This week I was a participant at the International Software and Measurement (ISMA) Conference, put on by the International Function Point User Group (IFPUG). During the conference, I struck up a conversation with Anteneh Berhane who was sitting behind me during the general session. Our conversation quickly turned to books and unbidden, Anteneh volunteered that The Goal was the type of book that had a major impact on his life. He said that The Goal provided an implementable and measurable framework to think about all types of work (personal and professional). Nearly everyone that I have talked has been impacted by the ideas in the book such small-batch sizes and analytically looking at the whole process that we see in today’s installment of the re-read.

Part 1       Part 2       Part 3      Part 4      Part 5      Part 6      Part 7      Part 8    Part 9   Part 10

Chapter 27

Alex presents the plant’s monthly reports to Bill Peach (Alex’s manager) and Alex’s peers. Even with the troubles with the non-bottleneck parts (Re-Read Part 10), the turnaround has been spectacular. Peach opens the meeting by telling everyone that it is because of Alex’s plant that the division was profitable in the last month. However Peach has no confidence that the turnaround will continue. Peach tells Alex’s that unless the plant delivers an additional 15% increase in profit, Peach will close the plant. Alex commits to the increase with a lot of internal trepidation and no idea how he will deliver the increase.

On the way home Alex visits Julie, his estranged wife. Alex proposes identifying the goal of their marriage and then working backwards to identify what would help them achieve that goal. Alex is applying the many of the ideas from the plant to his personal life. In my conversations between presentations during the ISMA Conference, Anteneh said that understanding the goal of any endeavor is the critical first step toward measuring whether you are attaining that goal (ISMA is a measurement conference). Measuring progress provides feedback to keep you on track.

Chapter 28

Johan calls Alex. Johan will be out of touch for several weeks and he wants to make sure things are going well at the plant. Alex fills him in on the progress and the 15% demand being levied on the plant. Jonah points out since the plant is the only profitable component in the division, Peach probably will not follow through on the threat to close the plant. Side note: Most of us that have managed projects or any other group have been handed stretch goals. Most of these demands are presented in terms of both a carrot (incentives) and stick (consequences). Peach’s words have that sort of ring to them, however Alex has committed and asks Johan if there are any next steps.

Alex meets his management team the next day and relates the first of the next steps. Johan has suggested that the plant cut batch size in half for all non-bottleneck steps. Alex’s management team list the steps and the time for each step needed for a batch.

Batch Time =
set-up time +
processing time +
wait time before processing +
wait time before being assembled into the next step.

The two categories that include wait time are generally the longest in duration, and cutting batch size directly cuts the overall batch time. The only wild card in the equation is the amount of set of time which must occur before each batch. Smaller batches generally decrease wait time more than the additional set up time and will increase the ability to change direction if business needs change.

The concept of shortening batch size has been directly adopted by the Agile community. Time boxes enforce small batch sizes. Teams practicing Scrum will recognize sprint planning as a set-up step required before processing, which includes design, coding and testing. The smaller the batch size the faster value is delivered and the faster feedback is generated.

Alex asks his team whether they feel that the process will allow them to deliver orders in four weeks or less. When they agree he asks for a public commitment. Scrum also uses the idea of public commitment to generate internal team support for an overall goal. If everyone publicly commits it is harder to throw in the towel and it creates an atmosphere where the entire team helps each other out when a problem arises (in Agile we call this swarming).

Johan also suggested that Alex ask the company’s sales department to promote the company’s new ability to deliver quickly to their clients. While not stated, the politics of this idea is wonderful. If Alex and his team can pull delivery change off they will be virtually immune to Bill Peach’s irrational demands. However, when Alex pitches the plant’s new ability to Jons, the sales/marketing manager, he experiences pushback. Jons does not believe the turn around because less than a year before the best the plant could promise was four months (and they were generally late) and now Alex was promising a four week turn around on orders. Alex and Jons end up striking a compromise, sales will promote a six week turnaround on orders. If the plant can deliver in less, Jons will buy Alex a pair of shoes and if the plant misses the 6-week window, Alex will have to buy Jons a pair of shoes.

Summary of The Goal so far:
(Next week I am going to create a separate summary page)

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, which in the long run an organization must make progress towards their ultimate goal, or they won’t exist.

Chapters 7 through 9 show Alex’s commitment to change, seeks more precise advice from Johan, brings his closest reports into the discussion and begins a dialog with his wife (remember this is a novel). In this section of the book the concept “that you get what you measure” is addressed. In this section of the book, we see measures of efficiency being used at the level of part production, but not at the level of whole orders or even sales. We discover the corollary to the adage ‘you get what you measure’ is that if you measure the wrong thing …you get the wrong thing. We begin to see Alex’s urgency and commitment to make a change.

Chapters 10 through 12 mark a turning point in the book. Alex has embraced a more systems view of the plant and that the measures that have been used to date are more focused on optimizing parts of the process to the detriment to overall goal of the plant.  What has not fallen into place is how to take that new knowledge and change how the plant works. The introduction of the concepts of dependent events and statistical variation begin the shift the conceptual understanding of what measure towards how the management team can actually use that information.

Chapters 13 through 16 drive home the point that dependent events and statistical variation impact the performance of the overall system. In order for the overall process to be more effective you have to understand the capability and capacity of each step and then take a systems view. These chapters establish the concepts of bottlenecks and constraints without directly naming them and that focusing on local optimums causes more trouble than benefit.

Chapters 17 through 18 introduces the concept of bottlenecked resources. The affect of the combination dependent events and statistical variability through bottlenecked resources makes delivery unpredictable and substantially more costly. The variability in flow through the process exposes bottlenecks that limit our ability to catch up, making projects and products late or worse generating technical debt when corners are cut in order to make the date or budget.

Chapters 19 through 20 begins with Johan coaching Alex’s team to help them to identify a pallet of possible solutions. They discover that every time the capacity of a bottleneck is increased more product can be shipped.  Changing the capacity of a bottleneck includes reducing down time and the amount of waste the process generates. The impact of a bottleneck is not the cost of individual part, but the cost of the whole product that cannot be shipped. Instead of waiting to make all of the changes Alex and his team implement changes incrementally rather than waiting until they can deliver all of the changes.

Chapters 21 through 22 are a short primer on change management. Just telling people to do something different does not generate support. Significant change requires transparency, communication and involvement. One of Deming’s 14 Principles is constancy of purpose. Alex and his team engage the workforce though a wide range of communication tools and while staying focused on implementing the changes needed to stay in business.

Chapters 23 through 24 introduce the idea of involving the people doing the work in defining the solutions to work problems and finding opportunities. In Agile we use retrospectives to involve and capture the team’s ideas on process and personnel improvements. We also find that fixing one problem without an overall understanding of the whole system can cause problems to pop up elsewhere.

Chapters 25 and 26 introduce several concepts. The first concept is that if non-bottleneck steps are run at full capacity, they create inventory and waste. At full capacity their output outstrips the overall process’ ability to create a final product. Secondly, keeping people and resources 100% busy does not always move you closer to the goal of delivering value to the end customer. Simply put: don’t do work that does not move you closer to the goal of the organization. The combination of these two concepts suggests that products (parts or computer programs) should only be worked on and completed until they are needed in the next step in the process (Kanban). A side effect to these revelations is that sometimes people and processes will not be 100% utilized.

Note: If you don’t have a copy of the book, buy one.  If you use the link below it will support the Software Process and Measurement blog and podcast. Dead Tree Version or Kindle Version