About this Presentation
This presentation describes the use of theory of constraints in the telecommunications (telco) industry. First, the telco industry is described as a service industry with no finished goods, measures are customer service driven, information technology (IT) based and capital intensive, high operating expenses and investments, etc. Value-focused management was developed to apply TOC to this industry. The five step process is: 1. Determine the goal; 2. Define measures of performance; 3. Identify the significant value drivers; 4. Decide how to exploit and improve the value drivers; and 5. Execute and control. The focus is not to make more throughput but to make more value. The broader goal is to increase the shareholders’ value, defined as discounted cash flow (DCF). An example is given. A value driver is any performance variable that can significantly increase shareholders’ value. Managerial value drivers for the telco industry are measures of performance, IT strategic gating, 25/25 rule; IT throughput; sales throughput; complexity reduction; cost accounting, pricing and decision making; and customer service/call centers. Examples of each driver are given. A permanent bottleneck is defined as a bottleneck that cannot be moved. It has 300-400% more demand than capacity.
What Will You Learn
To help you get the most value from this session, we’ve highlighted a few key points. These takeaways capture the main ideas and practical insights from the presentation, making it easier for you to review, reflect, and apply what you’ve learned.
The telco industry is a complex and dynamic field that includes a variety of businesses. The speaker focuses on cellular service providers, landline operators, and internet service providers.
The speaker presents a methodology called Value Focused Management, which aims to increase the value of the company. This methodology includes five steps: Determine the goal, Determine measures of performance, Identify the significant value drivers, Decide how to exploit and improve the value drivers, Execute and control.
The speaker introduces the concept of 'strategic gating' to manage the workload of IT departments, which are often permanent bottlenecks in telco companies. This involves screening out some projects and downgrading the features of others to manage the demand.
Instructor(s)
Boaz Ronen
Boaz Ronen is a Professor Emeritus of Technology Management and Value Creation at Tel Aviv University, The Coller School of Management. He holds a B.Sc. in Electronics Engineering, an M.Sc. and Ph.D in Business Administration. Prior to his academic career, he worked for over 10 years in the Israeli Hi-Tech industry. He has consulted to numerous corporations, healthcare organizations and government agencies worldwide. He was a visiting professor at the schools of business of leading universities worldwide. Prof. Ronen has published over 100 papers in leading academic and professional journals, and co-authored four books on Value Creation, TOC, Focused Management, Health Care management, Costing and Pricing and Decision Making. In 2012 his work "Justice in Time: Applying TOC to Law Courts Systems" (with Shimeon Pass and Shany Azaria) won the Dr. Eliyau M. Goldratt Foundation prize. In 2016 he was awarded by TOCICO for his life time achievement in recognition of significant contribution to the TOCICO community to advance the TOC body of knowledge. . He holds B.Sc. and M.Sc. in Chemistry from the Technion, Haifa, and from the Weizmann Institute, Israel, and an MBA from Tel Aviv University, the Coller School of Management. Working in the past for IBM in the ERP group, Mr. Pass has also specialized in the implementation of advanced managerial methods to enterprise information systems. Mr. Pass specializes in applying Focused Management and TOC in R&D organizations and project management. His papers on value creation and performance improvement appeared in leading practitioners and academic journals. Oxford University Press published his book on healthcare management. His book, "Focused Management: Doing More with Existing Resources" was published by John Wiley & Sons. In 2012 his work "Justice In Time: Applying TOC to Law Courts Systems" (with Boaz Ronen and Shany Azaria) won the Dr. Eliyau M. Goldratt Foundation prize.