September 14, 2011

The Goal: A Process of Ongoing Improvement

The following Book Review has received II Prize in the Book Review Competition held at Indian Institute of Management, Raipur
‘The Goal’ – an operations and supply chain oriented novel was first published in 1984. It is written by Dr E Goldratt (physicist by training and management consultant by occupation) and takes a novel approach of explaining the eventual reason (goal) for the existence of an organisation/company. Also it aims to help the readers realise the methods of improving the profitability and functioning of any company.

The main character of the novel is Alex Rogo, who is the plant manager of UniCo manufacturing. The plant is riddled with problems like excess unshipped inventory, orders frequently behind the schedule and labour dissent. All this is happening inspite of advanced machinery being present in the plant. The Company executive issues an ultimatum of three months to Alex to turn around the plant or to face shutdown. Deep in crisis, Alex turns to Jonah, who helps him realise the bottlenecks in production, after removal of which the plant will return to profitability.
The book is a continuous series of conversations between Alex and Jonah. It is interesting to note that, in spite of knowing the answers Jonah never passes them on to Alex. He urges Alex to arrive at them through a series of well directed questions. This method is known as the ‘Socratic method’, in which the instructor engages the pupil in dialogue and encourages him to think and deliberate about the problems at hand and arrive at conclusions by eliminating the irrelevant choices.
By writing the book as a series of conversations, Goldratt believes that the reader will be able to arrive at the answers before Alex. To quote Goldratt himself – “This is the way we should attempt to write our textbooks. Our textbooks should not present us with a series of end results but rather a plot that enables the reader to go through the deduction process himself. If I succeed by this book to change somewhat your perception of science and education, this is my true reward.”
The argument here is that we can only learn through our own deductive processes. If we are presented with readymade facts then we are ‘trained’ and not ‘learned’. No exceptional intelligence is required for deduction and logic. The idea of the book is to encourage the reader to critically analyse any problem and not just attack it with the existing conventions because "that's the way it was always done".

The book very lucidly explains the Theory of Constraints and how to resolve bottlenecks. Also explained in the book are the real parameters of any business which any manager should focus on. The business world today is filled with enough jargon to confuse anybody, viz - cost-effective purchasing, employing good people, high technology, producing products, producing quality products, selling quality products, capturing market share. In this mess the manager forgets the actual ‘Goal’ of the business, and that is:
·         Higher Net Profit – as the real aim of any business is to make money.
·         High Return on Investment (ROI) – as higher the returns higher the profits.
·         Regular and Positive Cash flows – to run day to day tasks and prevent the business from accumulating debt.
Dr. Ashwin Kumar Narayankar, a student of Indian Insttitute of Management, Raipur has done his M.B.B.S. from Lokmanya Tilak Municipal Medical College, Mumbai.
The Book Review of the Winner of the Book Review Competition will be published in the Half Yearly Magazine. To request a copy of the magazine, mail us at 

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