Goal - Eli Goldratt
I just happened to read a book named “The Goal” by Eli Goldratt over the weekend. So today’s Gyan is about this interesting Management Novel.
The best thing I liked about the book is its style. Generally, Management books tend to get a bit boring with all the management jargons, graphs and tables that they use. Instead of writing management fundamentals this way, Goldratt has spun a story around them, making the book more readable and interesting. Even though, the book is mainly aimed at the manufacturing industry, there is lot to learn for people like us working in IT.
Alex Rogo – the “Hero” of this novel - is a plant manager in a town called Bearington. One fine morning, his divisional manger Peach storms into his plant asking for the status of a delayed customer order. Peach is prompt to bash Alex and orders him to ship the order by end of the day. He, also, goes on threatening him that if he (Alex) couldn’t turn the plant into a profitable one within 3 months, the company would be left with no other option but to shut down the plant. To add more to Alex’s misery, a critical machine goes down and a skilled worker leaves the plant over a feud with the Divisional Manager. However, Alex somehow manages to ship the order within time limit. This incident and especially, the frequent delays in delivering the orders make him think. Why is it that even after he is giving his best try to every order, even after all the processes are in place, he has backlogs of weeks for orders to be delivered, piles and piles of inventories, unhappy workers to work with.
Alex is not doing any good at his personal life, either. He has no time for his kids and his wife. In fact, their marriage is falling apart.
Alex looks a complete loser in both Professional and personal life.
One day, when Alex is on his way for a Quarterly review meeting, he meets his old school friend Jonah at the Airport. Alex remembers bleakly that Jonah is a scientist. In a casual conversation, Alex boasts about the new Robots that his company has deployed at his plant to boost productivity. Jonah asks him, “Have those Robots really improved productivity?” Alex leafs through the pile of pages and tells him “Not sure.” Jonah goes on asking him few basic questions which Alex can’t answer satisfactorily. Jonah asks him to spare some time on what is that Alex is looking for and what his, company’s GOAL are. Alex mulls over and over on these questions only to find a simple answer “To Make Money” Anything, which helps in making money for the company, would be a productive activity and any other thing which doesn’t, would simply drive the company away from its goal.
Goal of a company should be:
1) To increase throughput i.e. the quantity that they are Selling
2) To decrease the Operational Expense: This should include the time spent on processing, Inventory etc.
Once the goal is explained, Goldratt goes on explaining how to achieve it using practical, routine examples. For example, while explaining how bottlenecks decide the throughput of the plant, he takes Alex on a hiking tour along with some kids. No matter how many times Alex sets the pace for every boy in the group, the gap between them goes on increasing. Also, together they move at such a slow pace that it would become impossible for them to reach the destination in time. Alex finds out that a fat guy named “Herby” is moving very slowly and because of him, other guys behind him are lagging even when they CAN be faster. This effect goes on accumulating till the last boy, resulting in overall delay. So Alex makes Herby the leader and as it turns out, the gap narrows and they reach the destination well before the stipulated time.
On the similar lines, Alex finds out the Bottlenecks – “herbies” in his plant. He makes necessary changes in the policies and scheduling. He prioritizes the parts. One important thing that he learns is that “If a resource is utilized to the fullest, it may not necessarily be fully productive” i.e. if it is non – bottleneck resource and is working up to its capacity, it will create excess parts for the bottleneck to handle. This will result in higher inventory implying a stuck cash flow.
With bottlenecks found and strategies set, Alex manages to reduce the backlogs dramatically. With effective support from his colleagues, he could deliver the orders well within the timelines.
Eventually, Alex turns the plant around and makes it the most profitable one in the entire division. He is also promoted to Divisional Manager. Needless to say, he also manages to continue with his marriage! (All things come to a goody goody end)
Even though lots of things said are sheer common sense, it is interesting to read how misguided efforts prove futile and how they tend to give us the feeling that we are extremely busy. It also shows how we take the predetermined policies for granted and how these assumptions make us overlook obvious false practices.
Well, as Goldratt puts it, it is difficult to explain what a Goal is or should be. Due to space constraint, I have missed a lot of other good points that would have made the review more interesting but I found the book (especially, the talks between Jonah and Alex) much better and practical than any other self help books and I’m sure, even if it is read as a plain novel, it would still make an interesting read.
Regards,
Abhishek
P.S.:
I just happened to come across a quote by an IAS Officer “My experience with bottles so far has told me that the bottlenecks are always at the top.” Of course, the context was a bit different; it was about the Indian Government! J
The best thing I liked about the book is its style. Generally, Management books tend to get a bit boring with all the management jargons, graphs and tables that they use. Instead of writing management fundamentals this way, Goldratt has spun a story around them, making the book more readable and interesting. Even though, the book is mainly aimed at the manufacturing industry, there is lot to learn for people like us working in IT.
Alex Rogo – the “Hero” of this novel - is a plant manager in a town called Bearington. One fine morning, his divisional manger Peach storms into his plant asking for the status of a delayed customer order. Peach is prompt to bash Alex and orders him to ship the order by end of the day. He, also, goes on threatening him that if he (Alex) couldn’t turn the plant into a profitable one within 3 months, the company would be left with no other option but to shut down the plant. To add more to Alex’s misery, a critical machine goes down and a skilled worker leaves the plant over a feud with the Divisional Manager. However, Alex somehow manages to ship the order within time limit. This incident and especially, the frequent delays in delivering the orders make him think. Why is it that even after he is giving his best try to every order, even after all the processes are in place, he has backlogs of weeks for orders to be delivered, piles and piles of inventories, unhappy workers to work with.
Alex is not doing any good at his personal life, either. He has no time for his kids and his wife. In fact, their marriage is falling apart.
Alex looks a complete loser in both Professional and personal life.
One day, when Alex is on his way for a Quarterly review meeting, he meets his old school friend Jonah at the Airport. Alex remembers bleakly that Jonah is a scientist. In a casual conversation, Alex boasts about the new Robots that his company has deployed at his plant to boost productivity. Jonah asks him, “Have those Robots really improved productivity?” Alex leafs through the pile of pages and tells him “Not sure.” Jonah goes on asking him few basic questions which Alex can’t answer satisfactorily. Jonah asks him to spare some time on what is that Alex is looking for and what his, company’s GOAL are. Alex mulls over and over on these questions only to find a simple answer “To Make Money” Anything, which helps in making money for the company, would be a productive activity and any other thing which doesn’t, would simply drive the company away from its goal.
Goal of a company should be:
1) To increase throughput i.e. the quantity that they are Selling
2) To decrease the Operational Expense: This should include the time spent on processing, Inventory etc.
Once the goal is explained, Goldratt goes on explaining how to achieve it using practical, routine examples. For example, while explaining how bottlenecks decide the throughput of the plant, he takes Alex on a hiking tour along with some kids. No matter how many times Alex sets the pace for every boy in the group, the gap between them goes on increasing. Also, together they move at such a slow pace that it would become impossible for them to reach the destination in time. Alex finds out that a fat guy named “Herby” is moving very slowly and because of him, other guys behind him are lagging even when they CAN be faster. This effect goes on accumulating till the last boy, resulting in overall delay. So Alex makes Herby the leader and as it turns out, the gap narrows and they reach the destination well before the stipulated time.
On the similar lines, Alex finds out the Bottlenecks – “herbies” in his plant. He makes necessary changes in the policies and scheduling. He prioritizes the parts. One important thing that he learns is that “If a resource is utilized to the fullest, it may not necessarily be fully productive” i.e. if it is non – bottleneck resource and is working up to its capacity, it will create excess parts for the bottleneck to handle. This will result in higher inventory implying a stuck cash flow.
With bottlenecks found and strategies set, Alex manages to reduce the backlogs dramatically. With effective support from his colleagues, he could deliver the orders well within the timelines.
Eventually, Alex turns the plant around and makes it the most profitable one in the entire division. He is also promoted to Divisional Manager. Needless to say, he also manages to continue with his marriage! (All things come to a goody goody end)
Even though lots of things said are sheer common sense, it is interesting to read how misguided efforts prove futile and how they tend to give us the feeling that we are extremely busy. It also shows how we take the predetermined policies for granted and how these assumptions make us overlook obvious false practices.
Well, as Goldratt puts it, it is difficult to explain what a Goal is or should be. Due to space constraint, I have missed a lot of other good points that would have made the review more interesting but I found the book (especially, the talks between Jonah and Alex) much better and practical than any other self help books and I’m sure, even if it is read as a plain novel, it would still make an interesting read.
Regards,
Abhishek
P.S.:
I just happened to come across a quote by an IAS Officer “My experience with bottles so far has told me that the bottlenecks are always at the top.” Of course, the context was a bit different; it was about the Indian Government! J
posted by Gyan for the Day! | 5:12 am
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