“Do you understand?”

(excerpted from The Pipeline)


“We said that we live in a world of systems.  What do we mean?”

“For our purposes, I think we’re talking about the relationship and interaction between dependent parts that comprise a whole”, offered the CEO.  “It is about the order of things, about relationships of cause-and-effect.  It is about structure defined by parts and processes.  It is about understanding dependencies, and how things work together.  You can say that systems are a generalization of reality, but that’s the only way we understand that reality.”

He wrote:




“As long as I have been in homebuilding”, he continued, “I have constantly been amazed at the way the industry tries to do things:  Lurching from project to project, from deal to deal, acting like we’ve never done any of it before.  Details without any context.  Treating symptoms of the problem, not the problem itself.  Trying to improve the performance of the individual parts, but not the performance of the whole.”

“Sounds like whack-a-mole”, said one of the sales representatives.

“When we use the term ‘systems-thinking’, what we mean is a way of reasoning, a way of problem-solving”, said the intrepid, results-based consultant.  “It is a way of thinking.  Systems-thinking teaches us to think globally while acting locally.  It teaches us to focus.

“The homebuilding industry, the housing and real estate market, and the local and national economies in which RB Builders operates – they are all part of a hierarchical system”, she said.  “The business environment in which we must operate – it’s a system.  These production principles and disciplines are part of that system.

“It is a hierarchy of goals, and the conditions required to attain them.

“RB Builders is not some loosely-connected set of independent and unrelated parts – a collection of processes, departments, systems, resources, policies, and other isolated pieces of a whole”, she continued.  “Like everything else, RB Builders is a system – a hierarchical set of interdependent parts that must work together to accomplish a stated purpose.

“Our understanding of production principles and disciplines is rooted in this way of systems-thinking”, she explained.  “Rooted in an understanding of cause-and-effect relationships, rooted in the interdependent nature of its parts, rooted in the ordered behavior of the business environment in which we must operate.

“It is rooted in the way things work.  It is rooted in the way problems are solved, rooted in the way constraints are managed.

“Systems-thinking is about improving the performance of the entire system, not the performance of its pieces or parts – not any of the parts, not some of the parts, not even all of the parts, independent of one another.”

The intrepid, results-based consultant made a numbered list on the flipchart, then paused and moved forward slightly for additional emphasis.  “Listen.  The way you improve a system is by focusing the improvement efforts on the two areas that determine the performance of the entire system:



“What is the problem?  What is the constraint?  Those are the two questions that have to be answered in order to improve the performance of any system.  The system’s core problem – its root problem – is the problem that causes the majority of the undesirable effects, the symptoms of the problem that permeate much of the system.  Variation, for example.

“The system’s constraint is whatever limits the system’s overall capacity to do more of what it’s designed to do, to produce more of what its purpose is to produce.

“Do you understand?”

The dazed looks and silence said it all.


(The Pipeline: A Picture of Homebuilding Production is available on the publisher website (virtualbookworm.com), and the author website (thepipelinebook.com), as well as amazon.com and barnesandnoble.com)