Overview of the Novel The Goal by Eliyahu Goldratt and the Importance

Overview of the Novel The Goal by Eliyahu Goldratt and

the Importance of Strategic Management Skills

Cole Benton

George Fox University

Principles of Management MGMT 260A

Dr. David Liu

2/16/19

Abstract

This paper will examine how the book The Goal (Goldratt 1984) has provided companies with information on the different aspects of management and how one must master these skills to be a successful manager. It summarizes the business model Godratt proposes in his book outlining and identifying five specific managerial roles including disturbance handler, entrepreneur, leader, spokesperson and disseminator.

Also described are five most important managerial skills including technical, interpersonal, conceptual, diagnostic and time management. These skills incorporated into the managerial roles are critical components for efficient and effective business management.

Overview of the Novel The Goal by Eliyahu Goldratt and

the Importance of Strategic Management Skills

Eliyahu Goldratt has a special approach to explaining an in-depth business model using fiction. He also includes personal drama examples to express his points in an entertaining style, which is also very informative for business professionals to use in managing their workforce and for students just learning these skills.

It is a story of a struggling plant manager who is forced to improve profits under threat of closing down. He must implement new methods, solving a problem of increasing efficiency without increasing profits. Under mentorship from his former professor, Jonah, he learns that the real goal of his plant is and how to achieve it. The book provides helpful insight to a manager’s daily routine as well as roles he must undertake and skills he must master.

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The first specific managerial role that Alex has in the book is one of the more conceptually simple roles, disturbance handler. Disturbance handler is a decisional managerial role defined (Griffin 2017) as “handling such problems such as strikes, copyright infringements, or problems in public relations or corporate image.” (p. 15) In the book The Goal, right away Alex arrives at work to find his manager has arrived and started a disagreement with his workers over a late shipment. (Goldratt 1984) His role here is to diffuse the situation so they can resume work and complete their task. Another managerial role Alex takes on a manager is entrepreneur. Griffin (2017) defines this role as “The voluntary initiator of change”. (p. 15) Alex takes on this role throughout a large portion of the book the Goal while attempting to save his plant. While trying to solve the problem of increased productivity without increasing profits, he must initiate change and discover a new way to fix this pressing issue. (Goldratt 1984) Alex also has to serve in the managerial role of a leader. Griffin (2017) defines the managerial role of a leader as “hiring training and motivating employees” (p. 14) the part of that definition that I saw the most was motivating employees. When forced to confront his staff with the ultimatum of having to make money for their parent company or they will be closed down, he has to follow the bad news up by motivating them. (Goldratt 1984) He says “I know it doesn’t seem like a lot of time. It isn’t. But until they kick me out of here, I’m not giving up. What you decide is your business, but if you want out I suggest you leave now. Because for the next three months I’m going to need everything you can give me.” (p. 77) Another role Alex takes as a manager is as a spokesperson. Griffin (2017) defines this role as “A manager that formally relays information to people outside the unit or outside the organization.” (p. 14) Alex must relay the information regarding statistics on the plant to Peach and in turn relay the information he gives to his staff. (Goldratt 1984) An example of this is when Alex gets a call from Peach at his office after leaving the meeting early, “Now because of your untimely absence yesterday, we’ve got some things to go over” (p. 55) The final role that I will talk about Alex functioning in is as a disseminator. Returning to Griffin’s (2017) definitions, he defines disseminator as “transmitting relevant information back to others in the workplace” (p. 14) Alex takes on this role by informing his staff how Peach wants improvement in certain areas of the plant in terms of output, efficiency among other things. (Goldratt 1984)

Peach’s takes on many managerial roles in The Goal, however the one I found to be most prominent was Recourse Allocator. A resource allocator (Griffin 2017) is “A manager deciding how resources are distributed and with whom he or she will work with most closely.” (p. 15) Peach is the one who decides which factory plants the company keeps as well as who oversees each individual plant and reports to him. His daily routine involves interacting with these managers and using information they give to determine how well each individual factory plant is operating. His decision to close Alex’s plant if they cannot increase productivity is a good example of distributing resources as a resource allocator. (Goldratt 1984) Although Peach seems to be doing alright in some aspects of management, he is lacking in several other roles. The three most prominent are leader, entrepreneur and disturbance handler. His skills as a leader were in question when his manager gave him a year to turn his whole branch of the company around or it would be sold. He responds to this by giving his plant manager Alex an ultimatum of improving his plant in three months or it would be closed. The problem here is he offered no real motivation or insight as to how to do this. I recognize that it is not the only plant he had to deal with however, some guidance in the right direction should have been given as a leader. Another role Peach is not functioning particularly well in is entrepreneur. The best example of this is the staff meeting when he makes a rash decision to bring everyone in overnight. The problem here is he offers little initiation of change and doesn’t seem to at any point later on save for threatening to close Alex’s plant. His third flaw in disturbance handler leads back to Alex’s example of the role when an order was late being shipped out. (Goldratt 1984) Peach did not keep his cool, showing up and “Stormed around yelling orders” (p. 2) his antics did not do much towards solving the problem and in fact just led to more problems after he left. If he had kept his cool mistakes would not have been made and it would have resulted in his order being shipped out faster. Jonah’s primary role with Alex is as an entrepreneur as he works with Alex to find ways to initiate change to help save the failing company. (Goldratt 1984) He makes it clear he cannot however function as an actual consultant would, but can provide advice, saying that “from what I’ve heard, I think you can solve your own problems.” (p. 82)

With Alex’s busy work schedule comes difficulty in balancing his personal life as he is so often consumed by his work. He has begun to neglect his family, particularly his wife. He recognizes this but doesn’t do anything long term to solve it as demonstrated at the beginning of chapter 11. (Goldratt 1984) “She goes upstairs without even looking back. And I don’t even have time to settle this; I’m already late for my flight” (p. 81) One of the main things I would do here is plan ahead in more depth as well as make backup plans to spend time with his family. This way he would be more likely to find time to spend time with his family among his busy schedule. The second thing I would do is to be more open and honest in communicating what is going on and why everything is so busy. Alex is reluctant to share details of his situation with his wife which leads to further breakdown and her not understanding the magnitude of the situation. (Goldratt 1984) Finally I would have to make sure I was honest with myself on family being a priority and what my limits would be on recognizing when the job was not going to work out and when it is time to cut my losses and move on to a less stressful job in order to keep my family together.

Based on the Managerial skills Griffin (2017) described, I believe the five most important are technical skills, interpersonal skills, conceptual skills, diagnostic skills and time management skills. Although the other skills, communication and decision making, remain important I feel they closely relate to some of the other skills in what they require. Technical skills are defined by Griffin (2017) as “Skills necessary to accomplish or understand the specific kind of work being done in an organization.” (p. 16) They are especially important for front line managers as was evident in the book The Goal when the manufacturing machine broke and it was up to the front-line manager to fix it. (Goldratt 1984) Another of the most important managerial skills are interpersonal skills. Griffin (2017) defines these as “The ability to communicate with, understand and motivate both individuals and groups.” (p. 17) These came up in the Goal when Alex had to explain the manufacturing plant’s situation to his employees and motivate them to help save each other’s jobs. (Goldratt 1984) Without interpersonal skills, it would have been difficult for Alex to understand his workers position and then motivate them to fix the issue. These skills I feel tie in with communication skills because once you have built up a good interpersonal relationship with your employees, communicating with them will be that much easier. The next managerial skill I found to be important were conceptual skills. Griffin (2017) defines these skills as “a manager’s ability to think in the abstract.” (p. 18) This was demonstrated by Alex in The Goal when he was attempting to understand the concept of the goal despite his mentor, Jonah, not outright telling him what it was. In the context of his employees not understanding Jonah’s points, Alex says “I can only tell you what he told me” (p. 74) (Goldratt 1984) It was important for Alex to think abstractly about the information he had been given in order to see the big picture. The next important skills, are Diagnostic skills. Diagnostic skills are defined by Griffin (2017) as “skills that enable a manager to visualize the most appropriate response to a situation.” (p. 18) Again, these came up in the broken machine example in The Goal, demonstrating not only how Alex had to diagnose a problem and find a solution, (Goldratt 1984) but how multiple skills are usually required in management scenarios. This skill I find similar to decision making skills in that it will always directly precede decision making as once you diagnose a problem you have to make a decision. The reason I didn’t include it in the top 5 was that the examples of this skill as it relates to problems in the goal seemed to require less actual skill than the Diagnosis of said problems. Finally, time management skills. Time management skills once again defined by Griffin (2017) are “The manager’s ability to prioritize work, to work efficiently, and to delegate appropriately. This skill was a constant weak point for Alex in The Goal (Goldratt 1984) as he is constantly having to make his factory play catch up on late orders and almost never gets things out on time. “So what else is new? Everything on this plant is late.” (p. 2) Better time management skills would keep him from staying busy with work that can be easily delegated to others.

In the book The Goal, I believe Alex’s manufacturing plant has achieved effectiveness but not efficiency. Effectiveness is the degree to which objectives are achieved and the extent to which targeted problems are resolved. It is also determined without reference to costs. I believe they achieved this due to the fact that it deals only with targeted problems and is without reference to cost. For example, when the problem arose of their new robots not reaching maximum efficiency they solved that specific problem because it was the only one they targeted and didn’t look at other problems the solution created. (Goldratt 1984) “We had to do something, Lou says. Those things were brand new and very expensive. They’d never pay for themselves in the projected time if we kept them at thirty percent” (p. 70) Furthermore when the issue of the broken machine came up, their only focus was to fix it regardless of cost, then celebrated that specific issue being resolved. However, efficiency is another issue. Efficiency is the ability to produce a desired effect, product, etc. with a minimum of effort, expense or waste. Achieving this goal seems to be “the goal” that the book is about, producing the desired effect of making money while minimizing expenses. Therefore, at this point in the book they still have not achieved THE goal of efficiency which the book is about.

As Alex continues to solve his factory plant problem he uses solutions dealing with both the science and art of management. The science of management according to Griffin (2017) “approaches problems in ways that are rational, logical, objective and systematic. Managers gather facts and objective information.” (p. 19) The flip side of this is the art of management. This is defined, also by Griffin (2017) as “Making decisions and solving problems on the basis of intuition, expertise, instinct and personal insights. Relying heavily on conceptual, communication, interpersonal and time management skills. (p. 19-20) Ultimately, I believe Alex focused more on the Art side of management. When faced with the problem of the machine’s increased efficiency not producing an increase in profit, the numbers got him going on the solution but ultimately it was not a logical or systematic solution that was required. Instead he had to take personal insight and the experience of his mentor to figure out that the systematic approach they had developed was not working. (Goldratt 1984)