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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

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As I began to summarize my Re-Read notes from Chapters 25 and 26, I was struck by a conversion I participated in at the QAI Quest Conference in Atlanta this week (I spoke on scaling Agile testing using the TMMi, but that is a topic for another column). A gentleman at my lunch table expressed his frustration because his testing team could not keep up with all of the work generated by the development team his group served. They read that for every ten developers there should be two testers, and his company had been struggling with balancing the flow of work between testing and development for a longtime. It was not working. I asked what happened when they were being asked to do more work that they had capacity to deliver. The answer was that it sometimes depended on who was yelling at them. The tactics they used included expediting work, letting some work sit around until it became critical or just cutting the amount of planned testing. He capped the conversation by evoking the old adage; “the squeaky wheel gets the grease.” My lunch companion had reverted to expediting work through a bottleneck much in the same way suggested by Alex (and rejected by Johan) in today’s Re-Read Saturday installment.

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

Chapter 25. In Chapter 24 Alex and his team suddenly found that 30 parts of their product have become constraints. As Chapter 25 beings, Johan arrives. After being briefed on the problem and the data, Johan suggests that Alex and his leadership team go back out into the plant to SEE what is really happening. The milling machine has become a problem area. Red tag items, priority items that to need ready for NCX-10 and heat treat bottlenecks, are being built to the exclusion of green tag (non-priority parts). Two things have occurred, excess red tag inventory has built up and now overall products can’t be assembled because green tag parts are missing. Johan points out the red card/green card process and running all steps at 100% capacity have created the problem. Remember, by definition non-bottleneck steps or processes have more capacity than is needed and when the non-bottleneck process is run consistently at 100% capacity it produce more output than the overall process needs. Bottlenecks as we have noted earlier define the capacity of the overall process. When output of any step outstrips what the bottleneck excess inventory is generated.  In this case, since everyone has been told to build red card items first they have less time to create non-bottleneck parts therefore inventory is being build up for parts that are not currently needed to the exclusion of the parts needed.  A mechanism is needed to signal when parts should start to flow through process so they will arrive at assemble when they are needed.

Alex and his team discover two rules:

  1. The level of capacity utilization of a non-bottleneck step is not determined by its own potential capacity, but some other constraint. Said differently, non-bottlenecked steps should only be used to the capacity required to support the bottleneck steps and to the level customers want the output of the process.
  2. Activation of a resource (just turning a resource on or off) and utilization of a resource (making use of a resource in a way that moves the system closer to the goal) are not synonymous. Restated, work that does not support attaining the goals of the system generates excess inventory and waste.

Returning briefly to my lunch conversation at QAI Quest, my new chum noted that recently one small project had to wait so long to be tested that the business changed their mind, meaning that six months of coding had to backed out. Which is one reasons that work-in-progress increases waste even in software development.

One the great lines in Chapter 26 is, “a system of local optimums is not optimum at all.” Everyone working at full capacity rarely generates the maximum product flow through the overall process.

Side Note: At the beginning of the chapter Alex and his team had the data that indicated that a problem existed. Until they all went to the floor as a whole team and VISUALIZED the work the problem was difficult to understand. Both Agile and Kanban use visualization as a tool to develop an understanding of how raw material turn into shippable product.

Chapter 26. Alex sits at his kitchen table thinking about the solution to the new dilemma of making sure the right parts flow through the system when they are needed without building up as inventory. Parts should only be worked on when they can continuously move through the process without stopping. This means each step needs to be coordinated, and if the full capacity of a step is not needed it should not be run. This means people might not be busy at all times. Sharon and David (Alex’s children) express interest in helping solve the problem. Using the metaphor of the Boy Scout hike David and Alex participated on earlier in the book, both children try to find a solution of pace and synchronization. Sharon suggests using a drummer to provide a coordinated pace. In Agile we would call the concept of a drummer: cadence. Cadence provides a beat that Agile teams use to pace their delivery of product. David suggests tying a rope to each part flowing through the process. Parts would move at a precise rate, if any step speeds up the rope provides resistance which is a signal to slow down and if slack occurs it is a signal to speed up in orders to keep the pace. Parts arrive at the end of the system when they are needed in a coordinated fashion. In Kanban we would recognize this concept as work being pulled thought the process rather than being pushed.

When back at the plant, Ralph (the computer guy) announces he can calculate the release rate needed for the red tag parts to flow smoothly through the process.  This would mean only the parts that will needed for orders being worked on would be created. No excess inventory would be created at any step including the bottlenecks.  Johan points out that Ralph can also use the same data to calculate the release rates for needed for the green tag items. Ralph thinks it will take him a long time to get both right. Alex tells them to begin even though it won’t be perfect and that they can tune the process as they get data. Do not let analysis paralysis keep you from getting started.

The chapter ends with Donavan (OPS) and Alex recognizing that their corporate efficiency reporting (they report efficiency of steps not the whole system) aren’t going to look great.  Even though they will be completing and shipping more finished product the corporate measures have not been syncronized to the new way the plant is working. The reduction in efficiency (cost per part – see installments one and two)  is going to attract Alex’s boss, Bill Peach’s attention.

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, 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.

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

IMG_1249

Part of the reason I embarked on Re-Read Saturdays was to refresh myself on a number of books that have had significant impact on my career. Re-grounding myself was somwhat of a selfish idea; however at the same time as I refreshing myself on important concepts Re-read Saturday has provided a platform to share those ideas with a wider audience. As we begin the second half of the re-read of The Goal, I have been struck how many people have been exposed to the ideas in The Goal and how many of those ideas they have put into action, even if they can’t recite the Theory of Constraints verbatim. For example, the development and test manager that recognizing the handoff from development to test as a bottleneck and worked out a priorization scheme that maximized throughput of critical projects. Earlier entries in this re-read are:

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

Chapter 23: Alex meets with Ted Spencer, the supervisor for the heat-treat area, who is asking Alex to get the “computer guy” (Ralph) off his back. Ralph is asking Ted to keep significantly better records of when parts enter and exit the heat-treat process. Ted indicates that he does not know why Ralph wants the data. In the past few chapters we have seen the power of transparency and communication to support process changes; in this scenario the lack of transparency has generated conflict. When Alex meets with Ralph he finds that has been trying to use the process data to understand why more shipments have not been being completed, and has noticed SIGNIFICANT variability in the times that parts enter and exit the heat-treat process. Often parts that have been completed sit until someone has time to unload the furnace. This originally lead him to question the validity of the data, so he requested that Ted to generate better data. The issue turns out to be that parts are often not immediately unloaded after the heat-treat process due to timing and staffing issues. The furnace is loaded and then heats the parts for four or five hours before being ready to be unloaded. In order to maximize efficiency, people are assigned other jobs during the heating process, which causes the timing and resource contention problems. The heat-treat bottleneck is not being run at or near maximum capacity, which reduces the output of the plant. As Ralph leaves he mentions that he believes they can predict when orders ship based on the bottlenecks (this is a bit of foreshadowing; however an area of further reading you might consider is our discussion of Little’s Law). Note that the problem with the heat-treat process was identified through measurement and analysis of the data. The problem Ralph identified is a reflection of the ripple effect of other changes and that as the process is refined better information is exposed.

Alex and Rob Donavon, the production supervisor, meet (loudly) over the discovery that the heat-treat process is not being used to maximum capacity. The discussion unearths that similar timing and resource problems are happening at the NCX-10, even though the new work rules ensure that no breaks are taken during machine set-up. The problem occurs when the machine stops and before the set-up begins again. They decide to staff both bottlenecks 24×7 so there is no downtime. The problem of who to staff the NCX-10 and heat-treat with immediately exposes a new set of constraints, this time as a reflection of the overall organization’s policies on pay and hiring. Hiring, including layoff callbacks, are currently frozen, therefore Alex and his team need to rob Peter to pay Paul. (A bit of foreshadowing – the impact of change can ripple through other process steps.)   In an overall sense, the efficiency of both the heat-treat and NCX-10 steps as measured in terms of cost per unit is being reduced while the overall effectiveness of the plant is being increased by the changes being made.

One of the other steps taken as part of the new changes to staff the bottlenecks is that Alex has let the foremen in the heat-treat area know that they will be rewarded for changes that improve the output of the process. The third-shift foreman makes two process changes that have a significant impact. He has broken high priority orders down and batched parts that require the same treatment together, and has prepped the material so that it is staged to be loaded as soon as the furnace is ready. He also points out to Alex that with a little help from engineering they can modify the loading process so that parts can be wheeled in and wheeled out rather than lifted in an out by a crane. The foreman is immediately shifted to first shift to work with engineering to make the changes and document the process. In Agile frameworks like Scrum this is EXACTLY why the teams doing the work need to reflect on how they are doing the work and take steps to improve their processes.

Chapter 24 begins on an up note! The plant has been able to ship more orders with a higher sales value than ever before, while reducing the level of work-in-progress. Champagne flows! During the celebration Bill Peach (Alex’s boss) calls and delivers praise from one the clients that has noticed that his orders are getting delivered. In light of the continuing celebration Alex is driven home by a female member of staff, which leads to complications with Julie, his estranged wife, who just happens to be waiting to surprise Alex. If Alex’s marriage problems were not enough, the next workday Alex discovers that like a virus, the bottlenecks have spread. Changes to the process to focus on making the parts that flow through the bottleneck more available have caused process steps for other parts to become bottlenecks.

Alex tracks down Johan and briefs him on what they have done. Johan suggests a visit to see what has been accomplished.

The Goal is truly about the Theory of Constraints; however Johan’s role is the same as an Agile coach. Johan rarely solves the plants problems directly, but rather asks the questions that lead to a solution. The Goal provides a great side benefit of reinforcing one the central ideas of Agile coaching.

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, 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.

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

 

IMG_1249

I first read The Goal: A Process of Ongoing Improvement when I actively became involved in process improvement.  I was bit late to the party; however since my first read of this business novel, a copy has always graced my bookshelf.  The Goal uses the story of Alex Rogo, plant manager, to illustrate the theory of constraints and how the wrong measurement focus can harm an organization. The focus of the re-read is less on the story, but rather on the ideas that have shaped lean thinking. Even though set in a manufacturing plant the ideas are useful in understanding how all projects and products can be delivered more effectively.  Earlier entries in this re-read are:

Part 1                Part 2                  Part 3                      Part 4                Part 5           Part 6             Part 7

 

Chapter 21: This chapter is bookended by Alex’s martial travails. The chapter opens with Alex making a date with Julie (Alex’s wife). I remember the first time I read the book being worried about Alex’s ability to set a date and time and meet it . . . heck, his plant can’t meet dates.

When Alex’s team identifies the late orders (which was easy), they find that the majority of the late orders are processed through one or both of the bottleneck steps. Some people conceive of manufacturing sector as a set of assembly lines in which the process seldom, if ever, varies. The description of the manufacturing in The Goal is much more akin to a job shop in which the process steps vary depending on the job. This is VERY similar to much of the work done in software development, enhancement and maintenance. If you surface read The Goal you might not see the applicability to software development or other business processes because of this false impression.

Alex tasks his team to ensure that the work following through the bottlenecks is focused on the critical orders. The team sets out to implement the initial wave of changes they discussed with Johan. As with any change the unless specifically addressed those asked to change do not automatically understand why which casues resistance. The Goal uses two situations to push the ideas of communication and transparency as a change management tool. The first occurs when Alex finds the NCX-10 is not running. The inventory for the next critical order is not at the machine therefore the operator is waiting. The material is at an earlier stage. The operator did not recognize the material as being important, therefore opted to follow standard operating procedure. This scenario generates one of the best lines in the book, “if you have to break the rules to do the right thing, maybe the rules are not the right rules.” Similarly, the union head immediately pushed back when asked to change the work rules needed to keep the NCX-10 running during lunch and breaks. Alex recognizes that everyone needs to see the big picture and needs a signal to know which work behavior is needed. Based on these two issues, Alex immediately implements two changes. The first is a   signal card (red tag) to indicate priority orders (very similar to Kanban), and second Alex and his staff begin briefing EVERYONE in the plant (transparency, one of the pillars of Scrum) on the the impact of the changes they were being asked to make. The transparency of the management team about reason the plant was being asked to change helped sway the union.  After Alex personally address everyone in the plant in small meetings the union agreed to the work rule changes and the other changes begin to take hold.

Alex’s date with Julie? In the end Alex showed up on time and they went for the date.

Chapter 22: Alex reviews the progress with his team. The situation has improved by ensuring that the priority orders move through the bottlenecks first and moving quality control to before the both of the bottlenecks. Before the changes the latest order was 58 days behind, now the latest order was only 44 days behind. The problem as Alex sees it, it is not enough.  Goldratt speaking though Alex says, “a few weeks ago we were limping along; now we’re walking but we ought to jogging.”  The changes generated some progress, but not enough. Alex pushes Donavan to address the other ideas that they had addressed with Johan, These included outsourcing some of the processing through the bottlenecks to generate capacity.

As they use the signaling system (red card = a critical order), they begin to discover problems. For example, parts that are queued for processing through the bottleneck steps are not easily distinguishable before and after the process, risking mistakes.  A yellow flag is added to the red card to signal processing is complete (the changes to the process is a reflection of an attitude of continuous process improvement). Alex points out that he does not want stop gap measures and is assured that his team will get to the bottom of the problem, fix the process and re-train the staff (dealing with the deeper issue is a reflection of a culture where root-cause analysis is performed so that problems aren’t just glossed over). The tweaks to the process improve throughput, but don’t generate the quantum change the plant needs.

The chapter ends with Donavon, who has been missing in action, who shows up with the old machines of type that the NCX-10 replaced. Even though, as they put it, the machines he had scavenged from another plan were “state of the art circa 1942”, but they provided extra capacity for the bottlenecked NCX-10. The added capacity, when implemented, will increase the capacity of the bottlenecked step. Remember the overall process capacity is directly governed by the capacity of the bottleneck.

I was talking recently with a Scrum team that included a product owner, coach, 4 coders and one tester. The tester was the only person allowed to test. It had been six months since the team was consistently able to complete a story during the sprint it was accepted in. They wondered if increasing the sprint duration from one week to three would solve their consistency problem. We built a Kanban board to visualize the flow of work through the team. Once the board was built it was immediately apparent that the bottleneck was the single tester. The question I left them to wrestle with was whether the answer would be to reduce the number of coders (implement work-in-progress limits) or to increase the number of testers (add capacity). This is a real life example of how the ideas and concepts expressed in The Goal are just relevant in the world of software development as they are in manufacturing.

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, 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 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.

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

IMG_1249

I first read The Goal: A Process of Ongoing Improvement when I actively became involved in process improvement.  I was bit late to the party; however since my first read of this business novel, a copy has always graced my bookshelf.  The Goal uses the story of Alex Rogo, plant manager, to illustrate the theory of constraints and how the wrong measurement focus can harm an organization. The focus of the re-read is less on the story, but rather on the ideas that have shaped lean thinking. Even though set in a manufacturing plant the ideas are useful in understanding how all projects and products can be delivered more effectively.  Earlier entries in this re-read are:

Part 1                Part 2                  Part 3                      Part 4                Part 5           Part 6

As we noted during our re-read of John P. Kotter’s Leading Change, significant organizational change typically requires changes to many different groups and processes to be effective. As we observed in Chapter 18, change is difficult even when everyone has sense of urgency and understands the goal of the change.

Chapter 19

Alex begins to despair of being able to deal with two constraints at in the same process. After dinner with his mom and kids, he picks up Johan at the airport.  On the way to the plant, Johan points out that there are only two reason why what Alex and his team are learning won’t help them save the plant. The first reason is if there is no demand for the product they are making and second if they are not willing to change. Once at the plant, Johan gets a briefing on the problems.  The multiple bottleneck problem has Alex and his team on edge.  They do not see a solution and press Johan on how other plants handle bottlenecks. A bottleneck is any resource that has a capacity that is equal to or less than the demand placed upon it.  Johan points out that most plants do not have bottlenecks, rather they have excess capacity and therefore are not efficient.  Efficient plants have and manage bottlenecks rather than over-investing in capacity. Johan points out that in order to increase the output of the overall process only the capacity of the bottlenecks need to be addressed. Increasing the capacity of the bottlenecked resource increases the throughput of the process.

Johan, Alex and his management staff adjourn to the plant to see the problems in action.  When they visit the robot, which is the first bottleneck in the process, it is idle. The staff went on a break before they completed the set up needed to manufacture parts for an order. Johan points out that any downtime on a bottlenecked resource can’t be made up later in the process, and any downtime limits the plant’s ability to produce completed product, which directly impacts the bottom line. As a group, they explore ideas to increase the capacity of the robot (bottleneck) ranging from changing how breaks are taken to re-commissioning the older machines that the robots replaced.

When the team reaches the second bottleneck, the heat-treating step, the problem of increasing capacity continues to plague the group.  You just can’t add extra heat-treating capacity quickly due to the footprint of the department and the equipment needed.  Johan quizzes the group on different ideas to increase the capacity of the step. He begins by asking whether all the part that go through heat treating really require the step. They also discussed why they were padding out the batches to build inventory and decrease cost per unit of work. Doing work that is not needed (including building inventory of parts that will be used later) steals capacity that can be better used to relieve some of the pressure on the bottleneck. During discussion Johan observes a pile of rejected parts that had been heat treated.  He observes that using a bottlenecked resource to work on broken parts does not make sense. One solution is to move the parts inspection step before the heat-treating step, so that only good parts are treated; an effective increase in the capacity of the process.  This is just like building code and then using an independent testing resource to find the problems just before it is scheduled for implementation.

The focus in Chapter 19 is to drive home the point that every time the capacity of a bottleneck is increased more product can be shipped. The impact of a bottleneck is not the cost of individual part, but the cost of the whole product that cannot be shipped.

Johan leaves the team with a reminder that wasted time on a bottleneck includes idle time, time working on defects and making parts that are not currently needed.

Chapter 20

Early the next morning Alex meets with his team to start planning how to implement the ideas they discussed the previous evening.  Some of the changes, like moving the quality inspections before the bottlenecks, are relatively simple, while others, such as changing the union work rules, are more difficult. However starting to implement the changes is more important than waiting until they all can be implemented.  This is similar to the Agile approach of making small changes and gathering feedback, rather than big bang approaches.  Alex tells his team to shift priorities to make the latest job (most behind schedule) the top priority.  While we might argue that a better approach might be to approach prioritization using the weighted shortest job first approach to maximize value delivered, the important message in the chapter is the shift of focus from step efficiency to maximizing product delivery.

The chapter ends with Alex reminding his team that the changes in process and the new work they are doing is of maximum importance.  Anything that takes their focus off moving forward, including reports for the home office, imperils their future.

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, 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.

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

IMG_1249

The Goal: A Process of Ongoing Improvement, published in 1984, is a business novel. The Goal uses the story of Alex Rogo, plant manager, to illustrate the theory of constraints and how the wrong measurement focus can harm an organization. The focus of the re-read is less on the story, but rather on the ideas the book explores that have shaped lean thinking. Earlier entries in this re-read are:

Part 1                         Part 2                         Part 3                         Part 4                      Part 5

This week I attended the CMMI EMEA conference.  Kirk Botula, CEO of the CMMI institute delivered a great speech about developing and managing capability.  Capability is ability to do something.  Without capabilities, individuals, teams and organizations are powerless. Tools like the CMMI, Agile and lean provide frameworks to decide which capabilities are important and then to measure the level and impact of current capabilities. During Kirk’s talk he referenced two books.  The first was Out of the Crisis by Edwards Deming and The Goal: A Process of Ongoing Improvement by Jeff Cox and Eliyahu Goldratt.  Deming’s work defined the continuous process improvement movement, while Goldratt framed the lean movement.  Later during the week I asked a group of C-level executives if they were familiar with The Goal and the Theory of Constraints.  Unfortunately the answer was not a resounding yes.  The limited awareness is problematic because that leads to a focus on cost containment and efficiency as the most important goals over effectiveness and throughput. Over focusing on cost and efficiency leads sub-optimal performance and in the long run market failure. In this installment of Re-read Saturday we begin to encounter the nuts and bolts that make the Theory of Constraints an effective tool for structured process improvement.

Chapter 17

After dealing with the complications of a household in turmoil (Alex’s household is a reflection of a series of dependent events and statistical variability), Alex arrives at the plant to find an order for an important client is late. Alex explains how dependent events and statistical variability will lead to the sub-optimal performance of a system. Despite Alex’s revelations from observing the scout troop, his team believes they can deliver the parts in time to make the last truck at 5 PM. Alex places a ten dollar bet that the parts will not be ready ship that day due to variations in the production process.  The production of the parts requires two steps. The first step in the production process averages 25 parts per hour. In this case the production started slowly, however by the end of four hours 100 parts had been completed. Therefore the process had averaged 25 parts per hour. The production ranged from 19 parts to 32 parts. While the second step in the process had the same 25 parts per hour capacity, because of the variability of the first processes the capacity of the second process was exceeded on two occasions, therefore all 100 parts were not completed.

Chapter 18

Alex and his now attentive staff (the performance on late order has gotten their attention) attempt to determine how to control the flow of work thought the steps in the process (dependent events) as they are subject to statistical variability.They consider longer lead-time as a method to smooth the flow, because longer lead times would generate higher inventories to reduce efficiency. As a group they elect to call Johan, who introduces another new concept: bottleneck and non-bottleneck resources. A bottleneck resource is any resource that has a capacity that is equal to or less than the demand placed upon it. Any variability in the flow of work that is beyond the capacity of the bottlenecked resources will generate a backlog. While The Goal was written from the point of view of a manufacturing plant, bottlenecks can occur in any type of project. Any resource that is planned to 100% capacity is a bottlenecked resource. Through discussion with Johan the team discovers that like the scout troop the capacity of the plant is governed by the step with the least capacity. In the plant, the team needs to discover the bottlenecks that are blocking their ability to deliver effectively.

Bottlenecks are neither good or bad in their own right. A process with infinite capacity at all steps will not be efficient because resources would be under utilized. Bottlenecks can be used to generate a predictable process. This a reflection of how Alex used the slow scout in Chapter 15. Also understanding the capacity and variability of the bottleneck step will help make the process predictable.

When the staff discovers the bottleneck, it generates a process of discovery in which the team discovers that they really don’t know the process well and that the time accounting data is less than perfect. The big revelation is that looking for steps in the process with build-ups of work-in-process waiting to be addressed are an indication of a bottleneck. In this case the team finds two culprits. The first is the industrial robot that is darling of senior management and the second is the heat treatment step. The bottlenecks cannot be moved to the head of the column like Alex did to solve the problem with the boy scouts, nor can extra capacity be generated by increasing staff or buying machines. The workday ends with Alex searching for a solution.

The affect of the combination dependent events and statistical variability on the plant floor is obvious. In a manufacturing plant where processes are heavily automated variability might be low, however it still exists. In software or product development same interaction of process steps and variability exits although because the work tends to be more discovery-oriented, the variability is probably higher making the impact more substantial and less predictable. 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.

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, 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 15 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.

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

IMG_1249

The Goal: A Process of Ongoing Improvement, published in 1984, is a business novel. The Goal uses the story of Alex Rogo, plant manager, to illustrate the theory of constraints and how the wrong measurement focus can harm an organization. The focus of the re-read is less on the story, but rather on the ideas the book explores that have shaped lean thinking. Earlier entries in this re-read are:

Part 1                         Part 2                         Part 3                         Part 4

In the next 4 chapters Alex stumbles on the how the concepts of dependent events and variability affect the flow of work, nearly literally.

Chapter 13

Chapter 13 begins with Alex awaking to his son, Dave, in his Boy Scout uniform waiting to go on a weekend hike and camping trip. Alex ends up as the leader due to the absence of the normal scout master.   The column of scouts sets out with an adult, Ron, leading the way. Alex asks Ron to set a pace that is consistent and maintainable. The scouts create a queue based on the arcane rationale of young boys, and Alex anchors to the column to ensure the troop stays together. The column spreads out immediately even though everyone is moving at the same “average” speed. The interaction amongst the hikers is a series of dependent events. Scouts speed up and slow impacting those behind them. The act of speeding up and slowing down is the statistical variation described in Chapter 12. The speed of any individual hiker is influenced by the person directly ahead them in the line. Finally Alex realizes that the speed of the overall hike is less a reflection of first person in line than the last person in line. In the software-testing world, testing is not complete when the first test is done, but rather when the last test is completed.

Side Note: Anyone that wants to understand why every effort should be made to remove or reduce dependencies needs to read these this of chapters carefully. Dependencies make any process A LOT more complicated.

Chapter 14

Rogo considers how to reduce the statistical variation in the column. While stopping for lunch, Alex recruits a few of the scouts to play a game using match sticks, bowls and a die (they are boy scouts . . . ready for anything, including dice games). The game is played by moving match sticks between bowls. The number match sticks moved in each step is based on the roll of the die. As Alex gathers statistics by repeating the game, the combination of dependent events (movement of the match sticks from one bowl to another) and statistical variation (die roll) show him how build ups of inventory occurs between steps. The flow of work becomes irregular and unmanageable.

Side Note: This is a great game to play with software teams to drive home the point of the impact of variability.

Chapter 15

As the troop starts out from lunch, Alex considers the concept of reserves as a mechanism to fix the flow problem (spreading out) the troop is having. He watches the slowest kid in the troop fall behind and then sprint to catch up over and over, generating a large gaps in the line. The troop is utilizing all of its energy to stay together meaning that it has no spare capacity to recover when gaps appear. Consider software teams that generate plans with 100% utilization. As any developer or tester knows nothing goes exactly as planned, and as soon as a problem is encountered you are immediately behind if you are 100% utilized.

Another option he considers is to have everyone hike as fast as they can individually. In this scenario everyone would optimize their individual performance. The outcome would be chaos with scouts strung out all over the trail. With the troop spread out on the it would be impossible to know when the last person would get to the camp for the night.  Remember the hike is only complete when the last person gets to camp, therefore chaos does not promote predictability. In Alex’s plant, even though they are using robot and each step is running at high levels of efficiency orders are not completing on-time. Similar problems can be seen in many software projects with developers and testers individually running at 100% capacity and high levels of efficiency while functionality is delivered well after it was promised.

When Rogo realizes that the process is only as fast as the slowest person, he decides to re-adjust the line of scouts so that the slowest is in front. The gaps immediately disappear. With the process now under control he can shift to helping the slowest person speed up, therefore improving the whole process.

Chapter 16 moves the novel plot forward with Julie, Alex’s wife, dumping Alex’s daughter at Alex’s mother’s house and leaves Alex.

Chapters 13 – 15 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.

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, 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.

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

IMG_1249

Eliyahu M. Goldratt and Jeff Cox wrote The Goal: A Process of Ongoing Improvement in 1984.  The Goal is a business novel. It uses the story of Alex Rogo, plant manager, to illustrate the theory of constraints and how the wrong measurement focus can harm an organization. The focus of the re-read to-date has been on the ideas and concepts that affect Software Process and Measurement readers and listeners. The focus we are taking is not meant as a slight to the part of this book that is a novel, but rather to provide focus on the ideas that have shaped lean thinking. Earlier entries in this re-read are:

Part 1                       Part 2                       Part 3

In the next 3 chapters Alex and his team begin to explore how their newly emerging understanding of throughput, inventory and operational expense can be applied in their organization.

Chapter 10

In Chapter 8 Alex and Johan discussed three critical definitions:

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.

In Chapter 10 Alex and team  discuss whether all of the activities at the plant can be measured by the concepts of throughput, inventory and operational expense. The three definitions equate to money coming in, inventory is money in the system and operational expense is money that leaves the system. The three measures generate consternation and debate. For example, the team spends time debating individual expenses and whether the expense is operational or included in inventory. In the end they conclude that everything can be measured by the three measures. The problem is that they can’t conceive of how the three metrics can be used to turn the plant around. Alex goes to off New York City to meet with Johan the next morning to get some more answers.

Chapter 11

Alex and Johan discuss the problems in the plant over coffee in the hotel restaurant before Johan meets the people he in NYC to visit. Johan guides Alex by asking questions and letting him find the answers for himself (many of us would recognize the techniques Johan uses to help Alex to formulate answers as being very similar to those used in Agile coaching). Key discoveries include the realization that the inventory problem the plant is experiencing is a reflection of over utilization of plant personnel on specific tasks rather than focusing on throughput. The measure of 100% capacity utilization leads to inefficiencies when the parts can’t be used. Conceptually this point is the same as if a software development process that segregates coders and testers, and one group produces more than the other can immediately absorb. For example, coders often keep generating more code even if the testers can’t immediately begin testing the work that is being handed off. The Agile/lean concept of self-organizing teams would attack the problem differently by shifting resources to avoid building excess inventory. The organization’s over-reliance on that single measure of efficiency in isolation has caused disastrous results.

Johan and Alex identify two phenomenon that cause the problems that Alex and his management team are seeing. The first is the idea of dependent events, which is when one event must happen before another. For example, code must be written before the unit tests can be run. The second is statistical fluctuation, said differently all process have some degree of variability. The execution of events vary for many reasons. The book uses an example of a waiter and the variability in the time needed bring the check and pay (Johan was pressed for time and had fit his meeting with Alex into his breakfast). If we consider coding and unit testing as a process, most of us would recognize that coding and and testing any specific piece of work has a degree of variability. Variance could be caused because some problems are harder or the programmer might get hungry and go to lunch before they finish a specific piece of work. When both concepts interact process variability becomes much harder to “plan” out of existence.

Johan leaves Alex with the question of how he can apply these concepts and the three measures to save the plant.

Chapter 12

This chapter could easily be written off as purely back-story. However in the discussion with his wife, she and Alex discuss how to establish a pace that respects both the needs of the businesses and family life. In today’s IT environment we would recognize the discussion as one of sustainable pace. Sustainable pace typically reflects a rate of work that can be consistently performed. It is a concept commonly used when discussing Agile.

Chapters 10 – 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.

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, 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.

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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 a central feature in the corporate culture. (more…)

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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. If the book stopped here it would be brief tragedy, however Chapter 4 begins the path towards the redemption of Alex Rogo and the ideas that are the bedrock of lean.

New Characters

  • Jonah – advisor
  • Lou – plant’s chief accountant

Chapter 4:

In Chapter 3, Alex was at a company meeting that communicated the depths of the problems the division was having and to search for answers. The meeting was not holding Alex’s attention. He found a cigar in his jacket and flashed back to a chance meeting in an airport lounge. While smoking a cigar, Alex recognizes and strikes up a conversation with a professor from grad school. The discussion turns to the problems at the plant, and even though they have pursued changes that have yielded great efficiencies the problems still exist and perhaps are getting worse. Alex proudly shows Jonah a chart that “proves” that a 36% improvement in efficiency from using robots and automation. Jonah asks one very simple question: was profit up 36% too? Alex struggles and answers that, “it is not that simple.” In fact the number of people in the plant did not go down, inventory did not go down and not one additional widget had been shipped. This interaction foreshadows one of the key ideas that The Goal presents to the reader. We are measuring the wrong thing! When we measure the wrong thing we send the wrong message and we get the wrong results. Chapter 4 closes with Johan and Rogo talking about the real meaning of productivity. Productivity is defined as accomplishing something in terms of a goal. Without knowing the goal, measuring productivity and efficiency is meaningless.

Chapter 5:

In Chapter 5 we snap back to the all-day meeting to discuss the division’s performance (Chapter 3). Alex continues to ruminate on Jonah’s comments. Alex leaves the meeting under the pretext of a problem back at the plant. As he drives back to the plant he begins to reflect on the “the goal” in the definition of productivity identified in Chapter 4.  As Alex drives back he decides that he will not have time to think due to the day-to-day demands (also known as the tyranny of the urgent but not important – See Habit 3 of Stephen Covey) therefore heads to a favorite pizzeria for pizza and beer. Goldratt and Cox use Alex’s inner dialog show why most of current internal goals and measures Alex is being asked to pursue miss the point. The bottom-line goal is that the plant’s goal is to make money. If it does not make money, the rest does not matter. While The Goal is set in a manufacturing plant, the point is that unless any group or department does not materially impact the real goal of an organization it should not exist.

Chapter 6:

Chapter 6 begins with a search for the overall measures that contribute (or predict) whether the plant is meeting the goal of profitability. One the first questions Alex poses to himself is whether he can assume that making people work and making money are the same thing. This sounds like a funny question, however I often see managers and leaders mistake being busy with delivering value. Alex and Lou brainstorm a set of 3 metrics that impact the goal. They are: 1. net profit, 2. ROI, 3. cash flow. In this conversation Alex tells Lou the truth about the state of the division and the potential closure of the plant. The 3 metrics sound right, however Alex does not see the immediate connection between the measures and day-to-day operations. The chapter ends with Alex asking the 3rd Shift Supervisor how is activities impact net profit, ROI and cash flow. He simply gets the deer-in-the-headlight look.

Chapters 4 – 6 shift the focus from steps in the process to the process as a whole. Organizations have an ultimate goal. In this case the ultimate goal of the plant is make money. The goal is not quality, efficiency or even employment because in the long-run if the plant doesn’t deliver product that can be sold it won’t exist. Whether an organization is for-profit or non-profit, if they don’t attain their ultimate goal they won’t exist.