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5 Steps to Continuous Improvement by Allen Pratt
Last annotated on October 23, 2014

Goldratt described a five step improvement process based on the premise that each profit-seeking organization is driven by the goal to make more money “now and in the future.

Before you start a process of ongoing improvement, define the goal for your company.

1)      Identify the bottleneck constraint or significant obstacle (what prevents the organization from obtaining more of the goal in a unit of time?)

2)     Decide how to exploit the bottleneck constraint or significant obstacle (how to get the most out of the constraint)

3)      Subordinate and synchronize everything else to the above decisions (align the whole system or organization to support the decision made above)

4)     Elevate the performance of the bottleneck constraint or significant obstacle (make other major changes needed to increase the constraint's capacity)

5)     If in any of the above steps the bottleneck constraint has shifted, go back to Step 1; do not allow inertia to become a system’s constraint.

Step #1: Identify the bottleneck constraint.

Every organization has a bottleneck constraint. Be careful not to confuse a troubled or underperforming resource with a constraint

Step #2: Decide How to Exploit the Bottleneck Constraint.

exploit means to maximize output.  At this stage in the process of ongoing improvement, determine how to squeeze the most effectiveness from the constraint, it’s too early to spend money to break the constraint. 
If the market is the constraint, segment the customers and prospects so that a targeted marketing message and product or service offering may address each segment’s concerns. 
Find a unique guarantee to offer that’s sets the organizations products or services apart from their industry competitors.  This is not the ‘value proposition’ that many consultants will identify. 

Step #3: Subordinate and synchronize everything else to the above decisions.

Don’t allow incorrect policies to stand in the way of throughput improvement. 
There are no “sacred cows” to protect when the organization is working to increase throughput and break a constraint.
Don’t allow the financial or management accounting systems to interfere with the throughput calculation. 

Step #4: Elevate the performance of the bottleneck.

The organization can solve any constraint with enough time and money.  If all efforts have been exhausted, then use both, time and money, as necessary to eliminate the constraint and increase the organization’s throughput. 
If the wrong constraint was chosen, capacity will have been increased but the organization will not increase overall throughput. 

Step #5: Go back to Step 1.

By now, the above steps have caused the constraint to shift.  That means there’s a new bottleneck constraint.  Identify the next biggest constraint or significant obstacle to increasing throughput and begin the improvement process a new with a focus on this next constraint.
Be careful that the organization does not lose focus on what’s important.

Apply the five step improvement process as the methodology for driving results in the organization.  Bring other management disciplines to bear, like lean manufacturing or six sigma, etc. only if those apply. 

An organization using the five focusing steps is limited only by how big it dares to think. Imagine what that can mean for your organization!