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Eliyahu Goldratt's "The Goal" is an entertaining novel and at the same time a thought provoking business book. The story is about a plant manager, Alex Rogo, whose plant and marriage are going downhill. He finds himself in the unenviable position of having ninety days in which to save his plant. A fortuitous meeting with an old acquaintance, Jonah, introduces him to the Theory of Constrains (TOC). He uses this new way of thinking to ...
TOC postulates that for an organization to have an ongoing process of improvement, it needs to answer three fundamental questions:
1. What to change?
2. To what to change?
3. How to cause the change?
The goal is to make (more) money, which is done by the following:
1. Increase Throughput
2. Reduce Inventory
3. Reduce Operating Expense
Goldratt defines throughput (T) as the rate at which the system generates money through sales. He also defines inventory (I) as everything the system invests in that it intends to sell. Operating expense (OE) is defined as all the money the system spends in order to convert inventory into throughput.
The author does an excellent job explaining his concepts, especially how to work with constraints and bottlenecks (processes in a chain of processes, such that their limited capacity reduces the capacity of the whole chain). He makes the reader empathize with Alex Rogo and his family and team. Don't be surprised if you find yourself cheering for Alex to succeed.
The importance and benefits of focusing on the activities that are constraints are clearly described with several examples in "The Goal". One example from the book is the one in which Alex takes his son and a group of Boy Scouts out on a hiking expedition. Here Alex faces a constraint in the form of the slowest boy, Herbie. Alex gets to apply two of the principles Jonah talked to him about - "dependent events" (events in which the output of one event influences the input to another event) and "statistical fluctuations" (common cause variations in output quantity or quality). He realizes that in a chain of dependent processes, statistical fluctuations can occur at any step. These result in time lags between the processes that accumulate and grow in size further down the chain. This leads to the performance of the system becoming worse than the average capacity of the constraint.
It is interesting to note that TOC practitioners often refer to TOC concepts in terms of references from this book. For example, a constraint is often called a Herbie.
The Goldratt Institute (goldratt dot com) has illustrated TOC Analysis in the form of five steps used as a foundation upon which solutions are built:
1. Identify the constraint
2. Decide how to exploit the constraint
3. Subordinate and synchronize everything else to the above decisions
4. Elevate the performance of the constraint
5. If, in any of the above steps the constraint has shifted, go back to Step 1
Although this book is excellent in the context of Operations, the "Goal" to "make (more) money by..." is limited in its focus. It is concerned with the cost centers internal to a business. Business performance in today's increasingly competitive market depends on a variety of factors that exist outside the business. These include competitors, external opportunities, customers and the non-customers. Executives need to focus on these in order to see the bigger picture.
This book is necessary reading at the best MBA programs. In addition to being a review, this write-up was intended to serve as a summary of the core concepts of this book and TOC. If you are reading this as part of your coursework, please feel free to share the link with your fellow students.
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on December 3, 2009
The Goal is a fantastic business novel that wraps up a whole lot of common sense that most of us miss. The novel follows Alex Rogo, a manager in a manufacturing plant that is in danger of going out of business as he and his team figure out how to get back into the black and making money. Aside from being a reasonably well written novel, the advice provided through out the book is great and has application in many more areas of business and industry than just manufacturing.

The first point of common sense it comes to is the goal of any business. In its simplest form, the goal of every business should be to make money. This gets elaborated on more in the statement: The goal is to make money by increasing net profit while simultaneously increasing ROI and simultaneously increasing cash flow. This is done through these areas:
Throughput: the rate a system generates money through sales. This is your money coming into the system.
Inventory: all the money that the system has invested in purchasing things which it intends to sell. This is money stuck in the system.
Operational Expense: All the money the system spends in order to turn inventory into throughput. This is the money going out of the system.

While all of this will likely make sense to anyone in business, the even more valuable lesson learned within the book is the importance of measuring these three areas and NOT worrying so much about irrelevant measurements, which is pretty much every other measurement we seem to use. Examples of what not to measure in manufacturing seemed to focus around efficiencies and keeping people busy while in software, it would be common measurements such as lines of code written per hour or a daily defect fix rate. While I have no doubt people will quickly disagree with this concept, the genius of the book is showing just how important these measurements are.

Once Alex and his team come to understand this, they then delve into managing by the theory of constraints which, after realizing the above, focuses on
What to change.
What it has to change to and
How to change it.
The book is very effective due to its readability and common sense approach and definitely worth a read.

Written by Eliyahu M. Goldratt and Jeff Cox

Goldratt`s site, while advertising his consulting and services also has a number of good free resources on the theory of constraints and more.
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on October 4, 2011
I recommend this book with all my heart to the regular folk, especially to ones that find themselves putting fires out daily. I love the fact that you have to make your own deductions to learn anything out of the book, which then stays with you for a life time. Nothing is put in front of you in a silver plate. I praise Mr. Goldratt.
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on January 15, 2013
The book had way too much filling and beating around the bush to finally get to the point. There were about three key ideas explained in the book within 300 pages, which could have all easily been summarized in less than a couple pages. Its a fun novelization, but not worth much as tool to learn about the manufacturing industry.
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on May 26, 2014
This management book is written as a good detective novel that can be read at one or two sittings. It also packs a punch in terms of management principles that go well beyond the manufacturing environment that it describes, and then deals with in detail. The management principles are shown to be implementable in a wide variety of situations for profit and for people. For example, it begins by showing how a limited goal, such as making money, can be translated into increased productivity, innovation and other worthy goals, all with this most inviting approach: business and life as a novel. It was recommended by my son-in-law when I asked if there was a book that invited students to study business, rather than telling them. I'm going to try and make 'The Goal' standard reading for my senior business and ethics classes.
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on September 1, 2013
The book is much better than I thought. It's an easy to read story that pulls together all aspects (both technical and persona) of the production process. It provides a thorough analysis and explanation of so many aspects of the production process without being dry and hard to read. Highly recommended for anyone involved with a manufacturing company. I, myself, work in IT, and this book is helping me appreciate and understand the challenges before my colleagues in the Production side of the business.
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on October 18, 2013
Everyone reads it, and says that it makes sense, but hardly anyone does it. Doing it is the power. Concepts apply to any business of process, although project-oriented stuff requires a new level. This book will still help with basic understanding of the building block concepts. Easy read, well-written and entertaining.
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on December 4, 2014
I'm an Engineer and I totally recommend this book to anyone who is interested in a good story that serves as a lesson in supply chain and has no or minimal experience in the field. It is easy to relate to the main character and the book makes you want to keep reading it.
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on November 18, 2015
Excellent reading , lotsa of interesting concept . Only downside is the book is old , likely written in the 70 and there is no email/cellphone. If your in IT id recommend reading the pheonix project first , then read the goal as a complement.
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on February 24, 2014
It's written as a novel which allows for easy reading. I like the analogies used to depict the theories in easy to understand examples. It's a good look into what manufacturers experience on an ongoing basis.

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