The Goal: by Eliyahu Goldratt

In 1999 I was recommended the same book by 4 different clients in the same week.  The name of that book was “The Goal” by Eliyahu Goldratt.  Still to this day, “The Goal” remains one of the most influential books in my life.  I’m excited to finally have a way to share it with you. Below is an executive summary.

Executive Summary

The problem of production has challenged human beings since they first evolved.  Even hunters and gatherers had to do elementary planning to evaluate local resources and ration their prizes to assure they met the basic needs of the tribe.  Moreover, gathering these basic commodities from nature — wild game, fruits, nuts, roots, stems, berries, and so forth — constituted only the first step of the tribal production process.  A primitive division of labor within the tribe created the equivalent of an assembly line on the micro scale with hunters, gatherers, preparers, tribal elders, caretakers, medicinal specialists, etc.

Over the millennia, this division of labor continued to specialize and to multiply the range of possible productive occupations.  This trend exploded with the advent of new individual freedoms after the American Revolution.  The resulting Industrial Revolution greatly swelled the diversity, complexity, and specialization of knowledge needed in the rapidly modernizing society.  It resulted in the modern fields of engineering and especially industrial engineering, the study of systems that keep industries humming.

Because of their long history of storytelling, humans still show a strong preference for learning through dramatic interpretation.  Young people learn moral lessons like the just rewards of industry through stories such as “The Little Red Hen.”  Such fictional tales of virtue tend not to make their way so much to older generations.  A more recent exception comes in The Goal by Eliyahu Goldratt, a story which illustrates his “Theory of Constraints” dramatically.

Goldratt seeks to show, in the form of a novel, how commonly held yet faulty assumptions about ideal production plant behavior, such as using all processing resources to capacity, neglect integrated thinking at a systems level and lead to net profits far short of potential.  Goldratt tells the reader, in effect: “Check your premises.”  By the end of the tale, protagonists and readers alike have profitably done just that.

Goldratt cleverly tells the story from a first person point of view of its main protagonist, Alex Rogo.  The novel opens with Alex struggling to keep his manufacturing plant afloat.  As the plant manager, Alex has done his best to apply his degree as an industrial engineer to solve mounting production problems at his plant.  But he has had to face the hard truth that his best simply will not do.  The plant has fallen into a perpetual “fire fighter” mode in which jobs get “expedited” based on whichever higher manager screams the most loudly on that particular day.  Preposterously long work shifts resulting from this modus operandi have placed stresses on his marriage to his wife, Julie, as well as his relationship with their two young children.

Alex encounters Jonah, an old friend and science teacher who challenges Alex on a number of his basic assumptions with a Socratic method of inquiry.  “Then, tell me, what is the goal of your manufacturing organization?” he asks Alex after a brief series of opening questions.  Although seemingly innocuous, the answer to the question of “the goal” actually opens a floodgate of other questions.  These in turn cascade into answers that help Alex and his team of managers to transform the plant from the biggest loser in the company to the most profitable one.

For any plant, of course, “the goal” proves actually quite simple — to make money.  But Alex takes pages and pages of thought and dialogue in the early part of the novel to answer this question, first refuting other common answers such as “to produce products as efficiently as we can” and other misleading slogans before arriving at the final answer to his own satisfaction.  His ensuing exchanges with Jonah over the remainder of the novel, combined with many other plot elements, help Alex to work backwards from this goal to the intermediate tasks the plant performs to achieve it.  This leads to open challenges and confrontations with management up and down the chain of command in the company as Alex and his new converts strive to drive dogma from the corporate culture and replace it with a well-reasoned production philosophy — the “Theory of Constraints.”

The “Theory of Constraints” itself seems obvious by the end of the novel.  It simply shows, for example, that the throughput of a plant will remain constrained by the narrowest “bottleneck” in the production line, with that line including the market demand itself.  Hence, attempts to use other resources up and down the line from that bottleneck to full capacity result in backlogs before the bottleneck and idleness after it.  Other problems, such as excess inventory and untimely retooling, also result from the “full capacity” fallacy.  Moreover, as a plant reorganizes its resources to make the plant more effective, thus increasing its overall capacity, it can experience the phenomenon of moving bottlenecks.  Alex Rogo and his team of experts deal with just this occurrence as their plant improves and they later document this as a key component of their process improvement strategy.

Goldratt keeps the story interesting with side plots to illustrate his theory, such as a Boy Scout hike that stretches or shrinks depending upon the sequence and ability of the hiking troops.  He also shows that “constraints” apply beyond manufacturing plants to human relations as Alex struggles to hold his family together under the “constraints” of 16 hour work shifts.  By the end of the novel, Goldratt resolves the conflicts among the characters satisfactorily and shows the happy reality of practicing his “Theory of Constraints.”