The Goal
ELIYAHU M. GOLDRATT AND JEFF COX
Reviewed by Jack
Eliyahu Goldratt and Jeff Cox published The Goal in 1984, and shortly after, a company in Milwaukee placed an order with us for ten copies of the book. I had not heard of the book before, and I was surprised to discover when I received the shipment and perused a copy that The Goal was a novel. While common today, writing about business in story form was striking and original at the time. What caught my eye was how the authors brought to life, using realistic, flesh-and-blood characters and fast-paced storytelling, the story of one company’s struggle to turn around a failing division.
The story features Alex Rogo, a new plant manager who is leading six hundred employees in a division of UniCo. The parent company is unhappy with the UniWare division’s productivity and Alex is given three months to turn the plant around. Alex must solve myriad problems, such as late shipments, soaring inventory, and unacceptable quality levels, to reverse the trend.
Flummoxed by where to start the transformation, Alex recalls a chance encounter he had with a physicist named Jonah. The two had struck up a conversation during an airport layover when Alex proudly told Jonah about his company having just installed state-of the-art robots. Alex told Jonah the robots had increased productivity 36 percent in some departments. Jonah asked Alex a series of questions about the resultant effects of the robots: Is your company making more products? Was manpower decreased? Or did you reduce inventory? When Alex answered no to all, Jonah explained to him how his perception of success was incorrect. Alex did not internalize the advice at the time, but with a deadline looming, he reconnects with Jonah.
Through a series of short meetings and phone calls, Jonah teaches Alex the metrics he should be looking at to match the outcomes, rather than just the output of the robots that Alex had celebrated in their earlier conversation. What should Alex track to know whether the changes he implements will help in the turnaround? First Jonah explains to Alex the results that Alex’s bosses at UniCo really care about. These financial measurements are indicators of how a business is doing on the top level: net profit, ROI, and cash flow. Jonah then explains that the best internal metrics that Alex can control in the turnaround—i.e. to make factory floor decisions that will ultimately inform those top level metrics—are throughput, inventory, and operational expense. Jonah reminds Alex that “‘the goal is not to improve one measurement in isolation. The goal is to reduce operational expense and reduce inventory while simultaneously increasing throughput.’”
Alex has trouble visualizing how Jonah’s ideas will work on his factory floor until he takes his son’s Boy Scout troop on a long hike. He has a hard time keeping the boys together because some are faster than others. He begins to see the variations or deviations in real time. One of the really slow boys is Herbie, and Alex realizes that Herbie was being slowed up by carrying too much in his backpack. Alex removes and redistributes the heavy items, Herbie catches up, and the boys make great time. Here is where Goldratt and Cox introduce one of the most popular takeaways from The Goal: the Theory of Constraints. TOC is a metaphor for looking at a process—be it an assembly line or any kind of repetitive process—as a living entity and finding the bottleneck that is preventing its maximum output. By studying the actual flow of the parts through the factory and looking for and dealing with “Herbies” immediately, the plant is able to show the corporate headquarters success. Ultimately, Alex is promoted and the conglomerate incorporates the TOC into the other divisions.
“Why can’t we consistently get a quality product out the door on time at the cost that can beat the competition?”
In the past twenty-plus years, The Goal has sold over three million copies, been translated into twenty-one languages, been taught in over two hundred colleges and universities, and was made into a movie. Goldratt, an Israeli physicist, is, of course, present in the character of Jonah and advocates that in teaching there should be more question marks and fewer exclamation points. Jonah embodies this Socratic approach, and through Jonah’s questions, we are afforded the chance to learn along with Alex. The Goal does, however, provide plenty of answers relating to viewing a process as a whole and the need to continuously improve that process. JC
The Goal: A Process of Ongoing Improvement, North River Press, Paperback Third Revised Edition 2004, ISBN 9780884271789
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