In the morning, Bill Peach calls Alex to ask him to come into headquarters. Hilton Smyth’s plant’s traditional metrics look good, but he continues to lose money. Ethan Frost is convinced that they need to change their accounting methods, and they want Alex’s help. Alex is surprised that Peach is considering changing his traditional metrics, but he agrees to come in.
Peach and Frost’s desire to find better metrics as well suggests that if one can prove that their new way of measuring is successful (by managing a successful system), even those people steeped in tradition must recognize the usefulness of new metrics.
Alex’s excitement is tempered when Stacey and Bob approach him with bad news: new bottlenecks are appearing and throwing off the flow. Workers are running into overtime trying to correct the process, but it looks like the plant is about to miss several deadlines. Alex and his staff brainstorm and argue about the causes until Alex and Ralph realize that the new flood of orders has changed the flow of the entire manufacturing process. Their capacity has increased, but the non-bottlenecks have to adjust to compensate the change. Bob springs into action, ordering Stacey to change priorities and declaring that they’ll have to work with marketing and adjust their deadlines until this crisis passes. As Alex watches Bob direct, he realizes that “the baton has been passed,” and he feels both “proud and jealous.”
Although the plant runs according to its constraints and appears well-optimized, the new crisis again indicates that managing such a complex system requires constant vigilance and critical thinking. This final obstacle in the plant is significant primarily because it pushes Bob to take action as a leader. As Alex recognizes, this moment signals the transition of leadership and responsibility for the plant from Alex to Bob, allowing Alex to step away and step into his new role as division manager.
Lou and Alex chat in Alex’s office. Lou is impressed with Bob’s new leadership, but Alex is worried. Overtime will go up and they’ll have to break their promises about fast deliveries to marketing, and Alex thinks something must have gone wrong somewhere. He senses that they are reacting rather than planning ahead, but Lou still sees it as progress.
Although Alex is no longer responsible for the plant, his continued concern suggests that he will always be looking to refine their process and make it more effective and more adaptive to change.