Saturday, November 04, 2006

The Goal – Eliyahu M. Goldratt and Jeff Cox (Book Review 009)

ISBN: 8185984131

Tagline: A process of ongoing improvement.

The Goal was not on my reading list. However, it was lying around in the house and I decided to go ahead with it. The size of this book was very uninviting and from all the text on the covers and in the intro pages, I thought that I’d be better off reading this book during or after my MBA even though it seemed like a best-seller. However, once I started to read I realized that this whole "Theory of constraints" thing is actually presented in the form of a story which is very easy to grasp.

About the Author

Dr. Eliyahu M. Goldratt is an internationally recognized leader in the development of new business management concepts and systems, and acts as an educator to many of the world’s corporations. He is the originator of the Theory of Constraints (TOC) and his ideas have revolutionized the way companies work.

In addition to his pioneering work in manufacturing management, he holds patents in other areas, ranging from medical devices to temperature sensors. Other books from Goldratt, on this topic, are It's Not Luck, Critical Chain and Necessary But Not Sufficient.

The Goal

Plainly speaking The Goal is a book on Theory of Constraints. However along with the message, another important side to this book is the method the author has adopted to deliver the message. The Goal is actually the story (probably fictitious) of a plant manager by name Alex Rogo who manages a plant that is unable to ship any of its orders on time and is also loosing money for its division. In addition, Alex has a messed-up personal life due to frequent fights with his wife.

Alex is given a deadline to make the plant profitable (failing which it will be closed). He desperately wants to save his plant and in the process he meets his university professor and acquaintance (from college days), Jonah (which I think is characterizing Goldratt because both have a degree in Physics from Israel). Alex’s interactions with Jonah show him the right path. Jonah is a kind of teacher who encourages his students to discover answers on their own and he does that same with Alex (regarding the problem with his plant). Through Alex’s process of discovery the author explains the theory of constraints is a very simple manner. I was particularly impressed by the use of simple yet powerful example of boys marching in a line. The author through Alex’s discussions with his co-workers also highlights the short comings of cost-accounting where inventory is viewed as an asset on the balance sheet and the blind emphasis of management to cut costs wherever possible (which many times leads to death of sick business units that could have been turned around).

Conclusion

Services have become the fad of today and it is amazing to think about the application of TOC to the Services scenario (though I need to grow-up a little more to think about it in detail). With the advent of Globalization 3.0 (in terms of Thomas Friedman) and the ability of a business to break up a process, digitize it and outsource it to various parts of the world where they can be done (for cheapest price and best quality) simultaneously and delivered back in one piece to the HQ control, the relevance of this theory is questionable. However, I am sure that it still has a lot of implications on supply chains where constraints or bottlenecks may exist (again I need to learn a lot more to think in detail).

In one of the management fests I had participated in during my college days, I had taken part in a production game where there was a production line with different work centers. The performance of the participants was measured in terms of their ability to meet customer demands and have least inventories and turn-around times at the end of the game. Had I read this book back then, before that event, I am sure I would have done much better than the third spot out of fifth that I had got in that event.

2 Comments:

badfan said...

ya sure! steal all my books and put up their reviews online!! good things is atleast you read one of them. congrats! :-p

Vivek Sanghi said...

hehehe. Thanks for taking time off to read my blog. I returned the book to where I picked it from :D

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