particularly like to know why you are not observing proper pro-
cedures for determining economical batch quantities."
I pace in front of them a moment before answering. The fuse
to my anger has started a slow burn. I try to put it out and think
about what this means. I don't like the situation one bit. Peach
damn well ought to be here. And I was expecting to be making my
presentation to Frost, not his assistant. But from the sound of it,
Hilton may have set himself up with Peach to be my judge, jury,
and possibly, executioner. I decide the safest bet is to talk.
"Fine," I say finally. "But before I go into my presentation of what has been happening at my plant, let me ask you a question.
Is it the goal of the UniWare Division to reduce costs?"
"Of course it is," says Hilton impatiently.
"No, actually, that is not the goal," I tell them. "The goal of UniWare is to make money. Agreed?"
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Cravitz sits up in his chair and says, "That's true."
Hilton gives me a tentative nod.
I say, "I'm going to demonstrate to you that regardless of
what our costs look like according to standard measurements, my
plant has never been in a better position to make money."
And so it begins.
An hour and a half later, I'm midway through an explana-
tion of the effects of the bottlenecks upon inventory and
throughput when Hilton stops me.
"Okay, you've taken a lot of time to tell us all this, and I
personally can't see the significance," says Hilton. "Maybe at your plant you did have a couple of bottlenecks and you discovered
what they were. Well, I mean bravo and all that, but when I was a plant manager we dealt with bottlenecks wandering everywhere."
"Hilton, we're dealing with fundamental assumptions that
are wrong," I tell him.
"I can't see that you're dealing with anything fundamental,"
says Hilton. "It's at best simple common sense, and I'm being
charitable at that."
"No, it's more than just common sense. Because we're doing
things every day that are in direct contradiction to the established
rules most people use in manufacturing," I tell him.
"Such as?" asks Cravitz.
"According to the cost-accounting rules that everybody has
used in the past, we're supposed to balance capacity with demand
first, then try to maintain the flow," I say. "But instead we
shouldn't be trying to balance capacity at all; we need excess ca-
pacity. The rule we should be following is to balance the/ low with demand, not the capacity.
"Two, the incentives we usually offer are based on the as-
sumption that the level of utilization of any worker is determined
by his own potential," I tell them. "That's totally false because of dependency. For any resource that is not a bottleneck, the level of
activity from which the system is able to profit is not determined
by its individual potential but by some other constraint within the
system."
Hilton says impatiently, "What's the difference? When some-
body is working, we're getting use out of him."
"No, and that's a third assumption that's wrong," I say.
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"We've assumed that utilization and activation are the same. Acti-
vating a resource and utilizing a resource are not synonymous."
And the argument goes on.
/ say an hour lost at a bottleneck is an hour out of the entire
system. Hilton says an hour lost at a bottleneck is just an hour lost of that resource.
I say an hour saved at a non-bottleneck is worthless. Hilton
says an hour saved at a non-bottleneck is an hour saved at that
resource.
"All this talk about bottlenecks," says Hilton. "Bottlenecks temporarily limit throughput. Maybe your plant is proof of that.
But they have little impact upon inventory."
"It's completely the opposite, Hilton," I say. "Bottlenecks govern both throughput and inventory. And I'll tell you what my
plant really has shown: it's proved our performance measure-
ments are wrong."
Cravitz drops the pen he's holding and it rolls noisily on the
table.
"Then how are we to evaluate the performance of our opera-
tions?" asks Cravitz.
"By the bottom line," I tell him. "And based upon that evaluation, my plant has now become the best in the UniWare Divi-
sion, and possibly the best in its industry. We're making money
when none of the others are."
"Temporarily you may be making money. But if you're really
running your plant this way, I can't possibly see how your plant
can be profitable for very long," says Hilton.
I start to speak, but Hilton raises his voice and talks over me.
"The fact of the matter is that your cost-of-products mea-
surement increased," says Hilton. "And when costs go up, profits have to go down. It's that simple. And that's the basis of what I'll
be putting into my report to Bill Peach."
Afterwards, I find myself alone in the room. Messrs. Smyth
and Cravitz have gone. I'm staring into my open briefcase—then
with a fist, I slam it shut.
I'm muttering to myself something about their pigheaded-
ness as I exit the conference room and go to the elevators. I press
the "down" button. But when the elevator arrives, I'm not there.
I'm walking back up the corridor again, and I'm heading for the
corner office.
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Bill's secretary, Meg, watches me approach. I stride up to her
desk, where she's sorting paper clips.
"I need to see Bill," I tell her.
"Go right in. He's waiting for you," she says.
"Hello, Al," he greets me as I enter his office. "I knew you wouldn't leave without seeing me. Take a seat."
As I approach his desk I start to talk, "Hilton Smyth is going
to submit a negative report about my plant, and I feel that as my
manager you should hear me out before you come to any conclu-
sions."
"Go ahead, tell me all about it. Sit down, we're not in a
rush."
I continue to talk. Bill puts his elbows on the desktop and his
fingers together in front of his face. When I finally stop he says,
"And you explained all of this to Hilton?"
"In great detail."
"And what was his response?" he asks.
"He basically refused to listen. He continues to claim that as
long as cost of products increase, profits eventually have to go
down."
Bill looks straight into my eyes and asks, "Don't you think he
has a point?"
"No, I don't. As long as I keep my operating expenses under
control and Johnny Jons is happy, I don't see how profits can
help but continue to go up."
"Fine," he says, and buzzes Meg. "Can you call Hilton, Na-
than, and Johnny Jons in here please."
"What's going on?" I ask him.
"Don't worry, just wait and see," he says calmly.
<
br /> It's not long before they all enter the room and take seats.
"Hilton," Bill turns to him, "you heard Alex's report this
morning. You've also seen all the financial results. As the produc-
tivity manager of the division, and as a fellow plant manager,
what's your recommendation?"
"I think that Alex should be called to order," he says in a
formal voice. "And I think that immediate actions should be
taken in his plant before it's too late. The productivity in Alex's
plant is deteriorating, cost of products is going up, and proper
procedures are not being followed. I think that immediate actions
are in order."
Ethan Frost clears his throat, and when we all look at him
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he says, "And what about the fact that in the last two months that
plant has turned profits rather than losses, while releasing a lot of
cash for the division?"
"That is only a temporary phenomenon," Hilton states. "We
must expect big losses in the very near future."
"Johnny, do you have anything to add?" Bill asks.
"Yes, certainly. Alex's plant is the only one that can produce
miracles—to deliver what the client needs in a surprisingly short
time. You've all heard about Burnside's visit. With such a plant
backing up sales, they can really go out and blast the market."
"Yes, but at what price?" Hilton reacts. "Cutting batches to far below optimum size. Devoting the entire plant to one order.
Do you know the long-term ramifications?"
"But I haven't devoted the plant to one order!" I can't con-
tain my anger. "As a matter of fact, I haven't got any past-due
orders. All my clients are pleased."
"Miracles exist only in fairy tales," Hilton says cynically.
Nobody says a word. At last I cannot hold back, "So what's
the verdict—is my plant going to be closed?"
"No," says Bill. "Not at all. Do you think we're such bad
managers that we would close a gold mine?"
I sigh in relief. Only now do I notice I've been holding my
breath.
"As manager of productivity of the division," Hilton says
with a red face, "I feel it's my duty to protest."
Bill ignores him, and turning to Ethan and Johnny he asks,
"Shall we tell them now, or wait until Monday?"
They both laugh.
"Hilton, this morning I asked you to sit in for me because we
were meeting with Granby. Two months from now the three of us
are moving up the ladder, to head the group. Granby left it to us
to decide who will be the next manager of the division. I think
that the three of us have decided. Congratulations, Alex; you will
be the one to replace me."
When I return to the plant, Fran hands me a message "It's
from Bill Peach. What's going on?"
"Call everybody. I have some good news," I smile.
Bill's message is: "I recommend you use these two months to
prepare yourself. You still have a lot to learn, hotshot."
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At last I'm able to reach Jonah in New York and fill him in on
the latest developments. Although pleased for me, he does not
seem surprised.
"And all this time I just worried about saving my one plant,"
I tell him. "Now it seems that I'm ending up with three."
"Good luck," says Jonah. "Keep up the good work."
Hurriedly, before he hangs up I ask in a desperate voice,
"I'm afraid that luck will not be enough; I'm out of my depth.
Can't you come down and help me?" I haven't spent two hours
tracking down Jonah just to hear his congratulations. Frankly,
I'm terrified at the prospect of my new job. It's one thing to
handle a production plant, but handling a division of three plants
does not mean just three times the work, it also means responsi-
bility for product design and marketing.
"Even if I had the time, I don't think it's a good idea," I hear his disappointing answer.
"Why not? It seemed to work fine so far."
"Alex," he says in a stern voice, "as you climb up the ladder and your responsibilities grow, you should learn to rely more and
more on yourself. Asking me to come now will lead to the oppo-
site; it will increase the dependency."
I refuse to see his point. "Can't you continue to teach me?"
"Yes, I can," he answers. "But first you should find out exactly what it is that you want to learn. Call me then."
I don't give up easily. "I want to learn how to run an efficient
division, isn't it obvious?"
"In the past you wanted to learn how to run an efficient
plant," Jonah sounds impatient. "Now you want to learn how to
run an efficient division. We both know that it will not end here.
What is it that you want to learn? Can you spell it out?"
"Actually, I guess that I want to learn how to manage—a
plant, a division, a company, any type or size organization." After
a second of hesitation I add, "It wouldn't be bad to learn how to
manage my life, but I'm afraid that would be asking for too
much."
"Why too much?" says Jonah to my surprise. "I think that
every sensible person should want to learn how to manage his or
her life."
"Great, when can we start?" I ask eagerly.
"Now. Your first assignment is to find out what techniques
are needed for effective management."
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"What?" I ask in a choked voice.
"Come on, I didn't ask you to develop them, just to deter-
mine clearly what they should be. Call me when you have the
answer. And Alex, congratulations on your promotion."
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32
"I'm really proud of you. Three more steps like that and we
will have made it. Shall we drink to it?"
Julie's forced enthusiasm strikes a responding chord inside
me. "No, I don't think so." I refuse the toast, an event which, as you can imagine, is not very common.
Julie doesn't say a word. She just slowly lowers her drink,
leans slightly forward, and looks directly into my eyes. It's quite
apparent that she is waiting for some explanation.
Under the pressure I start to talk slowly, trying to verbalize
my rambling thoughts. "Julie, I really don't think that we should
toast it, at least not in the way you make it sound, like toasting an
empty victory. Somehow I feel that you were right all along—
what is this promotion if not just winning a point in the rat race?"
"Hmm," is her only response.
My wife can express herself very clearly without even open-
ing her mouth—which is definitely not the case for me. Here I
am, rambling all over the place . . . 'Rat race' . . . 'Empty vic-
tory.' What on earth am I talking about? But still, why do I feel
it's inappropriate to toast my
promotion?
"The family paid too big a price for this promotion," I finally
say.
"Alex you're being too hard on yourself. This crisis was
about to explode one way or the other."
She continues, "I gave it a lot of thought and let's face it, if
you had given up, the feeling of failure would have spoiled every
good part of our marriage. I think you should be proud of this
promotion. You didn't step on anybody to get it; you won it fair
and square."
A chill goes down my back as I remember it. I was in deep
trouble. My plant was under a real threat of being closed down;
over six hundred people were about to join the already long un-
employment lines; my career was one inch from being kissed by
limbo; and on top of all that, the unbelievable hours I was putting
in at work had pushed our marriage to the brink of going down
the tube. In short, I was about to change from a bright, rising star
into an ordinary bum.
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But I didn't give up. Against all odds I continued to fight.
And I was not alone. Jonah introduced me to his common-sense
(and thus very controversial) approach to managing a company.
It made a lot of sense, so my team enthusiastically backed me up.
And it was fun, real fun. Let me tell you, the last few months were
quite stormy. I think that we violated almost every rule of corpo-
rate America. But we made it. We turned the plant around. So
much so that it saved the entire division. Now, Julie and I are
sitting in this fancy restaurant celebrating. I'm going to head the
division, which means relocation—a fact that probably contrib-
utes a lot to Julie's supportive mood.
Raising my glass I say confidently, "Julie, let's drink to my
promotion. Not as a step toward the tip of the pyramid, but let's
drink to what it really means—positive reassurance to our excit-
ing, worthwhile journey."
A broad smile is spreading over Julie's face and our glasses
make a clear, gentle sound.
We turn to our menus, in a good mood. "It's your celebra-
tion as much as it is mine," I say generously. After a while, and in
a more somber tone I continue, "Actually, it's much more Jonah's
achievement than mine."
"You know Alex, it's so typical of you," Julie says apparently
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