The Goal – Chapter 37 – Constraint Rules

We pick up the team where we closed out Chapter 36.  A set of Steps has been laid out on how to handle new situations.

Highlights

1. IDENTIFY the system’s constraint( s).

2. Decide how to EXPLOIT the system’s constraint( s).

3. SUBORDINATE everything else to the above decision.

4. ELEVATE the system’s constraint( s).

5. WARNING!!!! If in the previous steps a constraint has been broken, go back to step 1, but do not allow INERTIA to cause a system’s constraint.

Page by Page

P303 – “And then Jonah came and showed us it wasn’t new bottlenecks, but that the constraint had shifted to being the way we released work to the plant.”

The goal is to have a balanced method – have a method that recognizes when change is needed.

P304 – “I made my people obey those computer lists. That was a major change in the way they operate—especially when you consider how much pressure the foremen put on them to supply them with work.”

Ralph created change with urgency.

P305 – “I’ll take care of those tags immediately. You won’t see them tomorrow.” – Stacey responds to a new observation with urgency.  She knows her response will create reaction.

Part of creating change is picking areas where one action can allow everyone to show results.  Picking long lead time areas to create change makes it hart to develop consensus – anyone, any theory, any constraint can be right while results develop.

P306 – “No more of that awful situation where we hold mountains of some products and not even one single unit of others.”

Inventory management and traffic is a terrific waste of resources.  This applies to more than plant inventory – unclear projects create mental WIP.  Personally – having loads of stuff in an attic is a weight on your life.

P307 –

1. IDENTIFY the system’s constraint( s).

2. Decide how to EXPLOIT the system’s constraint( s).

3. SUBORDINATE everything else to the above decision.

4. ELEVATE the system’s constraint( s).

5. WARNING!!!! If in the previous steps a constraint has been broken, go back to step 1, but do not allow INERTIA to cause a system’s constraint.

P308- “Now we know that we have a lot of spare capacity.”

Companies often fall into a trap where resources are blindly thrown at problems without a focus on creating effective results. This creates more and more waste as uncoordinated actions drag a business into good local decisions that are poor strategic decisions.

Capacity to do new things disappears if it is not correctly tracked.

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The Goal – Chapter 36 – Five Steps to The Goal

Again the chapter opens in a meeting, but this time Rogo’s spider sense about the state of the plant foreshadows a re-evaluation of Jonah’s teachings.

Highlight

STEP 1. Identify the system’s bottlenecks. [Constraints!]

STEP 2. Decide how to exploit the bottlenecks. (That was fun. Realizing that those machines should not take a lunch break, etc.)

STEP 3. Subordinate everything else to the above decision. (Making sure that everything marches to the tune of the constraints. The red and green tags.)

STEP 4. Elevate the system’s bottlenecks. (Bringing back the old Zmegma, switching back to old, less “effective” routings. . . .)

STEP 5. If, in a previous step, a bottleneck has been broken go back to step 1.

This is a good set of rules to follow if you’re looking for a process.  There may be a better set for your specific situation, but if you don’t know them – it is better to have some rules and some process rather than none.

Page by Page

P295 – Repeating the specific actions won’t work.

“A good job will be to start our division on a process of on-going improvement.” – Lou

P296 – “We have not launched even one formal improvement project.”

Bob Donovan highlights a paradox of operations.  If improvement programs require formality, they are often too slow to be effective.

P297 – “We haven’t launched so many improvement projects,” he says.

Rogo’s plant didn’t have to launch lots of programs once they focused on the right goal.

P298 – “The entire bottleneck concept is not geared to decrease operating expense, it’s focused on increasing throughput.”

“What you claim is that we have moved from the ‘cost world’ into the ‘throughput world’.”

Costs can only go down so much. Throughput can increase as much as the market can adsorb!

P299 – “Do you think that launching several improvement projects is a process? We haven’t done that, we have followed a process.”

P300 – “So if you want to improve the strength of the chain, what must your first step be?”

“To find the weakest link. To identify the bottleneck!”

“STEP 1. Identify the system’s bottlenecks.”

P301 – The operating steps continue…

“STEP 2. Decide how to exploit the bottlenecks. (That was fun. Realizing that those machines should not take a lunch break, etc.)

STEP 3. Subordinate everything else to the above decision. (Making sure that everything marches to the tune of the constraints. The red and green tags.)

STEP 4. Elevate the system’s bottlenecks. (Bringing back the old Zmegma, switching back to old, less “effective” routings. . . .)

STEP 5. If, in a previous step, a bottleneck has been broken go back to step 1.”

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The Goal – Chapter 35 – Prediction and Practice

We enter the chapter sitting with Rogo’s team in a meeting to prepare him for his next role in a promotion.  As noted in Chapter 34 – this really feels like a luxury in 2018!

Highlights

“His classification gave him the ability to predict their weight and other properties.”

A framework that helps predict what will happen in the future and how the organization should respond is of immense value. If we can know the game we are playing, we can formulate a strategy for our team to win.  This roadmap also gives us a way to let our team practice.

Finding sustainable ways for an organization to improve and practice are often more important than having the right strategy.  Practice enables coordination and flexibility for a team.  Rogo’s team’s brainstorming how to win in his next role is effective because they have worked together closely over the past quarter to turn around the plant.

Rogo has built a team to create change and is now utilizing that team to create change on a broader playing field.

Page by Page

P288 – “I think we were too hasty in our decision that classification of data can’t lead to something good.”

Ralph isn’t wrong – but this is leading to Rogo’s eventual aha moment.  Is data classification the best use of Rogo’s teams time?  Sure, something good can happen – but that is true of any activity.

P289 – “Yes Bob,” Ralph smiles at him, “But there was one professor who claimed that in his eyes it resembled dealing with the leaves while nobody had found yet the trunk.”

P290 – “This number provided Mendeleev with a unique numerical identifier for each element.”

“He had noticed that each seventh soldier represents basically the same chemical behavior, though with increased intensity.”

“In this way all the elements were displayed according to ascending atomic weight, and in each column you find elements with the same chemical behavior in ascending intensity.

“His classification gave him the ability to predict their weight and other properties.”

Goldratt’s appreciation for science and discovery foreshadows the increased use of science and engineering in startup strategy.

P291 – “Did his predictions come true?”

Written predictions are of great value.  Writing notes to your future self that signal if you have succeeded or failed is a great way to track development.  Just like the team in Chapter 1, it is easy to get wrapped up in activity and lose track of the goal – be it personal or professional.

P292 – “We can always procrastinate by wasting our time playing with some artificial, external order.

Lou says this to Ralph and recalls Goldratt’s common references that, ‘activating a resource is not the same as utilizing the resource.’  [Best covered in Chapter 31.]

P293 – “How does one go about revealing the intrinsic order?”

This is a puzzle building problem and resembles something we had encountered when writing the Report on Forecasting Future Disruptive Technologies.  Imagine being handed a bag and having random puzzle & game pieces pulled from it.  How do you guess what game will be played?

P294 – Julie to Alex, “I wouldn’t touch philosophy with a ten foot pole, but to learn a method to persuade my stubborn husband and kids—for that I’m willing to sweat.”

Goldratt starts to pull Julie Rogo in a different direction now – she starts to guide Alex, rather than serve as a foil.  Prioritizing family is rarely the wrong thing to do!

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The Goal – Chapter 34 – Promotion and Reflection

Rogo’s promotion leads to an interlude where he sits with his team and reflects on what he will need to do in his next job.  This chapter feels like a fantasyland in 2018 – I’ve never had this luxury between promotions.  Most promotions I watch come when the person has already been doing their next job and then get recognized with a title shift.  His reflection and wonder at the new expectations is endearing.

Highlight

“We all know that this nonsense of fact finding will continue until our committee runs out of ideas for gathering further facts.”

Or – the fact finding can continue until it is clear what to do.  In some sense, a new manager can follow a Hippocratic approach – first do no harm.  When a need for change shows up, make it.  Caution in the evaluation phase will improve execution when called for.

Page by Page

P281 – “I’m starting to see what Jonah meant when he warned you about increasing the dependency,” she replies.

P282 – And since I, frankly, don’t have the foggiest idea of how to run a division they had better put their brains to helping me.

“Basically you should do general fact finding first,” Lou answers.

P283 – “Yes, what you suggested just now is the usual line of action one takes when he is told to ‘go there and fix it.’”

P284 – “We all know that this nonsense of fact finding will continue until our committee runs out of ideas for gathering further facts.”

Or – the fact finding can continue until it is clear what to do.  In some sense, a new manager can follow a Hippocratic approach – first do no harm.  When a need for change shows up, make it.  Caution in the evaluation phase will improve execution when called for.

P285 – “This overconcern about the ‘proper way to arrange things’ manifests itself in other harmful ways.”

“Almost every big company is oscillating, every five to ten years from centralization to decentralization, and then back again.”

P286 – “If we’re just looking for some arbitrary order, and we can choose among so many possibilities, then what’s the point in putting so much effort in collecting so much data?”

Data reporting just for the sake of it is a waste – however, teams have a duty to report.  If a team cannot report, or if a team’s reports are not accurate – then there is a need to change the way data is gathered and communicated.

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The Goal – Chapter 33 – Sales & Growth

Rogo works with his team to anticipate what will be needed to succeed in his next job.  This chapter is full of Goldratt wisdom.

Highlight

“We re-engineered the deal; we came back with a counter-offer that was feasible and that the client liked even more than his original request.”

Collaboration between sales and operations leads to growth.

Page by Page

P271 – “And haven’t you noticed that quality has improved, and overtime has gone down—not to mention that we hardly ever have to expedite today!”

If every piece of WIP is treated as important, then quality improves.  Challenging the plant to improve broadly can be more effective than privileging high priority work.

P272 – “Donovan has worked only on things that we have orders for.”

Why work on anything else?

P273 – “I wasn’t an objective observer; I was following, almost blindly, some erroneous procedures without understanding the far-reaching, devastating ramifications.”

Using Gretchen Rubin’s The Four Tendencies – Rogo, through the coaching he has received, has moved from being an obliger to a questioner.

P274 – “I want the opportunity to devise a new measurement system, one that’ll correct the system we have now, so that it will do what we expect it to do.”

Measurement is crucial.

P275 – “We re-engineered the deal; we came back with a counter-offer that was feasible and that the client liked even more than his original request.”

Rogo’s plant didn’t simply say “yes” to Bucky’s request.  They countered with what they could do and there was a negotiation that benefited both sides.

P276 – “And then we took the time and reexamined it from basic principles.”

Once the spell of history is broken, new rules are adopted with a lot of inspection.

P277 – “You caused us to change almost every rule in production. You forced us to view production as a means to satisfy sales. I want to change the role production is playing in getting sales.”

Operations working closely with sales is a winning combination for any business.

P278 – “We don’t break setups, or light a fire.”

Breaking in to production schedules is almost always a losing battle.  Educate your operations team and make it easy for them to prioritize with visibility to customer needs.

P279 – “Information is the answer to the question asked.”

Sharing information when no one has asked a question is lecturing.

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The Goal – Chapter 32 – Change Management

The chapters after 31 are really a resolution to the book.  Rogo was promoted in 31.  The plant is in good shape.  These final chapters focus on laying out the ‘Rules around Constraints’ and show how Rogo takes his epiphany on learning and applies it to his next job managing multiple plants.

Highlight

“If it weren’t for the conviction that we gained in the struggle—for the ownership that we developed in the process—I don’t think we’d actually have had the guts to put our solutions into practice.”

Urgency – creating it and managing it, is part of effective change management.

Page by Page

P265 – “The family paid too big a price for this promotion,” I finally say.

There are many families – mine included – who have paid too much for a promotion.  Christensen’s How Will You Measure Your Life is a great way to think about work/life balance.

P266 – They all made common sense, and at the same time, they flew directly in the face of everything I’d ever learned.

P267 – “If it weren’t for the conviction that we gained in the struggle—for the ownership that we developed in the process—I don’t think we’d actually have had the guts to put our solutions into practice.”

The process of change management is tough.  It is a rare group that can take feedback and implement the needed changes right away.

“Probably Mark Twain was right saying that ‘common sense is not common at all’ or something similar.”

“The best that I have come up with so far is to recognize that we refer to something as common sense only if it is in line with our own intuition.”

If it was common sense to both parties – you would already be doing it.

P268 – “Actually there are only two possibilities, either you are not understood, or you are understood.”

Communication and explanation can be hard.  Repetition is part of effective communication.

P269 – “It looks like one should think twice before charging the tall windmills of common practice.”

“This is the technique that I should ask Jonah to teach me: how to persuade other people, how to peel away the layers of common practice, how to overcome the resistance to change.”

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The Goal – Chapter 31 – Defending Performance and a Promotion

Hilton Smyth’s interrogation opens the chapter.  Rogo avoids taking the bait on multiple taunts and attempts to explain what he has done to turn around the plant.

Highlight

“Activating a resource and utilizing a resource are not synonymous.”

This is similar to the highlight of Chapter 25 – “What you’re saying is that making an employee work and profiting from that work are two different things.”

Work for the sake of work is misguided.  It feeds vanity metrics.

Page by Page

P258 – “The goal of UniWare is to make money. Agreed?”

Alignment statements like this are required all too often in corporate meetings.  Smyth even jumps on Rogo’s baited first statement about the goal being cost cutting.

P259 – “Activating a resource and utilizing a resource are not synonymous.”

Frustration is energy without focus.  Asking for activity when the goal of that activity is unclear is wasteful.  Watching colleagues pursue useless tasks is a great frustration.

P260 – “I knew you wouldn’t leave without seeing me.”

If Bill Peach knew this, why didn’t he ask for the time?

P261 – “He basically refused to listen. He continues to claim that as long as cost of products increase, profits eventually have to go down.”

Rogo was patient.  Smyth’s lack of listening and stubbornness is common.

P262 – “Congratulations, Alex; you will be the one to replace me.”

P263 – “I think that every sensible person should want to learn how to manage his or her life.”

Jonah counsels Rogo on applying the Theory of Constraints to his personal life.

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