Mr. jonas has conducted a swot analysis for his restaurant. what should his next step be?
The Goal is a book designed to influence industry to move toward continuous improvement. First published by Eliyahu Goldratt in 1984, it has remained a perennial bestseller ever since. Show
It is written in the form of a gripping business novel. A WHAT!!! Since when are novels written about a factory located in a small town??? Who is This Book For?Everyone from production managers to college students to CEOs should read The Goal. It is surprisingly easy for people of all levels to read because it is written as a story.
Although it describes manufacturing operations, The Goal book is relevant for all types of situations because it is about learning what makes the world tick so that you can improve it. As the characters "think logically about their problems" they gradually uncover the "cause and effect relationships" between actions and results. The Goal is one of three books that Jeff Bezo requires his top management team to read. In fact, he uses it as a framework for sketching out the future of Amazon.com.The Goal Summary: Outline of This ArticleQuick OverviewAlex, an educated and competent manager at UniCo, is excited to get transferred back to his hometown Bearington with his family. But his moment of bliss quickly evaporates once he realizes that his factory is facing difficulties and might even get closed down! Shipments are always late and their production backlog is growing, yet somehow inventories also keep soaring. The team wonders why they can't seem to ship on time with good quality at a reasonable cost. Alex resolves to do whatever it takes to save the manufacturing plant… Meanwhile his wife, Julie, struggles to adjust to the monotonous life in the small town. Alex’s long hours at office put additional strain on their relationship, as things go from bad to worse.
Given three months to turn the plant around, Alex chances to bump into his old Physics professor, Jonah, who challenges his thinking and gives a series of clues about how to save the division. Jonah takes on complex subjects like "productivity" and defines them in simple terms. For example: "Every action that brings a company closer to its goal is productive. Every action that does not bring a company closer to its goal is not productive." But what is the goal? Following Jonah's clues, Alex mobilizes his team at the plant to find ways to improve the flow of production and somehow ship the huge backlog of orders on time. Along the way they discover the importance of constraints and learn how to manage them to achieve growth and profitability. Alex eventually realizes that the goal is not cost-effective purchasing, employing the right team members, the latest technology, producing quality products, capturing market share, customer satisfaction, etc. but rather making more and more money. Once the plant’s operations stabilize, Alex finds himself spending more time with his family. He wins back his wife’s affection and his plant suddenly becomes the most productive one in the company. Alex is promoted to President at UniCo and entrusted with the task of implementing Jonah’s advice throughout the entire division.
Towards the end, he begins to realize that 'bottlenecks' or constraints can change over time, and hence he must adapt his way of managing the business. But Jonah has given him the key questions to find solutions to these challenges as they arise… the secrets to the Process of On-Going Improvement (POOGI). Cast of Characters
Chapter 1 (The Goal)This chapter introduces the main character Mr. Alex Rogo, an industrial engineer and an MBA graduate who manages a plant of the UniCo Manufacturing Corporation. He arrives at the office one morning to discover that his parking slot has been taken by the division Vice President Mr. Bill Peach. The conversation becomes heated when they discuss order #41427 that is seven-weeks overdue. Bill is very angry and warns Alex that he must turn around the factory within 3 months or it will be shut down. Furthermore the overdue order must be shipped that very same day or else… Chapter 2 (The Goal)Alex reflects
back back on his travels, finding himself back at the place where he started from. "I’m 38 years old and a crummy plant manager." Chapter 3 (The Goal)The next morning, Alex
rushes to attend a meeting of plant managers at headquarters. In the elevator Alex’s co-worker Nathan Selwin explains why Peach has been behaving so strange lately. The entire division has been given one year to improve or it’s going to be sold! Chapter 4 (The Goal)While at the meeting, Alex remembers running into his old physics professor, Jonah, at the airport. Jonah marvels Alex with his intimate knowledge of how badly Alex’s plant is doing. With no prior knowledge, he accurately predicts problems like high inventories and missed shipping deadlines.
How did Jonah know so much about Alex's factory??? Their conversation is interrupted so that Jonah can catch his flight. But he leaves Alex with a lingering question: "What is his company's ultimate goal?" Chapter 5 (The Goal)Alex mind keeps wandering and he leaves the meeting to take a break. He cannot stop pondering over Johan's question. Suddenly it strikes him that the Goal of his company is to make money! Anything that brings him closer to the Goal is productive. Hence, all other activities are non-productive! Chapter 6 (The Goal)Back at the office that evening, Alex sits with the plant's controller, Lou. Together, they discuss the details of how the plant could go about achieving the Goal and the new targets. There is an urgent need to increase cash flow, return on investments, and the net profits. When Alex runs the numbers, the task seems daunting, almost impossible. Their conversation stretches late, and Alex finds himself in trouble once again with Julie when he calls home… Chapter 7 (The Goal)Returning
home at a very late hour, Alex is surprised when his daughter greets him in the doorway. She wanted to show him her school grades, but this is the only time when should could get her father’s attention. Chapter 8 (The Goal)The next morning at work, Alex tries to apologize to Peach after skipping out of his meeting the previous day. Unable to get through, Alex decides to trace down Jonah instead. In response to Alex’s questions, Jonah reveals three operational measurements. "Throughput is the rate at which the system generates money through sales." "Inventory is all the money that the system has invested in purchasing things which it intends to sell." "Operational expense is all the money the system spends in order to turn inventory into throughput." Their conversation gets cut short once again. Alex is left wondering how to relate them in terms of the plant's operation… Chapter 9 (The Goal)The head of the company decides to come down for a photo shoot with the robots in the factory. Alex begins to reflect on the viability of the robots. With the help of Lou the accountant, the inventory control person, and the production manager, Alex discovers that the robots increased operating
expenses without reducing any costs like direct labor, which was merely shifted to other parts of the plant. Since inventory stayed the same and throughput did not increase, the productivity of the plant declined because of adding the robots! Chapter 10 (The Goal)Alex and his team (Bob from production, Lou from accounting and Stacey from inventory control) reviewed the meaning of throughput, inventory and operating expense until everyone was
satisfied. Lou, summarizes them as follows. "Throughput is money coming in. Inventory is the money currently inside the system. And operational expense is the money we have to pay out to make throughput happen." Chapter 11 (The Goal)Alex catches Jonah briefly in his hotel in New York City and shares the details of the plant’s problems. Jonah assures Alex that all the problems can be solved despite their looming
deadline. Chapter 12 (The Goal)Upon his return home, Alex gets caught in an argument with his wife about all the unanswered phone calls. At this point his marriage is very strained due to the pressure of work and lack of time available for his family. Alex promises to set aside some time for her over the weekend… Chapter 13 (The Goal)Alex wakes up on Saturday morning surprised to find his son dressed and ready to go on an overnight Boy Scouts hike. Alex forgot that he had volunteered to lead the boys! Chapter 14 (The Goal)To observe the effect more carefully, Alex devises a dice game to play with the boys. It quickly becomes clear that any balanced plant faced with "statistical fluctuations" and "dependent events" will see throughput going down and inventory going up. Jonah was right - a balanced plant is not the answer! Chapter 15 (The Goal)The next day the troop begins to hikes again. But this time, Alex decides to let the slowest kid named Herbie lead the line. He also distributes some of the extra weight that Herbie was carrying. As expected, the fluctuations of the line balance out and the hikers reaches together on time, thus increasing the “throughput” of the entire troop! Chapter 16 (The Goal)Sunday evening when they reached home from the camping trip, Julie has gone missing. In her note, she expresses frustration that Alex is spending all his time at work and has yet again broken his promise to spend time with her. Chapter 17 (The Goal)The next day at work, Alex explains his revelation about dependent events and statistical fluctuations to a hesitant team of co-workers. Fortunately, he is able to prove his point by using these principles to complete a large overdue order. The team’s skepticism fades and even the production supervisor agrees. Now what…? Chapter 18 (The Goal)The team is beginning to trust their boss and appears ready to act on his command. But Alex, on the other hand, remains unsure what to do next. Predictably, Jonah is consulted once again. This time, the professor discloses the Theory of Constraints: "A bottleneck is any resource whose capacity is equal to or less than the demand placed upon it. A non-bottleneck is any resource whose capacity is greater than the demand placed on it." Jonah carefully explains that Alex must NOT try to balance capacity with demand, but instead balance the flow of product through the plant. Alex and his team set out to find their bottleneck and zero in on the NCX-10 machine and heat treatment section… Chapter 19 (The Goal)Jonah finally visits the plant in person. He explains to Alex that every plant should have bottlenecks (!), and that a system can only increase production by increasing capacity at the bottleneck operations. Chapter 20 (The Goal)Alex prioritizes the bottlenecks to work on the overdue orders starting from the most overdue down to the least. While this production plan is being set into motion, Alex discovers that his wife Julie had been staying with her parents. But when he tries to convince her to come home, she insists that she needed more time to herself… Chapter 21 (The Goal)The crew works out a detailed plan to keep the bottlenecks fully utilized. They soon discover that they
need a mechanism to inform workers about the priority sequence at non-bottlenecks as well. A system of red and green tags is put into place to map priorities visually: Red for bottleneck parts (to be worked on first) and green for non-bottleneck parts (to be worked on second). Chapter 22 (The Goal)Monday morning, Alex is excited to learn that their new system is actually working… the plant managed to ship twelve overdue orders! Alex is pleased, but he definitely wants more. He invites suggestions from the team for additional improvements. Bob, the production manager, finds and refurbishes an old machine to take some of the load off the NCX-10. Things are finally beginning looking up… Chapter 23 (The Goal)New problems crop up at the bottlenecks to disrupt production. There is nothing to do while waiting for the bottleneck to finish its batch, so workers have been shifted to other areas between batches to keep busy. To prevent this, Alex dedicates one foreman at each constraint location all all times. One of his dedicated foremen discovers how to process more parts by mixing and matching orders by priority,
thus hiking efficiency by a full 10%. Chapter 24 (The Goal)The team is excited about the sudden increase in performance and decides to celebrate. Afterwards, Stacey dropped Alex home but Julie is waiting up for him. She becomes suspicious that Alex might be cheating on her and leaves! Chapter 25 (The Goal)After studying the problems, Jonah explains that there aren’t any new bottlenecks! Rather, the current practice of
prioritizing non-bottlenecks to work first on bottleneck parts inadvertently caused the problem. Another part, which is required for final assembly, does not require any work by the bottleneck. Hence those parts were produced on lowest priority, leading to shortages at final assembly. Chapter 26 (The Goal)Jonah & the team (including Ralph, the computer whiz) devise a plan to anticipate which products needed to be finished by when and release them into production accordingly. It might take some time since there are so many parts stacking in front of the bottleneck. But this would eventually create a balance between production of the bottleneck and non-bottleneck parts. Tired but relieved, Alex drops Jonah back to catch his flight at the airport... Chapter 27 (The Goal)Once again, Alex is summoned for another corporate meeting. But this time, he is expecting plenty of appreciation for the achievements of his
team. Chapter 28 (The Goal)Later, as Alex ponders over how to increase demand from the market (15% !?#!) while reducing inventories, his thoughts are interrupted by the ring of the
telephone. Jonah has called to inform that he will not be available for advice over the next few weeks. Chapter 29 (The Goal)John has found a customer willing to purchase 1,000 products in just two weeks’ time. In fact, this order may lead to more business in the future as well! But can the plant produce that much, given their existing commitments? The team realizes that smaller
batch sizes can help but will not completely solve the problem. Working together, they find a novel way to spread out the new contract deliveries over four weeks (250 products per week). The customer loves their proposal and they win the order. Thus, smaller batches become a key factor in their ability to increase sales. Chapter 30 (The Goal)The month is over and results are in. Lou calculates an improvement of Seventeen Percent as per his new accounting method!! Most of this increase is thanks to delivering on the new order… Chapter 31 (The Goal)Instead of meeting directly with the boss, Alex finds himself discussing matters with a committee of Mr. Peach’s subordinates. They seem to believe that that the plant’s extraordinary growth is just temporary, and that the plant will soon begin to show major losses. Lou tries to point out the flaws of
the old accounting model to the division controller, demonstrating that the actual growth for that month was almost 20%. Chapter 32 (The Goal)Alex and his wife decide to celebrate his promotion with a candlelit dinner in an expensive restaurant. Over wine, they discuss Jonah's critical role in the events that transpired in the past months. Why couldn't they do it without
Jonah's questions and occasional advice, which seem like little more than common sense? Chapter 33 (The Goal)Alex makes his appearance at the plant, but this time as the division Vice-President. He promotes his team members Lou, Bob, Stacey, and Ralph, to higher positions within the division, carrying greater responsibilities. Now he is all set to embark upon the next major stage of planning and growth… Chapter 34 (The Goal)Now that Alex’s core team has taken up their new positions, it is time to take their model to a new level. The concepts that were being applied for just one plant must somehow be modified to work for the entire division. This will involve plenty of work and each team member's intense involvement. So they decide to meet on a daily basis to work out their strategy and tactics. Chapter 35 (The Goal)As the team brainstorms, they discuss how chemists invented the periodic table of elements. How were they able to classify something so vast into one simple table? Maybe this is how they can approach the massive problems of their division! Those scientists began by observing vast chaos and gradually derived it’s underlying order. By thinking like scientists, they must design a common framework to examine all the issues of the division… Chapter 36 (The Goal)As the team reviews the process they followed to fix the situation at their plant. Gradually they formulate a five-step Process Of On-Going Improvement (POOGI):
It seemed simple, clear yet… tough to implement. Chapter 37 (The Goal)As the team reviews the five focusing steps, they discover various issues to be addressed. The last step in the five-step process, for example, must ensure that inertia does create any system constraints. Chapter 38 (The Goal)John finds a new client in Europe which is large enough to utilize the excess capacity that has been freed up. But there is a catch – the deal would have to be priced significantly lower than their offering to the local market. But the deal could open up new opportunities in Europe, which has a lot of other potential large customers. Chapter 39 (The Goal)Another problem at the
plant… all the fresh orders seem to be creating new bottlenecks all over the place! Julie, who has been reading Socrates, explains the theory of 'if… then' deduction. She explains the importance of considering all of the scenarios that can arise and how prepare for all the side effects of a new initiative. Chapter 40 (The Goal)While Alex and Lou ponder over Jonah’s questions, they creates a few of their own:
Alex realizes that he can no longer keep running back to Jonah for help; he must tread alone on the path shown by Jonah. As a manager, he must master the art of how to get to the core of a complex situation and solve it without creating new problems. Main Lessons From The Goal BookInitially, Alex’s thinking is distorted by conventional management accounting metrics. This causes him to waste time and energy “improving efficiency” even though it has no impact on the profits of the division. Jonah helps Alex align his organization to the Goal by distinguishing between three operational measurements:
Armed with these definitions, Alex has a sound basis to analyse whether his decisions are helping the plant move towards the Goal (to make money, as characterized by increasing throughput and/or decreasing inventory and
operational expense). Between these three operational measurements, increasing Throughput impacts profitability far more than reducing Inventory or Operating Expense. Jonah outlines the secrets to managing constraints (Theory of Constraints) by asking questions. The answers to his questions form five focusing steps to improve the performance of any system (sometimes known as the Process of On-Going Improvement or POOGI):
These five steps follow a specific sequence. In other words, you should exploit the constraint before elevating it, because adding capacity requires capital investment. Also note that the bottleneck may be internal or external, such as customer demand. Click here to read more about The Five Focusing Steps. Key Takeaways for Managers: How to Drive Continuous Improvement1) Measurements Drive Behavior: any misalignment in measurements causes a wide range of destructive tendencies. It is your responsibility to identify The Goal of your organization. Be sure that your metrics align completely to this Goal. 2) Seek Answers: Be active in your quest for knowledge. The answers are out there, you just have to discover them. Sometimes the answers can be found in unlikely places, such as Jonah, an old physics professor.
4) Never Give Up: There is always a chance to recover as long as your organization in still running. Don’t be afraid to challenge the status quo. The battle is not lost until the moment you give up and stop trying. 5) Work Smarter, Not Harder: Oftentimes our greatest efforts are ineffective and sometimes even counter-productive. But by focusing on the right areas we can achieve breakthrough results
Final ThoughtsThe Goal continues to transform a variety of different fields including:
But Dr. Goldratt did not intend his book to be only for managers. It should be taught as part of every MBA, accounting course and leadership development program because of it's thought provoking explanation of business fundamentals. Also: click here for an interesting back story about events leading up to the writing of The Goal. How after Should a SWOT analysis be performed?Use the following 8 steps to conduct a SWOT analysis.. Decide on the objective of your SWOT analysis. ... . Research your business, industry and market. ... . List your business's strengths. ... . List your business's weaknesses. ... . List potential opportunities for your business. ... . List potential threats to your business.. What are the five steps to conducting a SWOT analysis?You determine your strategy in 5 steps based on your SWOT analysis.. Internal analysis. Start by naming the strengths and weaknesses of your company. ... . External analysis. ... . SWOT table. ... . Confrontation Matrix. ... . Determine conclusion and strategy.. What are the 3 steps of SWOT analysis?I bring here 3 steps to quickly and easily identify the risks involved in your project/business and to help you in Risk Management:. Identify SWOT factors. Perform a Brainstorm and capture: ... . Analyze SWOT factors. In a group, analyze the strengths, weaknesses, opportunities, and threats: ... . Identify risks based on SWOT factors.. What must you do once you've finished the SWOT to guarantee you get the most out of it?How to Take Action After Performing a SWOT Analysis. Step 1: Identify strategic alternatives. ... . Step 2: Prioritize your strategic alternatives. ... . Step 3: Balance your priorities. ... . Step 4: Build a roadmap.. |