I am not a business book guy.
There are, however, several books that have been instrumental in shaping my thinking about business. The Goal: A Process of Ongoing Improvement, by Eliyahu Goldratt, an Israeli physicist turned operations guru, is near the very top of that list. I first read the book in college and thought "that was not the worst thing I was ever forced to read"...extremely high praise from a student with regards to assigned reading. Twelve years later, struggling with roadblocks of my own, I recalled the book, downloaded it from Amazon, and have since incorporated it into almost every single operational design decision I make.
The Goal tells the story of Alex Rogo, an affable, thirty-something plant manager that cannot seem to win for losing. An MBA graduate dedicated to his career and his employer, Alex has walked the fine line that so many of us do between career success and, say, domestic harmony. His promotion to plant manager should be a dream job. The harder he works, though, the worse he finds the plant's position and his home life.
The action opens with a chaotic scene about getting a late order shipped at the expense of all other business of the plant. The reader immediately senses that this is a recurring all-hands-on-deck scenario that creates near daily havoc; key employees and managers racing from one metaphorical fire to the next. Ironically, this constant high-speed activity stalls the productivity of the plant, leaving its key employees feeling stuck and hopeless. The order ships today, but only to fight the same battle tomorrow. Quality is poor. Morale is bad. The plant lacks momentum.
The dramatic arc is launched into high gear when the division's vice-president gives Alex and his team 90 days to turn the plant around or face closure. Perhaps it is not Robinson Crusoe or The Martian, but Alex Rogo is definitely facing a seemingly impossible set of circumstances. As readers who have all been in this position, we hope for him to succeed but quietly think the smart money is to bet against him.
So, Alex does something unexpected. He skips out of a high-profile meeting, scores a pizza and six-pack of beer, and finds a quiet place on a far off hill overlooking the plant. He stops to think. While pondering his relatively few options, he recalls a chance meeting in an airport with his old college professor, Jonas. While Alex initially came away from their brief passing discussion thinking Jonas didn't totally understand business metrics and performance...maybe the old man was past his prime...the professor's Socratic style of questioning starts to connect the dots in Alex's mind on the hillside. Using Jonas' methodology for solving problems, Alex and his core team set out to win the battle, save the day, and get the girl.
Like any great thought exercise, Goldratt weaves very complex issues and ideas into relatively straight-forward maxims. There are two that stand out due to their simplicity and near universal application:
Without first understanding our goal or purpose, we cannot possibly be productive.
This is so simple as to be thought mere common sense, a charge Goldratt himself describes in the introduction as "the highest praise we can give to chain of logical conclusions." Goldratt highlights the primary importance of understanding the goal because, without the universal finish line, all measurements are bunk. For example, in the first encounter with Jonas at an airport, Alex is touting the reported efficiencies of his plant's robotic equipment; 36% to be exact. In three simple questions, Jonas decimates any illusion that the robots have increased efficiency. He goes on to point out that Alex and his company cannot begin to know if they are productive because they do not even know the goal.
You read that right. Cocksure Jonas-san does not say Alex's goal or the plant's goal or the company's goal. The singular goal for every company is the same, as it were.
All systems or processes have limiting factors that must be embraced; identified, prioritized, and exploited (Theory of Constraints or "TOC")
With his theory of constraints, Goldratt leads the reader to this simple, but non-obvious, conclusion.
While on a camping trip with his son, Alex dutifully lines up the boys to hike two miles through the woods to their campsite. He becomes frustrated they are moving so slowly that they may not make it to their destination by nightfall. In observing the boys, he notices that large gaps form in the middle of the pack where the slowest kid, Herbie, is huffing away. Alex observes that the faster kids get too far ahead and are forced to stop completely while the faster kids behind Herbie are forced to go slower than their maximum ability. The constraint...the bottleneck...in this hike is Herbie because his speed is equal to or less than the demands put on him by the rest of the line. Experimentally, Alex lightens Herbie's pack by redistributing some of the weight to the other boys and puts Herbie at the front of the line, the entirety of which is then ordered from slowest to fastest. Lo and behold, the line moves at breakneck speed because the constraint has been eased and the limitations placed on the "non-bottleneck" kids have balanced their output with that of the entire system. Put simply, no more hurry up and wait.
Together, these two concepts can have magically simple implications on our own work. Who is the Herbie in your operation?
- Is it, like Alex, a piece of equipment or software that is necessary to the production of your widgets?
- Is it the government agency that needs to approve your permits before work starts or continues?
- Is it the managing partner that is behind on reviewing audit workpapers or signing the many tax returns prepared by the new, Red-Bull-fueled preparation staff? (GASP!)
Once identified, an organization can:
- increase capacity at the bottleneck (e.g. hire/train/authorize more tax return reviewers and signers)
- reduce load on the bottleneck (e.g. reassign administrative tasks like approving expense reports, installing software updates, or preparing the client work schedules)
- modify processes to reduce load on the bottleneck (e.g. segregate or schedule work that requires permits to optimize the business hours of the government agency)
- reduce the amount of output leading up to the bottleneck (e.g. less Red Bull)
Using a familiar dramatic plot and story line to demonstrate Goldratt's theories is genius in that it allows us to superimpose our own individual situations on the framework and create our own light at the end of the tunnel. While the storytelling mastery may not rival Kurt Vonnegut, David McCullough, John Grisham, or even JK Rowling, it is likely the most enjoyably read business-slash-textbook ever written.