The Goal: A Process of Ongoing Improvement, Third Revised Edition
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think of it, he did kind of threaten yesterday with his opening
remarks that I might not have a job.
Shit, I could be on the street in three months!
"Listen, Al, if anybody asks you, you didn't hear any of this
from me," says Nat.
And he's gone. I find myself standing alone in the corridor
on the fifteenth floor. I don't even remember having gotten on
the elevator, but here I am. I vaguely recall Nat talking to me on
the way up, saying something about everybody putting out their
resumes.
I look around, feel stupid, wonder where I'm supposed to be
now, and then I remember the meeting. I head down the hall
where I see some others going into a conference room.
I go in and take a seat. Peach is standing at the far end of the
table. A slide projector sits in front of him. He's starting to talk. A
clock on the wall indicates it's exactly eight o'clock.
I look around at the others. There are about twenty of them,
most of them looking at Peach. One of them, Hilton Smyth, is
looking at me. He's a plant manager, too, and he's a guy I've
never liked much. For one thing, I resent his style—he's always
promoting some new thing he's doing, and most of the time what
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he's doing isn't any different from the things everyone else is
doing. Anyway, he's looking at me as if he's checking me out. Is it
because I look a little shaken? I wonder what he knows. I stare
back at him until he turns toward Peach.
When I'm finally able to tune into what Peach is saying, I
find he's turning the discussion over to the division controller,
Ethan Frost, a thin and wrinkled old guy who, with a little
makeup, could double for the Grim Reaper.
The news this morning befits the messenger. The first quar-
ter has just ended, and it's been a terrible one everywhere. The
division is now in real danger of a shortfall in cash. All belts must
be tightened.
When Frost is done, Peach stands and proceeds to deliver
some stern talk about how we're going to meet this challenge. I
try to listen, but after his first couple of sentences, my mind drops
out. All I hear are fragments.
". . . imperative for us to minimize the downside risk . . ."
". . . acceptable to our current marketing posture . . ." ". . .
without reducing strategic expense ...""... required sacri-
fices . . ." ". . . productivity improvements at all loca-
tions . . ."
Graphs from the slide projector begin to flash on the screen.
A relentless exchange of measurements between Peach and the
others goes on and on. I make an effort, but I just can't concen-
trate.
"... first quarter sales down twenty-two percent compared
to a year ago ..." "... total raw materials' costs in-
creased . . ." ". . . direct labor ratios of hours applied to hours paid had a three-week high . . ." ". . . now if you look at numbers of hours applied to production versus standard, we're off by
over twelve percent on those efficiencies . . ."
I'm telling myself that I've got to get hold of myself and pay
attention. I reach into my jacket to get a pen to take some notes.
"And the answer is clear," Peach is saying. "The future of
our business depends upon our ability to increase productivity."
But I can't find a pen. So I reach into my other pocket. And I
pull out the cigar. I stare at it. I don't smoke anymore. For a few
seconds I'm wondering where the hell this cigar came from.
And then I remember.
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4
Two weeks ago, I'm wearing the same suit as now. This is
back in the good days when I think that everything will work out.
I'm traveling, and I'm between planes at O'Hare. I've got some-
time, so I go to one of the airline lounges. Inside, the place is
jammed with business types like me. I'm looking for a seat in this
place, gazing over the three-piece pinstripes and the women in
conservative blazers and so on, when my eye pauses on the yar-
mulke worn by the man in the sweater. He's sitting next to a
lamp, reading, his book in one hand and his cigar in the other.
Next to him there happens to be an empty seat. I make for it. Not
until I've almost sat down does it strike me I think I know this
guy.
Running into someone you know in the middle of one of the
busiest airports in the world carries a shock with it. At first, I'm
not sure it's really him. But he looks too much like the physicist I
used to know for him to be anyone but Jonah. As I start to sit
down, he glances up at me from his book, and I see on his face
the same unspoken question: Do I know you?
"Jonah?" I ask him.
"Yes?"
"I'm Alex Rogo. Remember me?"
His face tells me that he doesn't quite.
"I knew you some time ago," I tell him. "I was a student. I got a grant to go and study some of the mathematical models you
were working on. Remember? I had a beard back then."
A small flash of recognition finally hits him. "Of course! Yes,
I do remember you. 'Alex,' was it?"
"Right."
A waitress asks me if I'd like something to drink. I order a
scotch and soda and ask Jonah if he'll join me. He decides he'd
better not; he has to leave shortly.
"So how are you these days?" I ask.
"Busy," he says. "Very busy. And you?"
"Same here. I'm on my way to Houston right now," I say.
"What about you?"
"New York," says Jonah.
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He seems a little bored with this line of chit-chat and looks as
if he'd like to finish the conversation. A second of quiet falls be-
tween us. But, for better or worse, I have this tendency (which
I've never been able to bring under control) of filling silence in a
conversation with my own voice.
"Funny, but after all those plans I had back then of going
into research, I ended up in business," I say. "I'm a plant man-
ager now for UniCo."
Jonah nods. He seems more interested. He takes a puff on
his cigar. I keep talking. It doesn't take much to keep me going.
"In fact, that's why I'm on my way to Houston. We belong to
a manufacturers' association, and the association invited UniCo
to be on a panel to talk about robotics at the annual conference. I
got picked by UniCo, because my plant has the most experience
with robots."
"I see," says Jonah. "Is this going to be a technical discussion?"
"More business oriented than technical," I say. Then I re-
member I have something I can show him. "Wait a second. . . ."
I crack open my briefcase on my lap and pull out the ad-
vance copy of the program the association sent me.
"Here we are," I say, and read the listing to him. " 'Robotics: Solution to America's Prod
uctivity Crisis in the new millenium ... a
panel of users and experts discusses the coming impact of indus-
trial robots on American manufacturing.' '
But when I look back to him, Jonah doesn't seem very im-
pressed. I figure, well, he's an academic person; he's not going to
understand the business world.
"You say your plant uses robots?" he asks.
"In a couple of departments, yes," I say.
"Have they really increased productivity at your plant?"
"Sure they have," I say. "We had—what?" I scan the ceiling for the figure. "I think it was a thirty-six percent improvement in
one area."
"Really . . . thirty-six percent?" asks Jonah. "So your company is making thirty-six percent more money from your plant
just from installing some robots? Incredible."
I can't hold back a smile.
"Well . . . no," I say. "We all wish it were that easy! But it's a lot more complicated than that. See, it was just in one department that we had a thirty-six percent improvement."
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Jonah looks at his cigar, then extinguishes it in the ashtray.
"Then you didn't really increase productivity," he says.
I feel my smile freeze.
"I'm not sure I understand," I say.
Jonah leans forward conspiratorially and says, "Let me ask
you something—just between us: Was your plant able to ship
even one more product per day as a result of what happened in
the department where you installed the robots?"
I mumble, "Well, I'd have to check the numbers . . ."
"Did you fire anybody?" he asks.
I lean back, looking at him. What the hell does he mean by
that?
"You mean did we lay anybody off? Because we installed the
robots?" I say. "No, we have an understanding with our union
that nobody will be laid off because of productivity improvement.
We shifted the people to other jobs. Of course, when there's a
business downturn, we lay people off."
"But the robots themselves didn't reduce your plant's people
expense," he says.
"No," I admit.
"Then, tell me, did your inventories go down?" asks Jonah.
I chuckle.
"Hey, Jonah, what is this?" I say to him.
"Just tell me," he says. "Did inventories go down?"
"Offhand, I have to say I don't think so. But I'd really have
to check the numbers."
"Check your numbers if you'd like," says Jonah. "But if your inventories haven't gone down . . . and your employee expense
was not reduced . . . and if your company isn't selling more
products—which obviously it can't, if you're not shipping more of
them—then you can't tell me these robots increased your plant's
productivity."
In the pit of my stomach, I'm getting this feeling like you'd
probably have if you were in an elevator and the cable snapped.
"Yeah, I see what you're saying, in a way," I tell him. "But my efficiencies went up, my costs went down—"
"Did they?" asks Jonah. He closes his book.
"Sure they did. In fact, those efficiencies are averaging well
above ninety percent. And my cost per part went down consider-
ably. Let me tell you, to stay competitive these days, we've got to
do everything we can to be more efficient and reduce costs."
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The Goal: A Process of Ongoing Improvement
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My drink arrives; the waitress puts it on the table beside me.
I hand her a ten and wait for her to give me the change.
"With such high efficiencies, you must be running your ro-
bots constantly," says Jonah.
"Absolutely," I tell him. "We have to. Otherwise, we'd lose our savings on our cost per part. And efficiencies would go down.
That applies not only to the robots, but to our other production
resources as well. We have to keep producing to stay efficient and
maintain our cost advantage."
"Really?" he says.
"Sure. Of course, that's not to say we don't have our prob-
lems."
"I see," says Jonah. Then he smiles. "Come on! Be honest.
Your inventories are going through the roof, are they not?"
I look at him. How does he know?
"If you mean our work-in-process—"
"All of your inventories," he says.
"Well, it depends. Some places, yes, they are high," I say.
"And everything is always late?" asks Jonah. "You can't ship anything on time?"
"One thing I'll admit," I tell him, "is that we have a heck of a problem meeting shipping dates. It's a serious issue with customers lately."
Jonah nods, as if he had predicted it.
"Wait a minute here . . . how come you know about these
things?" I ask him.
He smiles again.
"Just a hunch," says Jonah. "Besides, I see those symptoms
in a lot of the manufacturing plants. You're not alone."
I say, "But aren't you a physicist?"
"I'm a scientist," he says. "And right now you could say I'm doing work in the science of organizations—manufacturing organizations in particular."
"Didn't know there was such a science."
"There is now," he says.
"Whatever it is you're into, you put your finger on a couple
of my biggest problems, I have to give you that," I tell him. "How come—"
I stop because Jonah is exclaiming something in Hebrew.
He's reached into a pocket of his trousers to take out an old
watch.
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"Sorry, Alex, but I see I'm going to miss my plane if I don't
hurry," he says.
He stands up and reaches for his coat.
"That's too bad," I say. "I'm kind of intrigued by a couple of things you've said."
Jonah pauses.
"Yes, well, if you could start to think about what we've been
discussing, you probably could get your plant out of the trouble
it's in."
"Hey, maybe I gave you the wrong impression," I tell him.
"We've got a few problems, but I wouldn't say the plant is in
trouble."
He looks me straight in the eye. He knows what's going on,
I'm thinking.
"But tell you what," I hear myself saying, "I've got some time to kill. Why don't I walk you down to your plane? Would you
mind?"
"No, not at all," he says. "But we have to hurry."
I get up and grab my coat and briefcase. My drink is sitting
there. I take a quick slurp off the top and abandon it. Jonah is
already edging his way toward the door. He waits for me to catch
up with him. Then the two of us step out into the corridor where
people are rushing everywhere. Jonah sets off at a fast pace. It
takes an effort to keep up with him.
"I'm curious," I tell Jonah, "what made you suspect some-
thing might be wrong with my plant?"
"You told me yourself," Jonah says.
"No, I didn't."
"Alex," he says, "it was clear to me from your own words that you're not running as efficient a plant as you think you are. You
are running exactly the opposite. You are running a very in-effi-
cient plan
t."
"Not according to the measurements," I tell him. "Are you
trying to tell me my people are wrong in what they're reporting
. . . that they're lying to me or something?"
"No," he says. "It is very unlikely your people are lying to you. But your measurements definitely are."
"Yeah, okay, sometimes we massage the numbers here and
there. But everybody has to play that game."
"You're missing the point," he says. "You think you're running an efficient plant . . . but your thinking is wrong."
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"What's wrong with my thinking? It's no different from the
thinking of most other managers."
"Yes, exactly," says Jonah.
"What's that supposed to mean?" I ask; I'm beginning to feel somewhat insulted by this.
"Alex, if you're like nearly everybody else in this world,
you've accepted so many things without question that you're not
really thinking at all," says Jonah.
"Jonah, I'm thinking all the time," I tell him. "That's part of my job."
He shakes his head.
"Alex, tell me again why you believe your robots are such a
great improvement."
"Because they increased productivity," I say.
"And what is productivity?"
I think for a minute, try to remember.
"According to the way my company is defining it," I tell him,
'there's a formula you use, something about the value added per
employee equals. . . ."
Jonah is shaking his head again.
"Regardless of how your company defines it, that is not what
productivity really is," he says. "Forget for just a minute about the formulas and all that, and just tell me in your own words, from
your experience, what does it mean to be productive?"
We rush around a corner. In front of us, I see, are the metal
detectors and the security guards. I had intended to stop and say
d-bye to him here, but Jonah doesn't slow down.
"Just tell me, what does it mean to be productive?" he asks
again as he walks through the metal detector. From the other side
he calks to me. "To you personally, what does it mean?"
I put my briefcase on the conveyor and follow him through.
I'm wondering, what does he want to hear?
On the far side, I'm telling him, "Well, I guess it means that
I'm accomplishing something."
"Exactly!" he says. "But you are accomplishing something in terms of what?"
"In terms of goals," I say.