David Hodes, Founder

As we all face the unprecedented challenges of a world constrained by the COVID-19 virus, how can we mitigate the effects of the pandemic? I offer a view shaped by the Theory of Constraints (TOC).

[Listen to audio version, read by David Hodes]

The first step in a constraint analysis is to define the boundary of the system. In this case, I will focus on Australia and all the people within its borders. The second step is to determine the goal of that system. Fundamentally, in our case it is the electorate who have the right to set the goal. In practical terms, we achieve this through the election of a majority of members to our federal and state parliaments, based on their policy platform and competence—especially their ability to deal with what British Prime Minister Macmillan described as ‘events, dear boy, events’.

In TOC terms, the goal, too, should have specific attributes. You should always be able to get more of it, and you should not state the goal as a target. Thus, ‘We will achieve a budget surplus of x by 30th June 20xx’ should be restated as ‘We will achieve a budget surplus no less than x by no later than 30th June 20xx’.

Define a simple, higher-order goal

Furthermore, the goal should be simple and easy to articulate and serve the purpose of having everyone in the system recognise it, from the Prime Minister and Premiers to the most humble and vulnerable in our society. Crucially, we must understand the goal in the context that shows how it serves the higher-order mission, vision and purpose of the system we’re examining—the Commonwealth of Australia. Importantly, a well-crafted goal allows the actions taken when executing the strategy to be measured. Thus, it’s possible to assess whether or not those actions are effective and able to deliver more units of goal achievement.

This goal definition for the fight against the coronavirus thus raises some interesting questions. How could it be framed? We’ve all become familiar with the idea of flattening the curve—that is, to slow down the rate of infection through enforcement of social distancing. This policy allows the health services to use the limited capacity they have to service all of those for whom COVID-19 effects have become acute. As I write, preparations are underway for 20 per cent of the eight million people in New South Wales (NSW) to catch the virus. The forecast is that 5 per cent of people affected—up to 80,000 people—would require intensive care.

Australia as a whole, however, has only just more than 2,000 intensive care beds. That’s quite some constraint. If the virus was allowed to run wild, without any mitigating actions, and vast swathes of the population contracted the disease at more or less the same time, that would be 40 people for every bed, if NSW took all available Australian ICU beds. What chance is there that the rest of the states would accede to this proposition? If the goal is to save as many lives as possible, what are the decision-making criteria going to be for the triage? Who’ll be the lucky one and how many of the remaining 39 will make it on their own? It appears that the younger you are, the less severe the symptoms, but for our large, old and aging population, we are going to have to make some pretty tough, unpopular and socially divisive decisions.

What about the economic goal?

One in 13 jobs in our economy comes from tourism and hospitality. International arrivals have ceased; domestic travel is being heavily cut. Qantas and Virgin are under pressure, and possibly will be for some time. Qantas has cut international capacity by 90 per cent and domestic capacity by 60 per cent until the end of May. How many of the 30,000 people who work for Qantas will still have a job in a couple of weeks? What happens to every small-business owner who has a restaurant, a pub or a café? What happens to all the commerce that stops as a consequence of millions of people having no more than the dole to see them through the crisis?

In a recent essay, Victor Davis Hanson made the point about the USA, which faces similar issues to those we’ll experience in Australia: ‘We sometimes forget, in legitimate fears of the coronavirus, that every action prompts a reaction and the massive curtailments of the U.S. economy can have as many health consequences as the virus itself—if millions lose income and jobs, become depressed in self-isolation, increase smoking, and drug and alcohol use, and postpone, out of fear, necessary buying and visits to doctors and hospitals for chronic and serious medical conditions unrelated to the virus.’

The truth is that no one knows how the pandemic will play out. In an excellent simulator contained in an article in the Washington Post, you can get some idea of what the four basic strategies are to minimise the effects of the pandemic: free for all, attempted quarantine, moderate social distancing, and extensive social distancing. These kinds of scenarios are what’s exercising the minds of our finest epidemiologists, virologists and public health policy officials.

So, with all of that as context, my stab at articulating a utilitarian goal: minimise the adverse health, wellbeing and economic consequences of the COVID-19 pandemic for the population of Australia and the benefit of the world.

“…resolve the diabolical dilemma of minimising the health outcomes of the virus while ensuring the least harm comes to our economy.”

Given the above, we can conclude that our political leaders have to achieve a feat of creating national unity of purpose that is unprecedented outside of wartime. We’re asking them to resolve the diabolical dilemma of minimising the health outcomes of the virus while ensuring the least harm comes to our economy.

Allow me to step down from those lofty heights and provide some thoughts which go back to the roots of TOC. Below is a diagram of the 5-Step FOCUS.

Let’s use it to see what TOC thinking can contribute to achieving the stated goal.

Find the constraint: Currently, there are several candidates for the constraint, depending on the level of resolution you’re taking, but the one that worries most people is the supply of ICU beds and even more so, the availability of ventilators.

Optimise the constraint: There are only two ways to optimise the constraint—either build more capacity or slow down the demand.

Ways to build more capacity could include:

• massively mobilising projects and resources to create more ICU beds
• ramping up the design and production of ventilators
• insisting that the doctors, nurses and other frontline healthworkers do only that which only they can do

Ways to slow down demand could include:

• massively increasing the supply of test kits
• optimising the process of conducting the tests; for instance, with drive-through testing
• ramping up the throughput of pathology labs to deliver the results of the tests in record time
• applying big data concepts, including AI to help with an increase in knowledge about the COVID-19 epidemiology and virology
• Using IoT and mobile phone geolocation to identify who is infected and with whom they have come into contact
• Mobilising manufacturing capacity to create vital goods, such as sanitiser from alcohol facilities, or face masks and protective clothing from those with expertise in the provision of these goods to hazardous industrial and mining environments

Collaborate around the constraint: One of the most encouraging and heartwarming examples of collaboration I read about is the development of a Facebook Group who volunteer to do domestic duties for the families of doctors, nurses and other frontline health workers. Others include:

• Maintaining social distancing following best practice
• Not hoarding supplies
• Accelerating the capacity building of broadband so that it doesn’t become the communications bottleneck
• Learning how to work productively and socialise from home
• Reading, learning and growing
• Taking the time to reflect deeply on your life and how you can contribute, in whatever way, to positively moving the dial. This crisis is a singular opportunity to reconnect with all that is true, good and beautiful—dare to be that most generous, mindful and compassionate person you could be

Uplift the constraint: This too shall pass. We know that, on the horizon, there will be a vaccine. To get to that place, we must encourage behaviours that include:

• Removing all waste from the conduct of clinical trials, including senseless bureaucracy
• Developing a portfolio of approaches to the creation of a vaccine to increase the possibility of finding one that works, sooner
• Supporting collaborative efforts in promising places such as Australia, the USA, Israel and Canada where there are encouraging signs of cures

Start again: I am firmly of the view that the world we left so rudely just a couple of weeks ago will be a very different place once we are over the crisis. I was struck deeply by the fact that it was the nation-states that responded to the crisis, not the supranational constructs of, for example, the European Union or the United Nations. In short order, every country closed its borders and the WHO played along with China’s cover-up. One has to tap the deeper root of national memory, legends and myths to find the source of resilience, unity and sacrifice. Anzacs and the diggers come to mind for me in Australia.

I also think there has been an awakening of the limitations of globalisation and the consequent need to diversify supply chains. For example, Australia has only 27 days of liquid fuel as a reserve with 90% of refined fuel imported. What does this mean for us as we come to understand better what a totalitarian regime in China is capable of doing? Anyone want to put our whole economy at risk with the regime that lied and covered up about the coronavirus and who makes imperial claims on our vital shipping lanes in the South China Sea?

I’ll leave it for now on another quote from Victor Davis Hanson, whose wisdom applied to his analysis of the United States is equally prescient for Australia: ‘In addition, it is not wrong to remind the public that current but once caricatured policies of secure borders, targeted travel bans, demands for transparency and symmetry from major U.S. trading partners, recalibration with China, and a return of manufacturing and assembly of key U.S. industries, from high-technology to pharmaceuticals, was long overdue—and must continue to ensure U.S. security and the long term health of its people.’

There will be enormous opportunity to prosper in that world of the future, so let’s be sure, each of us in our way, to make our contribution and do our duty.

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My own sense of duty is to contribute where I can to the national effort by offering innovations in productivity. To the project and production work, such as increasing supplies or optimising testing processes, organisations can apply the TOC solutions of Critical Chain Project Management (CCPM) and Drum-Buffer-Rope (DBR). These methods are pragmatic, grounded in reason and are backed up by decades pf empirical evidence to prove their efficacy.

If your organisation could use this kind of thinking to transcend your corona constraint, please don’t hesitate to schedule a call. And if you know someone who’s battling with their own corona constraint, please forward this article to them.

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What’s next?

The change from standard thinking to Theory of Constraints (TOC) is both profound and exhilarating. To make it both fun and memorable, we use a business simulation we call The Right Stuff Workshop.

We’d love to run it with you. To learn more:

• download the brochure (no email required)
• schedule a call
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  [Background image: Whiteboard process, Chromatograph on Unsplash]

  “Know the whole, focus on the constraint.”

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