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Building Better Business Book Club 

Reading, sharing insights, getting recommendations, staying informed.

The Goal by Eliyahu M. Goldratt & Jeff Cox

The Goal is a different style of business book, it is written as a story. A story of a man called Alex Rogo. His challenge in an engineering factory that is struggling to be profitable and is given an ultimatum by its parent company. Alex Rogo’s challenge is to deeply understand the causes of the issue within his factory but at the same time, the story weaves in the impact on his personal life, and to those he loves. Insight comes when hiking with his children to illustrate the key aspects of the problem.

Eli Goldratt, one of the co-authors of this book use the style to explore his Theory of Constraints in business. When I started the book, I was unsure whether the challenges of a failing engineering factory would provide many lessons to a small one-person service business like my own. Those fears were completely unfounded. Although the context of bottlenecks around machinery, that cause both buildup of inventory and ultimately loss of profits is on the surface rather unlike a service business there are corollaries that are worthy of thought.

In the engineering factory, the bottlenecks are in one or two places in the manufacturing process. Other processes, that are not bottlenecks, continue to produce sub-assemblies faster than the bottleneck can handle them. The impact of that is build up an inventory of part-produced products. The consequence of having additional inventory is increased costs for the raw materials and the cost of storage. That reduces profit.

One of the early lessons if the goal is to understand what the goal of the business truly is, and whilst making profits is an outcome, it is not the goal. Being efficient and effective stands out. As I read I thought about the equivalent context of a small business, particularly in a service industry, where inventory is not obvious, yet such businesses do have inventory.

Websites that have pages that are rarely visited yet still need to be maintained. We have knowledge and skill that we acquire and hone but rarely use with our clients. We have bottlenecks, areas of our business where we struggle to find the time to complete the work and find backlogs and a multitude of things waiting to be done. These things are perhaps less obvious, we cannot stack them on shelves. They may be easier to ignore, than a pile of half manufactured parts in the gangway, yet they still affect the profitability of our businesses.

In the later chapters of the book, as the problems around having bottlenecks are resolved, other impacts start to appear, not least, that the throughput of possible business, given the capacity of the factory, is increased by addressing the issue the bottlenecks cause. The result of effective processing is a need to increase the sales so that that capacity can be used profitably.

This gave me pause to think about how a small service business might increase capacity, perhaps by moving from one to one products to group products. If it were to choose to do so it would also have to ramp up its sales capability to speak to more people to win more clients to feed the extra capacity.

One aspect of the book that I did enjoy is how it shows that the issues that the business described in the book had, are deeply interconnected. Addressing aspects of the manufacturing process causes a need for sales to change their approach, changes in the sales approach mean changes in the prioritisation of work and so on. This is the real lesson for small businesses like mine, and, probably, like yours. Change needs to be strategic, with a clear goal in mind and a focus on that goal as the changes and the impact they have are implemented. Those lessons are universal in business and yet often forgotten.

The Goal is now quite an old book. The first edition was published in 1984. Its age shows in some areas, being built around the challenges of a factory in 1984, where computers, automation and robotics were in their very early stages of development. Much of the work was manual compared to today’s factories where the descriptions of the work would be almost unrecognisable. Yet, it seems to me that the lessons held within this book remain true.

Though this is an easy book to read, partly because the story becomes quite a page-turner through the middle section of the book. I felt both the start and the end were somewhat contrived, in order to fit the telling of a story into the bulk of the middle of the book. It remains effective despite that and does still convey the lessons that we can apply today.
In summary, I think the goal provides a good holiday read for business owners, who would like some light relief while still thinking about and seeking to improve the ability of their business. In that context, this is a good read.