Managing strategic and tactical constraints in the hi-tech industry

Abstract

This paper addresses the issue of constraint management in the hi-tech industry, from the vantage point of the theory of constraints (TOC). First, we argue that the hi-tech industry faces a market constraint in operations, and resource constraints in both research and development (R&D) and marketing and sales (M&S). We then make the distinction between strategic and tactical constraints, and build a methodology to identify and manage them. While the TOC enables tactical treatment of the organization's internal resource constraints, we consider the prevailing constraint to be in the external business arena. In the short term, organizations apply the TOC methodology to increase their throughput, usually by focusing on the internal constraints. This is defined as tactical constraint management. In the long term, they navigate to position themselves in relation to the business arena's constraint. This is defined as strategic constraint management. In the paper we address the strategic dilemma of where the constraints should be in the hi-tech industry and how to reposition them there. In so doing, we bear in mind the relatively high frequency at which the hi-tech industry constraints change their position, and provide examples of disruptive change.