The Goal: A Process of Ongoing Improvement

The Goal: A Process of Ongoing Improvement

by

Eliyahu M. Goldratt and Jeff Cox

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The Goal: A Process of Ongoing Improvement: Chapter 30 Summary & Analysis

Summary
Analysis
At the start of the new month, Alex and his staff have their monthly report. Lou reports that they had a 17-percent improvement thanks to Burnside’s order, which meets Peach’s demand. The plant is turning a firm profit and has made up for its former losses. The next day, Alex receives notice from Peach that he will soon have a formal performance review of his plant. Alex looks forward to showing what he has done. However, Alex’s enthusiasm wanes the next week when Hilton Smyth drops by unexpectedly while Alex is away at a meeting. Smyth notices that some machines are idle and starts grilling Bob and the others about their new processes.
More than Peach, Hilton Smyth represents the folly of strict adherence to traditional methods and efficiency metrics. Even though Alex’s plant is far more profitable than it’s ever been, Hilton Smyth sees the idle machines as a sure sign that Alex and his staff are wasting money, suggesting that he trusts more in traditional metrics than in the proven productivity he can see with his own eyes. That is, Smyth’s adherence to traditional ideas makes him irrational.
Themes
The Importance of Goal-Setting Theme Icon
Working with Constraints Theme Icon
Ineffective vs. Effective Business Metrics Theme Icon
Efficiency vs. Optimization Theme Icon
Ethan Frost calls Alex, having just heard from Smyth, with questions about their new accounting methods. He sends an auditor named Neil Cravitz who doesn’t like the new methods, even though Alex insists that it gives a more accurate representation of their expenses. Lou receives a warning from Frost to stick to the traditional measures, but other than that, neither Alex nor Lou receive any formal punishment. However, using the old accounting methods, their monthly progress isn’t 17 percent, but only 12.8 percent—less than Peach demanded.
Even though Ethan Frost chastises Lou for breaking away from traditional cost accounting metrics, the fact that neither Alex nor Lou receive any real punishment suggests that Frost recognizes that Alex’s plant is profitable, regardless of how they measure it. However, those traditional metrics cause Alex’s plant to appear to underperform, which could cause Peach to close the plant, demonstrating that faulty metrics can have serious ramifications.
Themes
Ineffective vs. Effective Business Metrics Theme Icon
While Lou and Alex are meeting about the revised numbers, they hear a helicopter land in the parking lot. Johnny Jons and Bucky Burnside climb out. Alex panics, assuming something went wrong with his order. Before Alex can intercept them, Burnside strides into the plant and shakes hands with every employee he can find. Burnside congratulates Alex on their incredible work with his difficult order and states that he wanted to personally thank every person in the plant for pushing to get it done. Johnny Jons pulls Alex aside and tells him that he’s about to finalize a long-term contract with Burnside’s company to sell them 10,000 units a year. Alex is floored.
Johnny Jons and Bucky Burnside’s praise affirms that Alex’s plant is succeeding. The plant is satisfying customers and making huge sales, thus achieving their goal of making money despite what the traditional accounting method reports. This validates Jonah’s advice and again suggests that traditional corporate accounting measures do not give an accurate description of a business’s success.
Themes
The Importance of Goal-Setting Theme Icon
Ineffective vs. Effective Business Metrics Theme Icon
Since Alex must be at corporate headquarters in the morning, he decides to spend the night with Julie at her parent’s house, which is closer than his own house. When he arrives, he and Julie take another walk together. Alex shares how nervous he is about his performance review, since the traditional accounting method makes their number look less impressive than they actually are. Julie tells Alex that she enjoys hearing about his work, and she wishes he’d told her more about it over the years. They both admit to getting too wrapped up in their own lives instead of thinking about the other’s feelings.
Although Alex and Julie do not overtly state the goal of their marriage, their mutual admission that they’ve been too involved in their own lives to think about each other suggests that they’ve agreed upon an implicit goal: spending time together and sharing in each other’s lives. Alex’s fear about his performance review, which will be less impressive by traditional metrics, again demonstrates that faulty metrics can potentially cost someone their job, making it appear that they are failing even when they are achieving their goals.
Themes
The Importance of Goal-Setting Theme Icon
Ineffective vs. Effective Business Metrics Theme Icon
The Cost of Corporate Success Theme Icon
Related Quotes
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Julie confesses that she’s nervous about moving back home, because she doesn’t want Alex to stop paying attention to her like he does now. But she also knows that Dave and Sharon need their mom and dad at home; raising them and being together seem like good goals. Alex and Julie agree to make a point of sharing their lives with each other more, as often as they can. Alex says that the late nights won’t stop, but he’ll try to pay extra attention to Julie and the kids. Alex jokingly asks Julie if she wants to get married again, and they decide that they’ll go to Vegas and have a shotgun wedding that weekend.
In Alex and Julie’s marriage, just as in business operations, having clear goals allows them to see where they are succeeding and where they are failing. Though Alex once failed to recognize what he was doing wrong by working all the time, having the goal of spending time with Julie and sharing his life with her helps him to realize when he is failing to achieve that goal. This shows the usefulness of goals in both career and personal matters.
Themes
The Importance of Goal-Setting Theme Icon
The Cost of Corporate Success Theme Icon