The Goal is a novel written by Dr. Eliyahu M. Goldratt and oriented to management. Its first original publication was in 1984, and then it was republished in 1992 and 2004. Few books find their audience in initial printing, and even fewer get their first revision. Despite this tradition “The Goal” got its 3rd edition and was sold in 2 million copies. Book is an example of the Theory of Constraints. It teaches how to alleviate bottlenecks and, what is more important, how to apply such concepts in real life.
Alex Rogo is the manager of a failing manufacturing plant. He receives an ultimatum from his head office: either he turns the situation around in three months or the plant is scrapped. Alex and his team threw out a lot of questions about daily operations, procedures, and in some moments, abandoned company policies try new methods. Alex takes help from a mysterious tutor, and thus finds a new way for doing business – a way for any person in his / her field of enterprise to increase efficiency, prosperity, and personal realization. This way, taught to Rogo by Jonah (mysterious tutor mentioned before), is called Socratic Method. Throughout the book Jonah tries to pose questions either to Rogo or to the members of his crew making them to talk to each other, and find a solution to their problem. Throughout the book, the author uses faint devices to help Alex in realization of cathartic moments to penetrate apparently overwhelming roadblocks.
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Process of on-going improvements is based on the Theory of Constraints. It means that in any complex system, at any point of time, there is the only one thing, which keeps the system from achieving more of its goal. If the manager cares about the capacity and capability of the chain, it is no use in strengthening any link without identifying the weakest one. That is why the only way to strengthen the whole chain is to find the weakest link – the system’s constraint.
The essential idea is that business is a system and it may be compared to the chain: just as the chain’s strength is determined by the weakest link so the power of any business is controlled by one important operation – bottleneck. A bottleneck is a trend where the performance or capacity of the whole system is restricted by a single or limited number of components or resources. When bottlenecks are identified, it helps in reducing their impact on production and it also serves as a useful tool to measure and control the flow of materials. Alex with his team can identify such bottlenecks, and immediately start to introduce changes for capacity to speed up. At the same time, there were questions about the efficiency of using such outdated technologies in modern manufacturing. In response to that one machine, received for free, was brought to increase the capacity of other one, identified as a bottleneck. What is more, the processes at the heat treat identified as the second bottleneck, were identified.
There are Five Focusing Steps to be followed in the Theory of Constraints:
- IDENTIFY the system’s constraint. The constraint cannot be managed without its identifying. Like doctor finds symptoms and makes a conclusion, the manager should find the symptoms that organization suffers.
- Find the best EXPLOITING of the constraint. Utilization and productivity of the constraint should be maximized.
- SUBODINATE anything else for the above decision.
- ELEVATE the system’s constraint. This step should be considered when exploiting and subordination is managed.
- If the previous steps a constraint have been broken, go back to the step 1, but PREVENT INERTIA from becoming the system’s constraint.
Alex constantly strives higher and tries to re-develop both his own and his team’s ideas for utilizing an improved profit. And even in the case when production became profiting in quantity, Alex started not celebration, but improving quality. One of his ideas introduced in production was that robots had replaced other out-of-date methods.
The analysis, which Goldratt does in his book, refines the work in any organization into three elements, which could be operationally measured: inventory, overhead, and throughput. Inventory is represented by the money tied up in objects the system is intended to sell. In other words, anything within in the system, which could be converted into the item to be sold. It is also represented by raw materials, positive or negative movements, work in progress or standing stocks. Overhead is shown as the costs of doing business, other than inventory. Overhead is total costs, which are less than inventory costs. The situation with reductions and increases in overhead is similar to inventory. Throughput is the money coming to any organization in exchange to items produced.
Book and Alex Rogo’s actions perfectly show that managing the manufacturing capacity of the process is more important than being sure that each machine is producing at optimal capacity. That is the TOC principle. Toc was first initiated by Dr. Goldratt, and until his death he was the main driving force of this method. Then, a network of individuals and small companies appeared and they are loosely coupled as those who practice around the world. TOC is also sometimes called as “constraint management”.
There are Top Ten Things to be learned in the book:
- Always start to solve the problem by finding out what is really going on; discover the process with the help of “walking around”. Review each area for breakdowns.
- Hire skilled people to benefit your company.
- Remember you have a life outside of your work life.
- Brainstorm how the changes will affect employees and the community. Expect to receive feedback.
- Great changes are not always the answer. Start slowly by making small changes that will make a considerable difference.
- Have an open communication with employees.
- Pay attention to details. Not all of them are important.
- If one change is the reason for another problem, backup refocus on the first problem.
- Inventory should be kept to a minimum – too much is a waste of money.
- Know what the expected outcome needs to be.
The author was able to edify a lot of aspects for classifying objects and possible solutions. Any corporation might use to improve overall performance management practice. He summits that extended studies and information used for management may be just paper creating and not an excellent measurement of dealings really happening. This book identifies a great problem in stating with company strategy and guidelines constraints being in place and just limiting the minds of its employees.
For an organization to be effective, leaders should offer an environment comfortable for their employees, an environment providing constructive material for their stories. The reasons for this environment are:
- The relationship between local good organization and system constraints or bottlenecks;
- Corresponding capacity with demand;
- Permanent improvement.
There is also a good example of evaporating cloud given in the book. Evaporating cloud is one of 6 thinking Processes of The Theory of Constraints. These thinking processes are: Current Reality Tree (CRT), Evaporating Cloud, Core Conflict Cloud (CCC), Negative Branch Reservations (NBR), Positive Reinforcement Loop (PRL), and Future Reality Tree (FRT).
The example of evaporation cloud is the situation when Alex wants to increase the plant’s throughput, but it was impossible according to a salesman, Johnny Jones, because of any available deals’ absence. Later, the team finds out a Frenchman wanting to make a deal but proposes low price for a massive amount, and thus providing a conflict in the company. Then the team works hard for making a plan, bringing benefits to the company, and finds it! The French client agrees even though it is a bit costly, and this deal increases throughput bringing win-win situation to UniCo. This Evaporating Cloud is also a Core Conflict Cloud emerging from the analysis of a Current Reality Tree.
The novel twirls and spins with the use of risks for plant to close, to downsize and even such a risk as marriage crisis. All these events keep the reader affianced, at the same time illustrating the use of The Theory of Constraints. Today business is focused on Lean methods and with the help of the novel TOC is re-rising as a valuable tool worth being concerned. “The Goal” by Goldratt gives the reader an easy explanation of the Theory of Constraints. Anyone new in this method or those who want just refresh their knowledge should read this book.
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