Intellectual Property Exchange between Two Partner Companies - Application of the Theory of Constraints Thinking Processes

By Klingenberg, Beate; Watson, Kevin | Journal of Business and Management, April 1, 2010 | Go to article overview

Intellectual Property Exchange between Two Partner Companies - Application of the Theory of Constraints Thinking Processes


Klingenberg, Beate, Watson, Kevin, Journal of Business and Management


The problem of implementing a database for intellectual property sharing in a two company alliance is examined utilizing the Theory of Constraints Thinking Processes. The implementation of this database is required for new product development. Database implementation is hampered by internal policies, cost considerations, and strategic misalignment. A cause-effect analysis employing the Current Reality, Evaporating Cloud, Future Reality and Prerequisite techniques allows resolution of the conflict, resulting in a win-win solution and feasible implementation plan. This application of the Theory of Constraints Thinking Processes provides an excellent example for practitioners, academics and educators to examine the methodology and analyze its strengths.

The Theory of Constraints (TOC) began development with the introduction of Optimal Production Technology (OPT) scheduling and control computer software in the late 1970s (Lockamy & Spencer, 1998). Although TOC began as a production philosophy it has evolved into three interrelated areas: logistics, problem solving, and performance measurement (Spencer & Cox, 1995). The problem solving techniques utilized in TOC, the Thinking Processes (TP), were introduced by Goldratt in 1990 and expanded in 1994 (Goldratt, 1990, 1994). The purpose of these techniques is to answer three simple, yet powerful, questions: (1) what to change; (2) what to change to; and (3) how to cause this change (Scheinkopf, 1999).

To answer the question of what to change, the TP use an effect-cause-effect diagram called the Current Reality Tree (CRT) to identify core problems that result in the current undesirable system outcomes. To address the question of what to change to, the TP utilize two techniques: the Evaporating Cloud and the Future Reality Tree. The Evaporating Cloud (EC) identifies prerequisite relationships between objectives and actions to expose what Senge (1990) calls mental models; the assumptions that underlie our perceptions and actions, to expose faulty logic allowing conflicts to be resolved in a win-win manner. The Future Reality Tree (FRT) is an effect-cause-effect diagram used to analyze the solution determined by use of the EC to test this solution and to predict potential problems within the system that may occur from its implementation. The Prerequisite Tree (PRT) and Transition Tree (TT) are then utilized to plan for and control the implementation of the solution.

The Thinking Processes have been successfully utilized and expanded over the last decade to address general managerial problems (Hsu & Sun, 2005; Schragenheim & Pascal, 2005; Shoemaker & Reid, 2006; Walker & Cox, 2006), as well as to solve very specific issues in business strategy and competitiveness (Gupta et al., 2004; Polito et al., 2006; Taylor & Ortega, 2004; ), improvements in manufacturing and supply chain (Cox et al., 1998; Ehie & Sheu, 2005; Gattiker & Boyd, 1990; Rahman 2002; Unible et al., 2006), business finance (Taylor & Churchwell, 2003, 2004; Taylor & Thomas, 2008), government (Schoemaker & Reid, 2005), human resource development (Cox et al., 2005) and service management (Breen et al., 2002; Reid & Cornier, 2003). They were also applied to education (Cooper & Loe, 2000; Musa et al., 2005; Sirias, 2002). The variety of applications shows that the methodology is embraced by both academics and practitioners across many fields. A comprehensive review of the literature is provided by Kim et al. (2008), which also encourages further research work and publication of practical implementation cases to further solidify the available know-how about this methodology in academic and practitioner literatures.

Encouraged by Kim's work (2008), the present study utilizes the TP as originally discussed by Scheinkopf (1999) to identify and address policy constraints encountered during the development of a shared information database for the dissemination of intellectual property between two technology companies. …

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