A book The Goal: A Process of Ongoing Improvement is written by an Israeli philosopher, physicist, and inventor Eliyahu M. Goldratt, whose unconventional approach to business management has made him one of the most popular and successful consultants in the modern world. The Goal is an entertaining management-oriented novel, and at the same time it is a moderately provoking business book. The story is about a plant manager Alex Rogo whose marriage and plant are downgrading. Alex finds himself in a poor state of having ninety days to save his plant. Suddenly, he meets his old partner Jonah who introduces him the Theory of Constraint. Hereupon he uses a new way of acknowledging the theory postulates for the company to have a continuous process of improvement. The book is an attempt to demonstrate that individuals can make an insignificant number of assumptions and apply them to interpret a significant spectrum of industrial phenomena.
"The Goal" by Eliyahu M. Goldratt
The Goal is about new global manufacturing principles. The story is about the attempt of humanity to comprehend what makes the world tick so that they can try to make it better. As individuals consistently and logically think about their challenges, they are able to define cause-and-effect relationships between their activities and results. People derive some major principles which they apply to save their plant and make it prosperous in a certain process. The novel focuses on the Theory of Constraint, which is evidently developed by Goldratt himself, and this book was his way of proposing it as an idea for the industry. It was known that Goldratt has gained poor mouthing since he did not provide the complete theory but solely took improvement projects. Theory of Constraint is considered to work against conventional principles of inventory management and production. At that period, reducing the inventory and at the same time raising the service levels was not easy digestible for industrial practitioners.
The novel is created in a Socratic manner, and like other books of Eliyahu M. Goldratt, The Goal is a piece of fiction. A protagonist is named Alex Rogo who operates a production plant owned by UniCo Manufacturing. However, the business is on the edge of collapse since everything is always behind schedule and things are looking frightful. At the beginning of the novel, the company executive Bill Peach tells Alex that he has three months to manage operations at his plant in order to transform from the unreliable and unprofitable to successful organization. His distant partner a physicist Jonah, whom the majority views as Goldratt himself, helps him resolve company’s issues through a series of short meetings and telephone calls.
Throughout the novel, Jonah instructs Alex to work following the Socratic method. Whenever a telephone dialogue or meeting occurs, Jonah poses a question to Alex or a crew member which, in turn, leads to the conversation to reach a proper solution to the issue. Alex Rogo discovers the Socratic method to be a perfect way to fix his marriage with Julie. Thus, he utilizes it with his crew. In order to take five steps, the team should apply the method to meet challenges in the plant. Ultimately, it leads him and Lou, a chief accountant, to invent three things which each division manager should be able to manage.
The book indicates the role of constraints in the manufacturing process. It also claims that recognizing them not only makes it possible to diminish their impact but also gives a valuable tool to control and measure the flow of materials. Alex and his team discern the bottlenecks in their process and immediately start to execute changes to help enhance capacity. The author does a great job explaining his conception, especially the way to work with constraints and bottlenecks. Moreover, he examines each process in a chain of processes when a restricted capacity reduces the capacity of the whole chain. The importance and advantages of focusing on the activities like constraints are clearly represented and exemplified in The Goal. For instance, one should take into the consideration the case when Alex takes his son and the Boy Scouts group on a hiking expedition. Here Alex faces a constraint in the form of the slowest boy Herbie. Alex decides to apply two principles which Jonah discussed with him, namely statistical fluctuations and dependent events. Talking about statistical fluctuations, these are the common cause variations in output quality and quantity. Considering dependent events, these are the instances when the output of one event impacts the input to another one. Alex realizes that statistical fluctuations can occur at any step in a chain of dependent processes. Consequently, the results in time lags between processes that accumulate and grow in size further degrade the chain. In such a way, it demonstrates how the system is becoming worse than the average capacity of the constraint.
Although the novel perfectly represents the context of operations, the goal to make more money is restricted in its focus. It is concerned with the cost centers which are inherent in the business. Business performance in today’s increasingly competitive market relies on a diversity of factors that exist outside the business. They are the following: customers, non-customers, and external opportunities. Therefore, executives need to focus on such aspects in order to observe the bigger picture. Adopting the conception of making money as the purpose of manufacture appears like a good hypothesis. However, money should be a major purpose and nothing else matters in its place (Goldratt, Cox, & Whitford, 1992, p. 47).
The crucial points in the book include, first of all, the principle of finding and then focusing on one genuine target. The author proposes not getting into a lot of side challenges that other managers might suppose as the true goal. Hereby, this requires learning how to stop and look at a certain case. Afterwards, it is necessary to search for a new way to find a potential solution. Also, it requires attentive listening to what individuals have to say about various aspects of reaching the goal. If the goal is to make money, putting it in terms Jonah might have practiced, an action that moves individuals towards making money is productive. On the other hand, an activity that does not involve making money is considered to be non-productive. For the last year, the plant has been moving away from the purpose than towards it. In order to save an organization, one has to make it productive. Therefore, an individual has to make the plant amass a fortune for UniCo. Apparently, this is a simplified statement of what is happening nowadays. According to Goldratt et al., it is a logical starting point (Goldratt, Cox, & Whitford, 1992, p. 47).
There are three measurements which completely express the goal of making money and permit individuals to enhance operational standards of governing. The purpose of making more money can be accomplished through the rise of throughput and through the decline of inventory and operational expenses. Goldratt et al. (1992) found the following:
Throughput is a rate at which the system generates money through sales. Talking about inventory, this is all money that the system has invested in selling stuff which it intends to promote. Considering operational expense, it is determined as money that the system spends in order to turn inventory into throughput. (p. 66).
Therefore, a measurement that is not clearly determined is worse than useless. If knowledge provides a new manufacturing process and helps turn inventory into throughput, then such knowledge is operational expenses. If one intends to sell knowledge, as in the case of a patent or technological license, then it is an inventory. However, if knowledge relates to production, which will devalue with time, the investment that can be sold is inventory. Hereupon, the depreciation is an operational expense (Goldratt, Cox, & Whitford, 1992, p. 76). Each manufacturing manager has struggled to reach a balanced plant in the entire Western world. It is the plant where the output of each resource and the market’s demand are perfectly balanced. The closer one comes to the balanced plant, the more likely he/she is to fail (Goldratt, Cox, & Whitford, 1992, p. 86).
According to cost-accounting principles, which everyone has applied in the recent past, individuals are supposed to balance productivity and demand and try to maintain the flow. However, people should never try to balance output. On the contrary, they need an excess capacity. Goldratt et al. (1992) noted that:
The principle an individual should follow is to balance the flow with demand, not the capacity. Although personal motivation is usually based on the assumption that the level of utilization of any employee is determined by his/her own potential, it is completely wrong owing to dependency. That is not a bottleneck for any resource. The level of activity from which the system can benefit is not determined by its individual potential but some constraints within the whole system. (p. 259).
A significant point made by Goldratt is that each person has a part of knowledge required to achieve a goal within the organization (Goldratt, Cox, & Whitford, 1992,). Therefore, individuals need to create a genuine environment where they will not only foster their participation but also teach everybody how to pose a right question. Afterwards, they will see what is necessary to do in order to reach a certain purpose. The partnership between the chief and his employees, which has ultimately developed communication, overfills Alex’s relationship with his spouse and changes their relationship. There is a great amount of useful information to be extracted from such a remarkable novel, and it is a foregone conclusion why it has had such a great success for so many years. The Western world does not have to become a second-rate manufacturing power. If the modern generation comprehends and applies correct principles, it can bring success to any business. Thus, necessary knowledge should be pursued in order to make the world better and make life more fulfilling.