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 6 Summary & Analysis

Summary
Analysis
Alex enters the plant at 4:30 p.m. On his way in, he notices three laborers sitting and reading a newspaper. As soon as they notice him, they scatter and look busy while Alex chastises their supervisor; with the strain that the plant is under, they can’t afford idle workers. However, as Alex watches the men do unnecessary work to keep busy, he realizes he shouldn’t assume that being busy is the same thing as making money. He looks at the manufacturing floor: nearly everyone and everything is moving, since that is what Alex has always demanded. Now, he wonders how much of that work is productive and profitable, and how much is just busyness for its own sake. He wonders if all the measurements his controller, Lou, uses to check the plant’s efficiency really only measure how busy they keep the employees.
Alex’s sense that busyness is not the same thing as productivity foreshadows Jonah’s eventual advice that idle workers and idle machines are not necessarily bad. The disconnect between busyness and productivity also foreshadows the thematic conflict between individual efficiency and optimization of the entire production system. Alex’s fear that Lou’s metrics only measure busyness and not productivity foreshadows the novel’s argument that businesspeople need to search for better, more precise metrics to determine the health of their business.
Themes
The Importance of Goal-Setting Theme Icon
Ineffective vs. Effective Business Metrics Theme Icon
Efficiency vs. Optimization Theme Icon
Related Quotes
Alex enters his office after most of the day-shift workers have already left. His answering machines is full of messages from Bill Peach, but when Alex tries to call him back, no one answers. Lou enters Alex’s office to let him know that he’s sending Peach all of their accounting numbers. Alex asks Lou what the most fundamental metrics are to determine if a business is making money. They brainstorm together and establish that a business needs to know if it makes more sales than its investments cost (net profit), how much return on its investment (ROI) it’s creating, and whether or not it has a sustainable cash flow—without cash flow, a business will die.
Alex and Lou’s essential measurements all relate directly to their primary goal of making money, demonstrating how having a clear goal can help one determine which metrics are essential and which are inessential. This allows Alex to think about his plant and its ability to make money in simpler, clearer terms, rather than getting distracted by all the other nonessential metrics. Thus, clear goals can provide clearer focus.
Themes
The Importance of Goal-Setting Theme Icon
Ineffective vs. Effective Business Metrics Theme Icon
Lou asks Alex if the plant is about to be closed, and Alex admits that it is. However, Alex wants to fight to turn things around and try to save it. Lou promises he’ll try to help, but he thinks that Alex is wasting his time with new metrics; he should stick to standard business practices. Alex hears Lou out and listens to his opinions on why the plant is failing, but he knows that all of Lou’s grievances are just the typical excuses anyone comes up with. He knows Lou is a smart man and wonders how all these intelligent people could be so wrong about how to run a business.
Although Lou is an intelligent and experienced controller, his belief that the traditional, long-held metrics are best suggests that most people are naturally resistant to new ideas. However, Alex’s awareness that all of Lou’s traditional answers won’t solve anything suggests that traditional corporate practices will ultimately not help a business to succeed.
Themes
Ineffective vs. Effective Business Metrics Theme Icon
Late in the evening, after Lou goes home, Alex sits with a pad of paper and a pencil. He writes out “net profit, ROI, and cash flow,” and stares at them, wondering if one can be prioritized over the others. After several minutes, Alex decides that a business’s goal is to make money by increasing net profit, while also increasing ROI and cash flow—all three are equally important. Alex feels as if he’s closing in on a solution, but as he stares out at his plant, he can’t figure out how to directly connect the plant’s various operations with the three metrics. All he can think of are the old corporate metrics that he knows over-complicate things rather than tell him anything useful.
Alex’s desire for a simple way to measure the plant’s performance suggests that over-complicated traditional metrics only conceal what is actually going on, rather than revealing a business’s true weaknesses. Although Alex’s three metrics are different than the three Jonah proposes, they still attempt to measure the way that money flows into and out of the business, thus relating to the overarching goal of making money.
Themes
The Importance of Goal-Setting Theme Icon
Ineffective vs. Effective Business Metrics Theme Icon
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Alex realizes it’s after 10 p.m. and calls Julie, telling her he’ll be home in an hour. Julie is irritated at him for not calling earlier and tells him that their daughter has a surprise for him—she waited by the window for him to come home all night, but he never showed up. After hanging up with Julie, Alex finds a shift supervisor and asks the man how the plant’s ROI has improved in the last hour based on the work his employees are doing. The supervisor stares at Alex blankly, and Alex realizes that he doesn’t know how to connect the daily operations of the plant with any loftier ideas about business management or making money.
Because Alex spends all his time at work, he disappoints his wife by not communicating with her and his daughter by never coming home to her, suggesting that his commitment to his corporate career inhibits his ability to be a father and a husband. Meanwhile, his employee’s complete ignorance of concepts like ROI demonstrates the challenge of connecting business theory with day-to-day management.
Themes
The Importance of Goal-Setting Theme Icon
Ineffective vs. Effective Business Metrics Theme Icon
The Cost of Corporate Success Theme Icon