Book Review – The Goal - Principles of Management(300 Level Course)


The Goal is an intense and challenging management concepts book to read. It challenges the established management principles and structure. The author introduces us to the normal ways of doing things which

in this case did not work and then show us how to solve the issue at hand using unconventional methods of managing and problem solving.

The main character in the book is an ambitious plant manager who is inexperienced and seems to be a cookie cutter MBA type. The manager did not have a clear way of controlling and managing the plant environment to be more efficient and to produce products that will meet the plants demand schedule. The manager lacked a sense of direction as to where the plants goals are and what needs to be done to achieve those goals.

The plant is going through a tough time with revenues falling and getting cut by competition. Revenues have been falling for the last 3 quarters and Japanese producers make the same products cheaper and at a more efficient rate such that they are able to deliver the goods earlier and thus stealing business. At the same time the company is closing down plants that are underperforming without looking into what the underperformance is caused by or what could be done to overcome the loss of revenues from these underperforming plants.

The other plant managers are not given clear goals and an incentive to improve their numbers. All that the top executives are communicating to their subordinates is “Fear” (you don’t perform or produce a Net profit, we close your plant). This environment of fear is not helping the situation just making it worse.

To make matters even worse the main subject in the book (Mr. Rogo) is having marital difficulties. Mr. Rogo has to balance his work and life at home with 2 children and a wife who does not seem to understand how demanding the husbands work is and how much he is trying to balance both work and life at home. Both the division manager and Rogo’s wife seem to have unrealistic expectations. The headquarter executives also un-relentlessly interrupt things at the plants whenever they feel like it. From marketing to other managers, Rogo has to deal with these interruptions constantly and his work is affected by them. The plant is behind production schedule and some of the clients are starting to complain about their orders. Even though the plant is operating in full capacity according to Rogo, it is unable to meet its orders and there is a backlog of orders piling up. Marketing and Sales are getting frustrated with the plant and they seem to keep on calling to get things expedited.

The installation of robots in the plant was supposed to solve efficiency issues but it did the opposite. Robots are a good tool if they are implemented with a clear and concise plan in hand. Implementing robots without any kind of a plan will eventually backfire since robots tend to put some of your usual productions methods out of sync.

According to Rogo the robots were supposed to increase plant efficiency and improve overall productivity. This did not happen.

To add insult to injury Rogo had to ponder what his “Goal” was as an organization. Being that he is the plant manager he has to clearly define his goal and turn things around for the plant to become more efficient and increase both output and profits. Rogo was in luck that he met his old Physics professor and the professor who is now a consultant advised Rogo to clearly define his goal and get 3 measurements that will help him achieve that goal.

Rogo is able to identify the 3 measurements as Return on Investment (ROI), Net Profits and Cash Flow. These three measurements are supposed to help the plant achieve its ultimate goal of making money. Other three measurements are throughput, inventory and Operational Expense. Rogo embarked on a soul searching journey to understand the three goals and find a better way to apply them to the current situation at the plant. He asked the right questions and talked to key individuals at his plant in order to find out what was going wrong with current operation procedures and if measurements are kept to ensure that they achieve profitability. To achieve all of this Rogo has to maintain a balanced plant. Thus the number of inventory shall not be more than the number of orders. Also he needs to have better performing robots to increase efficiency.
After taking a camping trip with his son, Rogo observed how the whole scout trip was behaving when they were hiking in the forest. The group’s dynamics changed a lot when during the walk. The whole group depended on one individual who did not perform to par or had the groups objectives in mind.

By making the individual understand and helping him change his performance the whole group was able to function seamlessly without a hitch and reach their goal. Returning home to find his wife gone after the trip with his son also had a major impact on Rogo and also added more issues that he needs to handle.

Rogo embarked on a quest to find the bottlenecks that are keeping his plant from performing and meeting its obligations. He found out that there are few systems or machinery in the plant that were supposed to improve efficiency but they did not and ended up creating bottlenecks and statistical abnormalities. Quality control was also not performing to part thus causing some of the products to be turned back due sub standards.
Inventory is piling up and the only way to start creating a stable environment was to offload some of the processes to other plants in the area that could do the job for them. Offloading helped the plant create a stable environment and make sure some of the old orders are shipped before they start afresh and optimize the production line to their specific needs.

Another measure that they took was to control the release of inventory and raw materials. By doing this the plant was not overwhelmed with raw materials sitting on the plant floor waiting to be processed. By releasing smaller batches of raw materials they could observe the whole process out and fine tune it with ease and at the same time control bottlenecks. The plants improved efficiencies brought in new clients and business and they had a jump in Net Profits and orders. Rogo did quite an amazing presentation to his auditors and managers at their end of quarter meeting he did not manage to convince everyone that the method he was using to measure productivity and run the plant efficiently will work better than the cost accounting method.

In the end Rogo managed to get a promotion to turn the whole division around and increase overall efficiency. He embarked on finding methods to apply his ideas to the whole division and at the same time overcome the resistance of the other plant managers. The book exhibits the challenges faced by managers today trying to manage a division or company without knowing the ultimate goal of what they are doing. Managers are leading blindly and do not know what is going on until there is a crisis at hand and a solution needs to be formulated. By identifying the goal earlier on, managers are able to fine tune the environment to produce at maximum capacity and without glitches and at the same time have a high efficiency.

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