Summary of The Goal so far:

Chapters 1 through 3 actively present the reader with a burning platform. The plant and division are failing. Alex Rogo has actively pursued increased efficiency and automation to generate cost reductions, however performance is falling even further behind and fear has become central feature in the corporate culture.

Chapters 4 through 6 shift the focus from steps in the process to the process as a whole. Chapters 4 – 6 move us down the path of identifying the ultimate goal of the organization (in this book). The goal is making money and embracing the big picture of systems thinking. In this section, the authors point out that we are often caught up with pursuing interim goals, such as quality, efficiency or even employment, to the exclusion of the of the ultimate goal. We are reminded by the burning platform identified in the first few pages of the book, the impending closure of the plant and perhaps the division, that in the long run an organization must make progress towards their ultimate goal, or they won’t exist.

In the next 3 chapters Alex commits to change, seeks more precise advice from Johan, brings others into the discussion and perhaps destroys his marriage (it is a business novel after all).

Chapter 7

We are presented with a short inner monologue in which Alex decides that he won’t call a headhunter to find a new job. He wants to find a solution, and to not leave the town where his mother lives and he grew up. Running away is not an option in his mind. This decision marks his commitment to change. In a Scrum team, this commitment is very similar to the commitment the team makes to goals of a sprint. The impact of commitment in a larger group can be seen in the SAFe release planning event (PI) which involves 50 to 125 people. In the release-planning event, everyone involved in the release reviews and commits to the plan. Commitment locks in the sense of urgency needed to drive change.

Chapter 8

Alex finds a means to reconnect with Johan by searching through his school papers. When Alex connects with Johan, Johan immediately asks him whether he has come up with the answer for the question, “What is the real goal of a manufacturing organization?” The goal is to make money. Having the answer to that question is the key that unlocks further advice. Given the goal, Alex explains that the organization’s current measures are not telling him the whole story, and therefore the plant and division are failing. The discussion of the problem illustrates that there are many ways to express any goal, which will have an impact on how it is measured. Expressing a goal holistically lead to measuring and understanding the big picture.

Without directly identifying it as such, having a holistic vision is a reference to systems thinking. Systems thinking is an approach to problem solving that emphasizes the whole process, including the environment within which system operates.  The critical aspect of systems thinking to understand at this point of The Goal is that in a system the overall impact of a change to any individual component may or may not affect the performance of  the system.

By the end of the chapter, Alex and Johan settle on 3 metrics that, taken together, are equivalent to the goal of making money. They are:

Throughput – the rate at which the system generates money through sales.

Inventory – all of the money the system has invested in purchasing things it intends to sell.

Operational Expense – all the money the system spends in order to turn inventory into throughput.

The 3 metrics provide a broad view of the flow of product and money through the plants, and would be very useful in any IT organization. They all focus on getting product into the hands of paying customers. Many in software development would argue that the work they do isn’t related to a product. As have noted in earlier blog entries, I approach this argument with the belief that all applications are products and someone is paying for what you do!

Chapter 9

Alex widens the circle of people “in the know” about his revelations. He takes his senior staff through his revelations. He uses his the realization that the robots used to automate production have not reduced costs (because no workers have been displaced), have increased inventory (the parts being made are not being used fast enough) and are causing other orders to be late (maintenance requirements and resources) to make the point. While using the robots has optimized part of the system, the overall system has not improved and perhaps is doing worse than before. In lean terms, optimizing part of the system is known as a generating a local optimum. In this case, that optimization does not seem to benefit the whole system. Chapter 9 foreshadows the ideas of how constraints and bottlenecks affect the overall system and the theory of constraints. However, the robots have become celebrities. The company president is coming to the plant to be filmed with the robotic machinery which is a reflection of the fact that no one is connecting the dots between local optimums and performance of the system.

You get what you measure. In this case, we see measures of efficiency being used at the level of part production, but not at the level of whole orders or even sales. The corollary to ‘you get what you measure’ is that if you measure the wrong thing …you get the wrong thing. Johan has helped to open Alex’s eyes now that he has the urgency and commitment to make a change.

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