Goal back in 2001. From that period on, I continued to read about the Theory of Constraints. I tried to synthesize everything I read about innovation within the TOC framework. Whenever I read something new about innovation I would question how it fit into the framework, and how it could be useful for a company at a practical level. This part of my research was what might be called a labor of love. It was the most important element of building my own innovation coaching and consulting business as well.

The actual writing of the book was a bit more challenging – bittersweet would be the best way to explain it. While I enjoyed it, it was also a lot of work. I don't know if I'd recommend that others purposefully write a book taking the business novel approach. While it’s one of the most effective teaching methods, it's like writing two books at once. You have to write a novel, with characters and a story that engages the reader so they will want to follow along. At the same time, you have to have the entire flow of what it is you're trying to teach – the information you want to impart.

The didactic element has to be woven into the story at just the right time and you can't advance the teaching without advancing the story. That part was a lot of work, but it was fun to learn to do it as well.

VB: Did you learn very much in the process of writing the book, not necessarily for your consulting practice, but in how to write or how to think?

Michael Dalton: Yes, I learned a tremendous amount in terms of how to write in a way that engages people.

By nature, I'm more conceptual, but it's important to be able to write in a way that engages people to feel what you are teaching, rather than just understand what some might label as "the dry theory." Theory is useless unless you can put it into practice. Certainly part of what I learned throughout the process is how to make the theory more applicable and practical for people to understand and implement.

VB: Make it engaging.

Michael Dalton: Yes and achieving that is a great feeling. As a result of writing the book, my writing has become a little more engaging – at least that's the feedback I've been getting so far.

VB: As a com¬pan¬ion to Simplifying Innovation you have a blog. How do you choose the topics you write about?

Michael Dalton: I've been writing the blog since about March or April of last year and the topics are a mix of things. Some topics come out of the book as little nuggets I can write about in an article.

Oftentimes it's related to questions I get from a client, or when I'm speaking to an organization or an executive group. Sometimes those are questions nobody has asked me before, and I had not previously thought about the issue. If it's an interesting enough question and writing an answer might be valuable if shared with other people, then I'll take the kernel of the question and usually answer it in a 500 to 1,000-word article.

VB: Do you sometimes take a question that you don't have the answer to, explore it, and then write your thoughts about the question as a blog entry?

Michael Dalton: Yes, I've done that too. There have also been instances where I tried to answer an interesting query during the question period after my speech or during a training session, and later decided my answer was inadequate – that I needed to think about it and develop a more complete, thoughtful answer.

The first E-zine I wrote was "Managing Innovation Risk – Neither a Gambler or a Banker Be," which was the result of a question that a CEO at a speaking event asked me: "How do I get my organization to take more risks?" I remember answering the question when chatting with the CEO, and afterwards thinking to myself, 'I don't think I answered that in the best possible way. I really need go back and give that some thought, and dig into it a little bit more.' And I did. It turned into this article where I challenged the assumption that you want to take a risk in innovation.

Innovation is about taking smart risks, not gambling risks. Not the shoot from the hip, let's give this a try type of risk. It's about quickly weeding out the risks early when you can prove that they're not feasible, there's not a market for it, or whatever it might be that indicates the innovation will not be successful and make a profit. It's key that this work be done up front to reduce the risk as soon as possible in the process.

Innovation requires risk, no question about it. But why take risks that have no chance of having a benefit?

VB: In one of your web log entries you say "Companies that try to improve return on new prod¬uct invest¬ment by man¬ag¬ing project expenses are pulling the wrong lever." In your consulting work do you find this is a common mistake?

Michael Dalton: I don't know how common it is, but it is a mistake I’ve seen companies make. Innovation processes often have financial people assigned to maintain tracking systems for managing the hours dedicated to the project. I've seen project managers almost become the Gestapo for how many hours somebody can put on a project.

The reason I say it misses the point is because the critical question is whether you finish the project on time. It's most important because it is the driver for most of the costs and benefits.

VB: The rest might just be 'busy work.'

Michael Dalton: Yes.

VB: What are you doing to promote your book?

Michael Dalton: I'm initially trying to do as much as possible online. There's a web site for the book. My corporate website contains a link to my blog as well.

I've also been talking with a couple of people about doing a blog tour, which is an interesting new approach. I guess not all that new for many, but it's new for me.

I also recently provided a 'webinar' for the Theory of Constraints International Certification Organization.

VB: The media will likely be keen to interview you.

Michael Dalton: Yes and I'm also making it available for people to download some chapters, and hopefully this will get people engaged in Maggie's stories so they want to read more.

Sample chapters are a challenge with a business novel. You have to get the readers fully engaged in the story; plus they have to identify with the problem, and see that the process of reaching the solution provides valuable information of benefit to them.

VB: People may be interested in adding their own Maggie-like stories to your web log.

Michael Dalton: Yes, that's one of the things we are going to enable in the blog. It'll have a place where people can contribute their stories.

VB: Are you currently working on any other interesting projects?

Michael Dalton: The book has kept me pretty busy – I only started the actual writing of the book in July.

As one of my next projects, in the early part of 2010 I'm planning to set up a forum where people who are interested in learning more about how to apply the Theory of Constraints to innovation can have online discussions in a TOC for Innovators Group on LinkedIn. This should create a community for discussions about using these Theory of Constraints concepts. LinkedIn groups, I think, enable much better discussions than do blogs.

VB: You're going to create a community of practice related to applying the Theory of Constraints to innovation.

Michael Dalton: Yes, a community of practice around how this all gets put in place, the kinds of issues they face, and the benefits they experience.

I've also got plans for a second book, which would not be a novel.
I know there are lots of people who prefer a traditional business book approach. Also many would like more depth than you can provide in a 220-page novel. To try to take Maggie's company through every problem you could face is unrealistic, and even though the book brought in Maggie's colleague who was running another division with his problems, we could only scratch the surface of the possible problems you could face.

I've already got an outline together for a more traditional business book on simplifying innovation – more of a guidebook or a handbook for R&D and marketing people. It will be for those who have to put the changes in place.

VB: You have a vision for a series of books?

Michael Dalton: Yes, this will be the next in the series. Beyond that I'm not sure. As part of the peer review process for Innovation Simplified, some people have suggested other possibilities so we'll see where it all leads. The fact that marketing and innovation are so closely aligned – it's a necessity that they be closely aligned – means there is probably all sorts of value in a book that would address the marketing side of things.

There's been some great work done about marketing. There's a branch of Theory of Constraints that deals with something called the “viable vision” or, as it's also called, the “mafia offer.” 'How do you create offers that are too good for customers to refuse?’ 'How did you use your TOC driven capability to manufacture and fulfill your customers' needs far better than your non-TOC competitors can?' 'How do you use that to create a highly differentiated advantage in the marketplace?'

VB: Once you've accepted you're hooked and can never leave.

Michael Dalton: Yes, exactly. People have looked at it from that standpoint but I don’t think they’ve completely brought all the marketing aspects into it.

Lisa Lang, who is big in the area, has done a lot on the mafia offer, but I believe readers would welcome additional work about the whole concept of marketing and innovation. I think Lang has a chapter on marketing in an upcoming book, but this subject could potentially be more than just one chapter. (Vern's note: The mafia offer is also discussed in Lisa Lang's Achieving a Viable Vision: The Theory of Constraints Strategic Approach to Rapid Sustainable Growth.)

VB: Much more to be explored.

Michael Dalton: Yes, much more.

VB: Can innovation be simplified?

Michael Dalton: Well, as I mentioned before, innovation is a very complex system partially because it is made up of both process and project. While innovation is always going to be complex, we can achieve what Goldratt refers to as "inherent simplicity." The goal is to understand the root cause and effect, the leverage point, or the bottleneck. That simplifies the improvement of innovation by being able to target your efforts and deliver big improvements in speed to market and innovation throughput – wherever the leverage point is. That's what I meant by the title Simplifying Innovation."

The key is how to boil innovation down, and understand what’s at its roots so we know how to make improvements in the innovation process. That’s the big advantage of Theory of Constraints, and why I brought a TOC approach to innovation for the first time with this book. The Theory of Constraints is all about simplifying and boiling things down to the root cause, to the leverage point in order to identify the areas where there are buttons you can push and levers you can pull to make significant improvements.

VB: My compliments on writing your first book, Simplifying Innovation. Good luck with it and we will look forward to your series of books as they are published in the future.

Michael Dalton: Thank you.

VB: I appreciate the time you've taken to talk to me about Theory of Constraints.

Michael Dalton: It was an enjoyable discussion. You put a lot of incredible thought into the interview so it made the time fly by.

Author and consultant Michael Dalton has developed the Guided Innovation System using concepts from the Theory of Constraints. The first step, identify the innovation bottleneck, is about identifying what is preventing higher innovation performance. The fifth step for driving innovation improvement is "Start again and avoid the inertia constraint."

Michael Dalton provides the following advice about continuous change and improvement: "As you drain the swamp, more alligators will surface. As soon as one innovation constraint is broken, another will show up. It's time to start the cycle again and refocus another round of improvement efforts on the next bottleneck. If you stop after a single round, then inertia becomes your constraint and you only end up stagnating at a higher level."

This 5-step system is certainly worth checking out. The author says, "Since developing this framework, we've helped companies use these methods to cut time to market by more than half, nearly double new product profits, and get more results than they ever thought possible from their new product development investments."

Michael Dalton's Bio:
Michael Dalton is Managing Director and Principal Consultant at Guided Innovation Group. He works with companies that are struggling with new products and helps them create more innovation impact in less time. He also consults on open innovation and alliances as a member of the Alliance Management Group, Inc., and serves as an advisor at the Center for Advanced Technology & Innovation – a Southeastern Wisconsin based non-profit organization focused on regional economic development through technology & innovation.

Previously Michael Dalton had 24 years experience at Johnson Polymer (An SC Johnson Family Company), as Global Director of Strategic Business Development, and Regional Business Director – Americas.

Michael Dalton holds an MBA in marketing & finance from the University of Chicago, and a chemical engineering, gas, and energy technology degree from the Illinois Institute of Technology.

He is the author of Simplifying Innovation (2010).

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