The Goal: A Process of Ongoing Improvement

Citation

Narasimhan, K. (2005), "The Goal: A Process of Ongoing Improvement", Measuring Business Excellence, Vol. 9 No. 1, pp. 76-76. https://doi.org/10.1108/13683040510588882

Eliyahu M. Goldratt wrote the first edition in 1984. I had read the earlier edition without much impact as a budding academic. Now, reading this book as an experienced academic, I have found this book extremely valuable to impart certain basic principles of systems thinking and the application of theory of constraints to my students. This book is a must for managers to understand the theory of management.

The book comprises 40 short chapters (untitled) and a 46‐pages interview by David Whitford, Editor at Large, Fortune Small Business, with Eli Goldratt and others (from both manufacturing and service sectors) who have used the ideas in The Goal. It is based on dozens of real cases where people implemented the ideas that Goldratt had put forward in his courses since 1979 (personal communication from Goldratt and Inc.). It is written in the form of a dialogue between Alex Rogo (a plant manager whose plant is in danger of being closed) and Jonah (Alex's former physics tutor who has turned a management guru). Jonah only propounds principles of management and raises questions rather than give answers. His belief is expressed succinctly in the following statement “Alex, if I simply told you what to do, ultimately you would fail. You have to gain an understanding for yourself in order to make the rules work.” Eventually, the manager, with the help of his staff and the guidance from the professor, turns the plant round to such an extent that he is promoted as a divisional manager.

Those that are interested in the principles rather than the story will have to scan using fast‐reading techniques, as the first principle of management is suggested in the fourth chapter. The principle is that productivity is not the same as production of goods but meeting the goal, which for a manufacturing organization is to “make money” through defining precisely and managing effectively three interdependent measures: “throughput”, “inventory” and “operational expense”. Throughput is defined as the rate at which money is generated by the productive system through sales; inventory is the money tied up in purchasing things the organization intends to sell; and the operational expense is the money spent in converting inventory into through put.

Other key concepts explained are the chain of dependent events, which need to be categorized into critical or bottleneck events and non‐critical events, and statistical variation inherent in any process. Also explained is the key difference between “activating” a resource and “utilizing” it. Jonah emphasizes that “activating a non‐bottleneck to its maximum is an act of maximum stupidity” (p. 211). One may have to sacrifice efficiency of a department or process to maximize the overall organizational gain.

The disadvantages of relying on cost accounting yardsticks such as local efficiencies, economic batch sizes, product‐cost and inventory evaluations are clearly explained. It is emphasized that the two essential things necessary for an organization to succeed are a demand for the product or services of the organization and a determination to effect change, when required.

Probably, what makes this book gripping to a lay reader is the manager's personal life: his marriage seems to be on the rocks as he is so engrossed with the problems at work that his wife feels neglected and attempts trial separation.