Current Reality Tree

Note: This is one of the thinking skills taught by Eliyahu Goldratt in his book "It's Not Luck". This page brings together all material from that book which deals with this skill. Current Reality trees are used to map out and understand a system and how one part effects the others. Reading this page is not a substitute for reading the book as there is information in it that I cannot possibly reproduce here. If these thinking skills interest you, and they should, I urge you to aquire the book for yourself and read it. It is very readable and it is very affordable! The book is available in many bookstores, from Amazon, and also from North River Press.

Basic Logic Tree
Basic Logic Tree

Logic Trees

All of the rest of the thinking skills are diagrammed as variations of a basic logic tree. A Logic tree is a diagramatic way to connect cause and effect as a representation of a functioning system. Each cause or effect is encapsulated in a rectangular box and the boxes are connected by a series of arrows indicating which is cause and which is effect. The arrow always points to the effect. If two cuases are necessary to obtain an effect then there will be two boxes both connected to a third box, the effect, by arrows. A simple example would be the old logic chain: If A and B then C. This would diagram as shown to the right and labelled Basic Logic Tree. The oval which crosses the connecting arrows represents and meaning both are necessary to cause the effect. If there is no oval and there are two connecting arrows then either cause will produce the effect. This is the or conjuction.

Word Logic Tree
Word Logic Tree
Now, substituting words instead of letters we can create a simple logic tree using 'Revolution is change' instead of A and 'Change is Good' instead of B. Then following the logic Revolution is Good would be the conclusion. The diagram is shown to the right. There is no problem with the logic of this tree, but the assertion that 'Change is good

is incomplete or wrong'. Actually change can be good or it can be bad so the tree is incomplete. To create a Current Reality tree we simply need to add the rest of the causes and effects to account for all of the significant elements of the system being analyzed.

Current Reality Tree

The second thinking tool that is introduced in the book is the Current Reality Tree. It is much harder to perform and is far easier to learn if it is introduced in a structured learning environment. We create one of these because any complex situation is linked by many interdependent effects. However, all these effects are caused by only one or two underlying causes. A Current Reality tree helps us identify the underlying cause. When people are intimately familiar with a given situation their intuition might allow them to formulate the Evaporating Cloud without creating the Current Reality tree, However, in order to use the thinking skills to fully create new solutions to cmplex problems, we must be able to explain what the root caause of the problem is. This requires us to create a current reality tree. Otherwise we are asking others to 'take our word for it' and no one is usually willing to do that where complex problems are involved. The process consists of the following steps.

Current Reality Tree Creation Process

  1. Write down a list of five to ten Undesireable Effects (UDEs). There is no set number but the more complex the problem you are analyzing the more UDEs you will notice.
    The list of UDEs from the book It's Not Luck are listed at the end of chapter 14. I have included on some of them here.
    UDE #7 There is unprecedented pressure to take actions that will increase sales.
    UDE #8 There is the need to launch new products at an unprecedented rate.
    UDE #9 In advanced material industries the constant introduction of new products confuses and spoils the market.
    UDE #12 Salespeople are overloaded
  2. Review the list of UDEs and find two UDEs which are linked as cause and effect. Use your intuition about which UDE is linked to which other UDE. The link might be a long distance one, that is there may be intermediate effects between the UDEs. Don't be concerned with that at first, we will deal with that issue later. Write down the perceived link as a logic diagram like the one labelled CRT Getting Started.
  3. Once we have a link we examine it to make sure it satisfies the following conditions. These are called the Categories of Legitimate Reservation. They make sure that the links are systematicaly tested.
  4. Categories of Legitimate Reservation
    1. Clarity - Is the link we are proposing clearly stated?
    2. Entity existence - Is te proposed entity real and is its effects significant?
    3. Causality existence - Is the proposed cause really a cause and not an effect or independent entity?
    4. Cause insufficiency - Is te proposed cause sufficient all by itself to case the effect?
    5. Additional cause - Are there other contributing entities that are not yet listed which are necessary for suffciency?
    6. Cause-effect reversal - Do you have the cause and effects reversed?
    7. Predicted effect existence - Does the predicted effect actually exist? Has it been observed by anyone?
    8. Tautology - Is the cause and effect circular logic?
    In the diagram CRT Getting Started, there needs to be more clarity (category 1). The two UDEs indeed appear to be linked but an intermediate step would greatly clarify the linkage. After this is done, we end up with a tree that is labelled CRT - Adding Clarity. Notice that this linkage makes much better sense.
    There is still another problem with CRT - Adding Clarity. In this case there are two insufficiencies (category 4). The intermediate step requires the addition of two more causes. First, unpresedented pressure to increase sales does not automatically translate into developing new products. However, one of the tried and true methods of increasing sales is to develope improved products. So we add another box on the left side to clear up this insufficiency. Second, although there is pressure in almost all industries to increase sales, only some industries are launching products at an unprecedented rate. So to the right side we add another cause. Adding these two items will produce a tree that looks like the diagram labelled CRT - Adding Sufficiency.
  5. Add any cause effect relationships you deem necessary to satisfy the above list of reservations. This often results in adding causes to the diagram which you may not have initially listed in the UDEs. This is normal and it is the reason why the initial list of UDEs need not be either complete or exhaustive.
  6. Select another item from your list of UDSs which links to your existing diagram. Link it in using the categories of Legitimate Reservation to establish and firmly link the new entity.
    We will add two more UDEs to show how the process goes. UDE #9 is an effect of UDE #8. UDE #8 also causes UDE #12 through an intermediate effect. UDE # 7 also connects to UDE #12. These are shown in CRT - Adding More UDEs below. Also added is UDE #1 and UDE #2 because it shows how the tree can loop causing the effects to be magnified each time around the loop. This is labelled as CRT - with Loop.
  7. Continue this until all the UDEs have been linked to the diagram.
  8. When all UDEs have been linked in, review the diagram to locate the root case, the entity, that all other effects can be traced back to.
  9. If necessary redraw your diagram to place the root cause at the bottom of the logic diagram.
  10. Create an Evaporating Cloud by identifying the two necessary but conflicting conditions which are associated witht he root cause of the problem.
Starting a Current Reality Tree
CRT Getting Started
CRT after Adding Clarity
CRT - Adding Clarity
CRT after Adding Sufficiency
CRT - Adding Sufficiency


CRT after Adding Sufficiency
CRT - Adding UDEs #9 and #12
CRT after Adding Sufficiency
CRT with Loop

Using the Finished Tree

The entire Current Reality Tree for the Current Competitive Market from the book is available as a PDF. This is a very complex CRT and most are much simpler. Here is an example of the Current Reality Tree for a Steel Mill from Goldratt's book Critical Chain. It identifies the core problem of North American steel mills. These mills have been unable to compete with foreign steel for decades now. This diagram shows the system which causes these steel mills not to be competitive. If we look at the bottom of the tree we find the cause of all these problems. In this case the cause of all the problems is using the measurement of Tons/hour. Having identified the root cause of all the other UDEs we are now ready to use the Evaporating Cloud to show how the cause is a result of two necessary but conflicting requirements.

Steel Plant CRT
CRT for a Steel Mill