Book review
Goal: A Process of Ongoing Improvement. Eliyahu M. Goldratt and Jeff Cox
Great Barrington: North River Press, 2004, 3-rd edition, 389 pages.
The literature of modernity presents new way of thinking and genres. The importance of specific knowledge within the fundamental sphere of business management is crucial. That is why a kind of prose such as production novel occurs. The production novel is a literary work where all the action is described on the background of some of the production process; all the characters in one way or another are involved in it. The solution of production problems creates some moral conflicts that characters should solve. Thus the reader is introduced in the course of the production process; he seems to be involved not only in human but also in business, working relationships among characters.
In his well-known book « The Goal: A Process of Ongoing Improvement » the author tells us in simple way about the theory of constraints. Theory of constraints (TOC) is a popular management methodology that was developed in 1980-th by Goldratt that is based on the finding and management a key limitation of the system, which determines the success and efficiency of the whole system. That is a production novel in his pure origin. The overall storyline of the novel is relatively simple. The Director of the production company within a large Corporation gets a "black mark" - a warning of the closure of the plant, unless within the next three months the company demonstrates significant improvements increasing its profits. He decides struggle with many problems such as constant disruption in the production process and production drills, a permanent disruption of the timing of orders, stable increase in stocks of raw materials, components and finished products, the lack of reliable data about the real situation, etc.
That is a list of problems that are rather typical for traditional industrial enterprises. Nevertheless the main question of this book is how to identify the company objectives in order to overcome the problems. The entire novel is devoted to the description of the search of the progress of the battle, which unfolds the backdrop of tense relations in the family of the main hero. The author defines the main objective of the enterprise. He describes ways of increasing productive activity introducing new ways of evaluation. The book includes thorough analysis of increasing the productivity of the enterprise. The following issues such as the accumulation of negative fluctuations influence the supply chain, the nature of "bottlenecks" of the system, the role of the human factor in effecting change. The author provides his readers with detailed strategy of achieving sustainable results, not temporary improvements. The "universal" algorithm of the thinking process and building a program of action that a manager can apply is also defined.
The reader of this book is engaged to the deliberate search for answers to these and other important for manager’s questions. He even takes part in "business game" modeling the production process. Although the novel focuses on manufacturing topics, at the end of the book Goldratt expands the boundaries of the studied problem field. He presents new ways of improving the production and limiting the company's stoppage of production. He analysis hat happens when manufacturing goes into a sphere where limitations have no physical nature and take the form of misguided policies. He specifies how to achieve necessary changes in psychology and behavior. Ability to answer three simple questions: "what is to be change?", "what is the reason for change?" and "how to change it?" – is considered by the hero of Goldratt to be crucial for company business leader.
In essence, the most fundamental abilities that should be possessed by any manager should be obligatory found. That issue should be obligatory analyzed. It is fair to say that everyone would agree that a major obstacle to successful implementation is resistance to change. It is important to be able to change the dynamics of interaction between people professing different views and have different levels of understanding. Goldratt identifies five layers of resistance to changes that are proposed to be removed. The first layer of resistance is when the objections that have one thing in common are out of the hands of managers. Vendors do not always keep their promises, clients at the last minute tend to change their minds, insufficiently trained workers have too much responsibilities, corporate leadership puts pressure on workers etc.
The second layer of resistance is characterized by no doubt that the proposed solution can provide the desired result. The third layer of resistance represents the assertion that the proposed solution will lead to negative consequences. The fourth layer of resistance occurs when objection prevents implementation. Particular attention should be given to the character of the main hero in our review as he represents the set of personalities of different managers with their specific needs and purposes to be achieved. The conditions, in which the hero has to act, can be characterized by the definition of "fiction". First of all, the plant has no problem with demand. On the contrary, it is precipitated by customers who for months failed to produce any detail. Over six hundred pages there is no mention about the competitors.
The volume of sales is necessary to maximize;
The bottleneck is the machine, in front of which lies the biggest pile of blanks.
After understanding these truths and leaving his wife the hero begins to optimize the business structure. The new approach applied by him results in the book published of 2 million copies. The goal" is the first work of Goldratt. In search of solving problems and promoting its ideas, Goldratt wrote several books, and created the Institute. The main idea is to apply scientific concepts to the operational functioning of the company in reality. Some ideas were really innovative and have been never stated before. The author criticizes the idea of "balanced production", arguing that it is theoretically unattainable. He declares that the excess production capacity is required, and even swings at the Holy system of accounting and management accounting apply that strategy.
On the other hand, some features of many quite well-known ideas such as the concept of lean production, the theory of quality management, the idea that stocks can be managed can be found. According to the author, after the book was published he received plenty of letters from the Directors of American companies; the situation was exactly the same as was described in the book. They were assured that after the implementation of the methods described in the book, even the schedule of output of the enterprise crisis coincided with the story chronology. The practical meaning of the book is great."The goal" has helped thousands of American Directors to take another look at the production. This victory of thought is certainly a matter of respect. Some critics say that it is just a triumph of Japanese management practices. The basic idea of TOC reflected in the book.
1) The main goal of the company is to make money, increase speed of generation of the income, reducing coherent capital and operating costs. Other activities, not specifically for this purpose will not give a positive effect.
2) Described examples of "drum-buffer-rope" (DBR)
3) The algorithm of the process of improving the efficiency:
Step 1. Identify the bottleneck links in the system.
Step 2. To decide how to use the narrow link.
Step 3. To coordinate all other actions with that decision.
Step 4. To increase the capacity of the narrow link.
Step 5. If at the previous stage bottleneck was eliminated, then proceed to step
At the same time the book mainly focuses on the analysis of the well-known essentials and for the better understanding of this book by reader, he should have additional knowledge in the sphere of economy, management and production marketing. The book includes some standards to be followed by managers in their everyday practice. Also specific attention is given to the right formulation of the company goals. Without this formulation it is impossible to define the strategy and therefore final results are hard to forecast. The author also mentions that some basic truths should be evaluated on the basis of specific criteria.
The major advantage of the book is as following. The author explains his ideas by providing the reader with simple examples. The book is really easy to understand. The author appeals primarily to using logic as the main tool of predicting the consequences of any actions within the system. He proposes to test the hypothesis, at first speculative, and then to put it into practice. Also encouraged is always to assess today's situation and draw a graph from it in the future. It gives great values for professional readers.
Conclusion
As the result of our review we defined the main characteristics of the analyzed book focusing on its theoretical and practical value. We studied the main purposes and ideas of the book by the way of focusing on plot and overall perception of readers. We are able to conclude that this book is useful for reading by everyone who reads it especially for people whose activities are somehow related to the business management.
Lessons studied and personal attitude
I think that this book may be estimated as great source of information for managers. The reading was interesting for me; I derived practical knowledge and skills that can be applied to the analysis of the company performance from this book. To my point of view this book is applicable on practice especially by companies operating in pharmaceutical industry such as Medicom. The following decisions were taken by this company on the basis of theoretical ideas presented in the book.. Problems existed previously to new approach implementation:
The long development cycle of new products;
The duration of working out and preparation of production in 1, 5 times is more than the average in the industry.
Results of the strategy implementation:
New developments on the market in 2 times faster;
The level of deliveries in the period rose to 90%.
Competition for resources is resolved through the process of identifying those time intervals during which the plan requires more resources than are actually available, and the creation of resource dependencies between tasks that require the same resource. This prevents the implanting of the plan that is obviously unrealistic. We are to omit some details due to the format of the paper that is why we are to mention the results of the strategy implementation described in the book by the company without focusing on particular actions and stages of implementation. As a result, in a medical facility noticed the following positive changes:
1) The overall level of patient satisfaction has improved, which was evident through the survey results and through the increased re-entries on techniques.
2) The number of primary appointments increased by 30%. There is an assumption that the main reason is the separation of functions of the call center because of the additional marketing investments in the period, which is described, is not implemented.
The book has a lot of positive features, but to my mind it is better to read it with previous background related to the topic. Due to slight specific description of production, for a person without such a background the content of the book may seem rather complicated than simple. I think that these ideas are aimed at achieving great outcomes not only by the company but also in our daily life. I used the suggestions described in the book to increase efficiency of my studying and working processes and results were really great. I am really glad that I have read this book and recommend it to all friends.
References
Cox, E. M. G. a. J., 2004. The goal: a process of ongoing improvement. 3-rd revised edition ed. s.l.:North River Press.
Lynch, D., 2009. Theory of constraints in medical care. London: LNH.
