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 38 Summary & Analysis

Summary
Analysis
Alex picks Ralph and Lou up early in the morning and drives to headquarters, calculating in his head how he will make his appeal. When they meet Johnny Jons, Jons introduces them to Dick Pashky, his best marketer. Alex explains that he has 20 percent more capacity in his plant and wants 20 percent more sales—10 million dollars’ worth. Johnny Jons laughs at him and explains he’s already making all the sales that he possibly can. He does have French clients who want to buy from them, but the prices they are asking for is far too low.
Alex’s final push to make more  sales from a market that Jons believes is already exhausted demonstrates how a manufacturer, running a newly-optimized system, can use their new increased capacity to offer lower prices. This can allow them to take hold of a larger portion of their target market or even to break into an untapped market.
Themes
The Importance of Goal-Setting Theme Icon
Working with Constraints Theme Icon
Efficiency vs. Optimization Theme Icon
Alex and Lou think a moment, then tell Jons they can produce products for the French at 10 percent less than their production costs. Johns doesn’t understand how it could work but tells Dick to bring the paperwork—he’ll hear Alex and Lou out. After spending several hours calculating costs, Alex tells Jons that he wants to use this deal to break into the European market. On top of the price, he says Jons should guarantee that they’ll deliver their products within three weeks. Jons thinks they’re crazy, but when they prove their math, he agrees. On the way home, Lou calculates that the plant will make a seven-figure profit. They are all thrilled. Despite his excitement, Alex still feels that he has so much to learn if he is going to run the entire division.
The plant’s increased capacity and optimized system means that they can produce more finished products for less cost. Alex and Lou’s pitch to manufacture goods for the French below their current product cost (though not below the cost of materials) again demonstrates how a manager can use the increased capacity of his system to offer a more competitive price, make more sales, and take control of a greater portion of their target market.
Themes
The Importance of Goal-Setting Theme Icon
Working with Constraints Theme Icon
Efficiency vs. Optimization Theme Icon
Alex remembers Julie’s point that Jonah is a scientist and Ralph’s mention of Mendeleev. He wonders again if there isn’t some hidden connection between science and business. At the plant, everyone is busy preparing for the French contract except for him. Now that things are running smoothly, he has nothing to do. He misses the activity, the sense of being needed. With nothing better to do, Alex decides to go to the library and read some science books, starting with Newton, to see if there is anything to learn.
Alex misses being busy and constantly being needed, suggesting that part of his obsession with his corporate career is ego-driven; as a manager, he always feels that other people need him and therefore that he is important. This recognition of lurking corporate ego depicts the corporate lifestyle as both thrilling and deeply flawed, even troubling.
Themes
The Importance of Goal-Setting Theme Icon
The Cost of Corporate Success Theme Icon
That evening, Alex and Julie drink tea together and Julie tells him more about Socrates. Alex tells her about the physics books he read, which didn’t relate directly to business but revealed something about the way scientists operate: rather than collecting massive amounts of data, scientists look for simple if-then relationships between phenomena and slowly piece together all of the interconnections in the material world. Julie remarks that this is like how Socrates studies human behavior. Alex guesses that this is also how Jonah develops his ideas—by using this “thinking process” to find unusual relationships between things and people. However, Alex is not sure what to do with this realization.
Alex’s understanding of Jonah’s “thinking process,” which parallels Socrates’s own “thinking process,” implies that any manager should adopt this scientific mindset to better understand their business. By searching for relationships rather than just collecting data, one can focus entirely on what seems important rather than distract themselves with plentiful but meaningless facts. That is, they can maintain their focus on their goal.
Themes
The Importance of Goal-Setting Theme Icon
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