the divisional constraints?"
"I don't know," I say. "But if we succeeded in doing it here, in our plant, it must be possible to do in the division."
He thinks about it for a minute and then says, "I don't think
E.M. Goldratt
The Goal: A Process of Ongoing Improvement
Captured by Plamen T.
340
so. Here we were lucky. We were dealing with physical con-
straints, with bottlenecks, that's easy. But at the divisional level
we'll have to deal with measurements, with policies, with proce-
dures. Many of them are cast already into behavioral patterns."
"I don't see the difference," I disagree. "Here we had to deal with all of the above. Come to think about it, even here the constraints were never the machines. Yes, we called and still call the
oven and the NCX10 bottlenecks, but if they were true bottle-
necks how come we succeeded to squeeze almost twice as much
out of them as before? How come we increased throughput so
much without buying more capacity?"
"But we changed almost every aspect of how we operate
them, and how we operate everything around them."
"That is exactly my point," I say. "What aspect of operation did we change?" Mimicking his voice I answer, "The measurements, the policies, the procedures. Many of them were cast into
behavioral patterns. Lou, don't you see? The real constraints,
even in our plant, were not the machines, they were the policies."
"Yes, I do see. But still there are differences," he says stub-
bornly.
"What differences? Name one."
"Alex, what's the use of pushing me to the corner? Don't you
see that there must be major differences? If there weren't, how
come we don't even have a clue of what the nature of the divi-
sional constraint is?"
That stops me dead.
"Sorry. You're right. You know, Lou, maybe we were lucky
here. We had physical constraints that helped us to focus our
attention, to zoom in on the real policy constraint. That isn't the
case in the division. Over there we have excess capacity going
through our ears. We have excess engineering resources that we
succeed so brilliantly in wasting. I'm sure that there is no lack of
markets. We simply don't know how to put our act together to
capitalize on what we have."
Pacified he says, "That brings us to the real question, how
does one go about identifying the system's constraint? How can
we zoom in on the most devastating erroneous policies. Or, to use
your term, how does one go about identifying the core problem,
the one that is responsible for the existence of so many undesir-
able effects?"
"Yes," I agree, "That's the question, no doubt."
E.M. Goldratt
The Goal: A Process of Ongoing Improvement
Captured by Plamen T.
341
Looking at the board I add, "What's written here is still
valid. Identifying the system's constraint is the first step. What we
now understand is that it also translates into a mandatory de-
mand for a technique by which to do it. Lou, that's it. We found
it."
The excitement causes me to stand up. "Here it is," I an-
nounce, "here is the answer to Jonah's question. I'm going to call
him right now. You can imagine my first sentence: Jonah, I want
you to teach me how to identify the core problem."
As I turn to leave I hear Lou, "Alex, I think that it might be a
little premature."
"Why?" I ask, my hand on the doorknob. "Do you have any
doubt that that is what I must learn first?"
"No," he says. "On that I'm quite convinced. I just think that maybe you should ask for more. Knowing the core problem exactly might be far from sufficient."
"You are right again," I calm down. "It's just that I was looking for the answer for so long."
"I understand, believe me, I understand," he smiles.
"Okay Lou." I sit down. "What else do you think I should
ask Jonah to teach me?"
"I don't know," he answers. "But if the five steps are valid, maybe what you should ask for are the techniques required to
enable us to carry those steps out. We already found the need for
one technique, why don't we continue to examine the other four
steps?"
"Good idea," I say enthusiastically. "Let's proceed. The second step is," I read from the board, "decide how to exploit the
system's constraints. That doesn't make any sense to me. What is
the point in trying to exploit an erroneous policy?"
"It makes sense only if the constraint is physical, but since we
do deal with policy constraints, I guess we'd better move to the
next one," Lou agrees with me.
"Subordinate everything else to the above decision," I read.
"Same reservation. If the constraint is not physical this step is
meaningless. The fourth step is, 'Elevate the system's con-
straint^).' Hmm, what are we going to do with this one?"
"What's the problem?" Lou asks. "If we identify an errone-
ous policy we should elevate it, we should change the policy."
"How lovely. You make it sound so simple," I say sarcasti-
E.M. Goldratt
The Goal: A Process of Ongoing Improvement
Captured by Plamen T.
342
cally. "Change the policy! To what? Is it so simple to find a suitable replacement? Maybe for you, Lou, not for me."
"For me neither," he grins. "I know that cost accounting is erroneous, but that doesn't mean I've completely figured out
what to replace it with. Alex, how does one go about correcting
an erroneous measurement or any other policy?"
"First, I think that you need the light-bulb idea, the break-
through. The management techniques that Jonah talks about
must include the ability to trigger such ideas, otherwise those
techniques can't be used by mere mortals. You know, Lou, Julie
predicted that as I come to it I'll recognize that we are not dealing
just with techniques but actually with thinking processes."
"It started to look like it," Lou agrees. "But triggering breakthrough ideas by itself is not enough. An even bigger obstacle is to
verify that this idea really solves all the resulting bad effects."
"Without creating new ones," I add.
"Is it possible at all?" Lou sounds very skeptical.
"It must be, if we want to plan rather than just react." As I
talk I find a much better answer. "Yes, Lou, it must be possible.
Look what happened to us with our solution of getting more
sales. As a direct result of the French order we threw the plant
into a very unpleasant two weeks and we killed or at least delayed
a good marketing campaign. If we just thought systematically be-
fore we implemented it, rather than after the fact, we could have
prevented many problems. Don't tell me that it was impossible.
All the facts were known to us, we simply didn't have a thinking
process that would force and guide us to examine it early in the
game."
"What do we change to?" Lou says.
That throws me off balance. "Pardon me?"
"If the first thinking process should lead us to answer the
question 'what to change?' the second thinking process should
lead us to answer the question 'what to
change to?' I can already
see the need for a third thinking process."
"Yes, so can I. 'How to cause the change.' " Pointing to the
fifth step I add, "with the amount of inertia that we can expect in
the division, the last one is probably the most important."
"So it seems," Lou says.
I stand up and start to pace. "Do you understand what we
are asking for?" I cannot contain my feelings. "We are asking for E.M. Goldratt
The Goal: A Process of Ongoing Improvement
Captured by Plamen T.
343
the most fundamental things and at the same time we are asking
for the world."
"I've lost you," Lou says quietly.
I stop and look at him. "What are we asking for? For the
ability to answer three simple questions: 'what to change?', 'what
to change to?', and 'how to cause the change?' Basically what we
are asking for is the most fundamental abilities one would expect
from a manager. Think about it. If a manager doesn't know how
to answer those three questions, is he or she entitled to be called
manager?"
Throughout Lou signals that he is following me.
"At the same time," I continue, "can you imagine what the
meaning is to being able to hone in on the core problem even in a
very complex environment? To be able to construct and check
solutions that really solve all negative effects without creating new
ones? And above all to cause such a major change smoothly, with-
out creating resistance but the opposite, enthusiasm? Can you
imagine having such abilities?"
"Alex, that is what you have done. That's exactly what you
have done in our plant."
"Yes and no," I answer. "Yes, that's what we have done. No
Lou, without Jonah's guidance all of us would be looking for new
jobs today. Now I understand why he refused to continue advis-
ing us. Jonah said it to me in the clearest way. We should learn to
be able to do it without any external help. I must learn these
thinking processes, only then will I know that I'm doing my job."
"We should and can be our own Jonahs," Lou says and
stands up. Then this reserved person surprises me. He puts his
arm around my shoulder and says, "I'm proud to work for you."
E.M. Goldratt
The Goal: A Process of Ongoing Improvement
Captured by Plamen T.
344
AN INTERVIEW WITH
ELI GOLDRATT AND OTHERS
by David Whitford,
Editor at Large, Fortune Small Business.
DW:The Goal was published 20 years ago. Since then a lot has
changed in operations. New, powerful methodologies to im-
prove operations, such as LEAN and Six Sigma, are widespread.
The emphasis on reducing lead time and improving due-date
performance has become the norm. Even The Goal's subtitle - a
process of ongoing improvement - is a statement that is now
taken for granted by every organization.
So, my first question: Is The Goal still relevant?
EG: How does a scientist go about judging the relevancy of a particu-
lar body of knowledge? I believe that the decisive way is to choose
an organization where all the competing knowledge is implemented.
We should choose a large company that is already using all the new
methodologies you mentioned; an organization that is using these
methodologies so extensively that there is an institutionalized orga-
nizational structure - like a formal "black-belt" central office. The next step is to choose a significant section of that organization, and
properly implement in it the body of knowledge in question. In our
case it will mean implementing TOC in one of the plants of that large
company. Then, compare the performance of the chosen plant with
the
performance of the rest of the organization. Now we are able to reach
a conclusion: if no real difference is detected then the conclusion will
be that the examined body of knowledge in question is not relevant.
But, if there is a decisive difference, then the conclusion must be that
the examined body of knowledge has relevancy; the bigger and more
significant the difference, the more relevant it is.
E.M. Goldratt
The Goal: A Process of Ongoing Improvement
Captured by Plamen T.
345
DW: Did you conduct such an experiment? And if so can you
tell us about the results?
EG: Fortunately, I don't have to initiate such experiments, since many
readers of The Goal are kind enough to write to me and share their experiences. From the letters that I received over the years let's pick
one that fits our conditions. Since we are discussing relevancy, it must
be a recent letter. It should be from a person who implemented TOC
in a plant that is part of a large enough organization, an organization
that is using black-belts. And it should contain comparisons between
that plant and all other plants of that company.
Judge for yourself if this letter fits our bill perfectly.
Dow Corning Corporation
Healthcare Industries Materials Site
635 N. Gleaner Road
Hemlock, MI 48626
May 20, 2004
Dear Dr. Goldratt:
I wanted to share with you what we have accomplished within
our organization by using the tools presented in your books,
"The Goal" and "It's Not Luck."
When a colleague gave me a copy of "The Goal," the plant
at which I work was in a similar situation as Alex's plant in
the book. At that time, in 1998, our plant's on-time delivery
was approximately 50%. We were carrying over 100 days of
inventory and we had customers on allocation because we
could not meet the demand for orders. In addition, our man-
agement had given us six months to turn things around, or
else. I was the new production team leader for approximately
thirty percent of the plant sales and forty percent of the plant
production employees. My units performance was similar to
the plant's overall performance.
As I read "The Goal" I quickly realized one person alone could
E.M. Goldratt
The Goal: A Process of Ongoing Improvement
Captured by Plamen T.
346
not solve the problems within my unit, or within our plant. I
ordered several copies of "The Goal," and my colleague and
I distributed them to our production manager, plant manager
and manufacturing and quality engineers. Everyone was eager
for a solution to our problems.
Within my unit we identified the bottleneck and began to focus
our resources there. Our plant is a non-union facility and many
of the workers were also interested in what we were doing. I
ordered copies of "The Goal" for everyone who worked for
me. By the time the six-month ultimatum came, my unit and
another had started to make significant changes, and the plant
was spared any ill recourse. However, the expectation was
that we would continue to improve. For the five years that
followed, we continued to work on breaking our bottlenecks.
When one moved, we attacked it again. We got pretty good,
Eventually, the bottleneck moved outside our plant as depicted
in "The Goal." However, we knew this would happen ahead
of time and had already begun the indoctrination of our sales
and marketing group.
I recently moved out of production, but before I left, the results
within my unit were: cycle time reduction of ~85°/o. Operator
headcount reductions of 35% through attrition; no layoffs were
needed. Work in process and finished goods inventory down
~70%. On-time delivery went from ~50% to ~90% and the
number of material handling steps were cut by over half. Our
plant, and business unit have done very well too. And me, I
received a promotion while in that position, and a compensa-
tion award. Dow Corning, like many other corporations, has
downsized multiple times in the past five years. During each
one, our plant, and business unit were affected very little or
completely passed over. I am convinced that if we hadn't
read and followed the methods in "The Goal" and "It's Not
Luck" the situation would be much different today. There is
still much to do, as our business unit is the only one to really
have embraced "The Goal." I am hoping in my new role in
Six Sigma that I can further share your tools and methods.
E.M. Goldratt
The Goal: A Process of Ongoing Improvement
Captured by Plamen T.
347
Thank you for signing the book Dr. Sirias has forwarded to
you on my behalf. I am honored.
Sincerely,
Robert (Rob) Kain P.E.
Six Sigma Black Belt
Dow Corning Corporation
Life Sciences/Specialty Chemical Business
DW: Impressive, but why is only one business unit of Dow Corn-
ing using TOC? What bothers me is that this person is talking
about a span of over five years. If it worked so well, why didn't
it spread to the other business units? Is it the Not-Invented-Here
(NIH) syndrome?
EG: Before we dive into speculation about psychology of organiza-
tions, let's examine the facts. We are talking about a middle manager
who works in one corner of a large company. Why should we be
surprised that, in five years, this person was not yet able to take his
whole company through a major paradigm shift? And, by the way,
as you read in his letter, he is making nice progress; he has already
The Goal: A Process of Ongoing Improvement, Third Revised Edition Page 45
