Our author, Goldratt, begins the education process for the Theory of Constraints:

• Strawmen are introduced.
• We sit with our narrator, Rogo, as he endures a corporate meeting to understand why goals are being missed.
• Rogo comes to us fresh off of a 2 week flashback, where his Sherpa, Jonah, presented him with uncomfortable questions.
• Rogo flees the meeting and literally sits on a vantage point looking down at his plant to get a ‘high level view.’

Operations Highlight

“They’re out there renting warehouses to store all the crap they’re buying so cost-effectively.”  Creating accounting inventory without knowing how it will be monetized is a symptom of corporate hoarding.  R&D teams that don’t deliver are collected like zoo animals – put on display, but not expected to make real contributions.  The tools, personnel and inventory a plant builds must enable the goal of profitability – otherwise they turn into time traps justifying their own existence.

Writing Highlight

“Our tribe is dying and we’re dancing in our ceremonial smoke to exorcise the devil that’s ailing us.”  Rogo’s visions of witch doctors, cargo cults and pre-science cultures unaware of the laws of nature is cutting.  Poor performing operations functions can wear the robes of a cult – shedding their vestments only with clarity and candor.

Page by Page

P034 – There are a lot of highlights in the opening page of this chapter.

“You’re just playing a lot of games with numbers and words.”

“Because as I glance from face to face, I get this gut hunch that none of us here has anything more than a witch doctor’s understanding of the medicine we’re practicing.”

“Our tribe is dying and we’re dancing in our ceremonial smoke to exorcise the devil that’s ailing us.”

“What is the real goal? Nobody here has even asked anything that basic.”

“What the hell am I doing here? I’m wondering what good it is for me—or any of us—to be sitting here in this room. Is this meeting (which is scheduled to last for most of the day) going to make my plant competitive, save my job, or help anybody do anything of benefit to anyone? I can’t handle it. I don’t even know what productivity is. So how can this be anything except a total waste?”

P035 – “For a second, I consider ignoring the question.”  From a management standpoint – ignoring the question, even if it feels snarky from the asker, is rarely the right move. Don’t ignore the question.

P036 – “Some distance below, down across the highway, is my plant.” Rogo flees the meeting, fuels up on pizza, then literally gets a high level view of his plant.  Goldratt is not shy about metaphors as he shows us how to think about operations challenges.

P037 – “They’re out there renting warehouses to store all the crap they’re buying so cost-effectively.”  Creating inventory – either intermediate or final – is rarely the right move for a business unless demand is known!  Once a business starts exterior warehousing, it is like activating a hoarder – it is a difficult addiction to get rid of.

P038 – “It’s not enough to turn out a quality product on an efficient basis.”  Plenty of businesses went bankrupt efficiently building a quality product.  Someone else got more efficient, or better at quality – and with that they used their profits to create and extend a lead.

P039 – “So technology is important, but it isn’t the goal.”  Technology is often an enabler of sales, but if a customer can buy a product without technology – do not take the risk.

P040 – “The goal of a manufacturing organization is to make money.”  Here we have a clear goal for the organization.  Now, we’ll need a plan to measure this and share it to the organization.  (This comes in Chapter 09.)

P041 – “If the goal is to make money, then (putting it in terms Jonah might have used), an action that moves us toward making money is productive. And an action that takes away from making money is non-productive.”

Often times in an organization it can be hard to determine what actions move the business towards making money.  However, it can often be very clear what actions take you further from making money.  Activity that promotes the good, or stops the bad is good activity.  Stopping unproductive actions is valuable! Explain the rationale, be patient with the team, and the goal will emerge.