Learning Potential / Utility: ★★★★★ (5/7)
Readability: ★★★★★★★ (7/7)
Challenge Level: 1/5 (None) | ~340 pages ex-notes (362 official)
Blurb/Description: In the form of a fast-paced novel, business consultant Eli Goldratt delivers memorable lessons about “bottlenecks” and other important concepts.
Summary: More than thirty years after its publication, The Goal is still a worthwhile classic. I enjoyed it when I long ago read it as assigned reading in an undergraduate operations management class, but on a reread more than half a decade later, with the ability to more broadly apply the mental models contained within, I found it even more profound. For a compact, easily-readable book, there’s a lot of learning opportunities here, applicable in both professional and personal context
Highlights: The Goal does a great job of driving home some important concepts like bottlenecks and local vs. global optimization in an engaging way; the fiction format adds a level of suspense and engagement to the conceptual learning that most readers will appreciate.
Lowlights: As a novel, this is not great literature and some of the characterization/prose is pretty terrible (for one, don’t take marriage advice from Alex). Also, the book shows its age in places, with (among other things) some seeming implicit sexism. Still, it’s easy reading with useful lessons and would be infinitely superior “required reading” in high schools relative to trash like Pride and Prejudice.
Mental Model / ART Thinking Points: culture / status quo bias, busyness vs. productivity, local vs. global optimization, scientific thinking, utility, return on investment, path-dependency, bottlenecks,incentives, inversion, schema, n-order impacts,
You should buy a copy of The Goal if: you want a quick, easy, engaging read about some important topics that aren’t often discussed elsewhere.
Reading Tips: The book drops off pretty sharply in interest after about page 264 unless you’re actually running a manufacturing plant; I’d recommend heavily skimming the details and savoring the conclusion of the storyline.
Pairs Well With:
“Onward” (O review + notes). In an uncommonly honest book, former Starbucks CEO Howard Schultz explores how Starbucks lost its way in the mid-2000s (and how it got back on track). Many of the lessons are surprisingly similar to those from The Goal – there’s a big local vs. global optimization angle, for instance.
“Zero to One” (Z21 review + notes) by Peter Thiel. Not at all on the same topic, but The Goal is, in a sense, a book about learning to buck the trend, avoid status quo bias, and think for yourself. That’s exactly what Thiel does, and it’s an interesting thought process.
“Deep Work” (DpWk review + notes) by Cal Newport. I find it amusing throughout The Goal how Alex is always ducking the office to have time to think; things have only gotten worse with Slack and open offices and etcetcetc. Newport’s book provides an exploration of product vs. packaging and other mental models – if we want to actually get work done and create value, rather than just look productive – how do we do that? It’s very much like The Goal, in that sense.
Reread Value: 3/5 (Medium)
More Detailed Notes + Analysis (SPOILERS BELOW):
IMPORTANT: the below commentary DOES NOT SUBSTITUTE for READING THE BOOK. Full stop. This commentary is NOT a comprehensive summary of the lessons of the book, or intended to be comprehensive. It was primarily created for my own personal reference.
Much of the below will be utterly incomprehensible if you have not read the book, or if you do not have the book on hand to reference. Even if it was comprehensive, you would be depriving yourself of the vast majority of the learning opportunity by only reading the “Cliff Notes.” Do so at your own peril.
I provide these notes and analysis for five use cases. First, they may help you decide which books you should put on your shelf, based on a quick review of some of the ideas discussed.
Second, as I discuss in the memory mental model, time-delayed re-encoding strengthens memory, and notes can also serve as a “cue” to enhance recall. However, taking notes is a time consuming process that many busy students and professionals opt out of, so hopefully these notes can serve as a starting point to which you can append your own thoughts, marginalia, insights, etc.
Third, perhaps most importantly of all, I contextualize authors’ points with points from other books that either serve to strengthen, or weaken, the arguments made. I also point out how specific examples tie in to specific mental models, which you are encouraged to read, thereby enriching your understanding and accelerating your learning. Combining two and three, I recommend that you read these notes while the book’s still fresh in your mind – after a few days, perhaps.
Fourth, they will hopefully serve as a “discovery mechanism” for further related reading.
Fifth and finally, they will hopefully serve as an index for you to return to at a future point in time, to identify sections of the book worth rereading to help you better address current challenges and opportunities in your life – or to reinterpret and reimagine elements of the book in a light you didn’t see previously because you weren’t familiar with all the other models or books discussed in the third use case.
Page I: Goldratt is a bit Feynman-like, although not quite; maybe Benjamin Franklin is the more appropriate comparison. In his own words:
“I view science as nothing more than an understanding of the way the world is and why it is that way. At any given time our scientific knowledge is simply the current state of the art of our understanding.
I do not believe in absolute truths. I fear such beliefs because they block the search for better understanding. Whenever we think we have final answers[,] progress, science, and better understanding ceases.
Understanding of our world is not something to be pursued for its own sake, however. Knowledge should be pursued, I believe, to make our world better – to make life more fulfilling.”
Pages 2 – 3: The book starts out with a typical out-of-control manufacturing environment: orders are late, everyone hates each other, etc.
Page 6: Plant manager Alex Rogo has three months to turn his plant around, or they go out of business.
Pages 11 – 12: Goldratt will not win any awards for literary talent; his characters range from flat and one-dimensional (most of them) to blatantly autobiographical (really, a brilliant Israeli consultant who saves the day?) but at least he nails something that plenty of “great” (read: terrible) writers like Jane Austen or David Foster Wallace struggle immensely with: not getting so caught up in their own love for describing utterly irrelevant things that the plotline is completely lost.
The Goal succeeds at both being a good business book and an engaging story, and the world would be so much better off if every high schooler forced to slog through Pride and Prejudice was assigned The Goal instead. But I digress.
Page 24: The concept of local vs. global optimization pops up in this book quite often, mostly implicitly but (on a couple occasions) explicitly. Bill Peach, set up as an antagonist on like the second page when he runs into Alex’s plant screaming and disrupting everything, is set to lose his job if the division gets sold… so, the implication is that he is trying to save his own skin, damn the consequences. (For example, expediting an order to keep a customer happy even at the cost of screwing up go-forward operations).
Page 31: Jonah (or Goldratt, since, like Rand’s heroes, Jonah is just an excuse for him to spout his own philosophy): “if you’re like nearly everybody else in this world, you’ve accepted so many things without question that you’re not really thinking at all.” Peter Thiel would be happy! Culture / status quo bias.
Page 32: Jonah again: “productivity is meaningless unless you know what your goal is.” Also, does Jonah have a last name? I don’t think he does. Maybe I missed it. Anyway, this is busyness vs. productivity.
Page 36: basically my favorite thing about The Goal is that Alex plays hooky from work like every other day* and sort of comes and goes as he pleases and day-drinks from time to time and, like, notwithstanding that his plant is deeply in the red, he never gets fired.
That said, it’s interesting/amusing to note that well before the horror of open offices, well before cell phones, well before “Deep Work” ( DpWk review + notes), our fictional Alex Rogo notes:
“I guess the real reason is I just don’t want to be found yet. I need to think and I’ll never be able to do it if I go back to the office now.”
*Also he has time to drive around town and grab pizzas, but apparently not to make his wife not feel like shit.
Page 41: “the goal” is to make money. Duh. In other words, although the book doesn’t make it explicitly here, that’s the variable that you should be optimizing for globally… and yet lots of managers are optimizing for nice local variables.
Page 48B – 49T: Alex notes the possibility for juicing short-term earnings in various ways – for example, by not funding R&D.
Page 50: for a bright guy, Alex is pretty dumb at being a good husband 101. Really, his interactions with Julie are comically unempathetic. Julie tells him her day sucked; Alex isn’t like oh you poor thing tell me all about it while I do the dishes for you. Nope, he’s just like “that makes two of us.” Then silence.
Pages 60 – 61!: They redefine the plant metrics in terms of throughput (sales), inventory, and operational expense. The exact definitions aren’t terribly important unless you’re running a plant. But what is important is the mention of “local optimums” at the bottom – I wish the book made this point more explicitly (with a few philosophical speeches by Galt – I mean, Jonah). Nonetheless, it still discusses it a lot if you look for it. Jonah:
“Just remember we are always talking about the organization as a whole – not about the manufacturing department, or about one plant, or about one department within the plant. We are not concerned with local optimums.”
Page 66: in the “Goldratt’s writing” file, this classic one-liner from our hero Alex Rogo: “But, Mom, [Dad] was run over by a bus.” To which his mother replies: “So if he hadn’t been so busy worrying[,] he would have looked before he crossed the street.” I dunno, just, like, somehow, I don’t think that’s how family members would talk if their father had actually been run over by a bus…
Also, Laurence Gonzales would like to tell you, grumble grumble selective perception grumble grumble. If “ Deep Survival” (DpSv) didn’t scare you straight, well, Eli Goldratt’s literary flair just might. 😛
Page 68: Alex starts asking the right questions: the robots, that were supposedly supposed to be great for the plant, have only increased operational expense, but the plant isn’t shipping more than it used to… so why do the “efficiencies” look great? (Because they’re measuring the wrong things, that’s why.)
Page 69: not sure if this book is trying to be sexist but the only woman in management “rarely mentions anything about her life outside the plant” and “works hard.” Somewhere, Sheryl Sandberg sheds a salty tear.
Page 75: they start to piece together what’s going on…
Pages 82B – 83T: Decades before Duckworth’s Grit, Goldratt completely obviated the need for that book in two lines: Jonah tells Alex “Three months is more than enough to show improvement… if you are diligent, that is. And if you aren’t, then nothing I say could save you anyway.” Earth to Duckworth – the world, it turns out, was already aware that hard work is a required ingredient for success. See willpower.
Pages 83 – 85: again, a great example of local vs. global optimization, though not explicitly billed as such. Alex, brainwashed by his six months with UniCo and presumably other experiences elsewhere, is spouting nonsense about how his KPIs look great; Jonah is pointing out, rather reasonably, that given that his plant is so deep in the hole (losing money, not delivering customer orders, etc), it’s damn near impossible to argue rationally that the KPIs are measuring anythinguseful.
Again in local vs. global optimization (this comes up later in the book as well), Alex notes that even if he agrees with Jonah’s premises, “I have to care about efficiencies if only for the reason that my management cares about them.”
Pages 88 – 89: Jonah brings up the concept of variation / statistical fluctuations, i.e. the aphorism about a man drowning in a stream two inches deep on average.
After completely ignoring his wife, when she leaves the house for a while to get some space, Alex greets her with an accusatory question: are you having an affair?!?!?! (In so many words.)
C’mon Alex, you can do better. (In another example of fantastic writing, his marital problems more or less magically resolve themselves later in the book.)
Page 97: Alex learns about statistical fluctuations in the context of hiking… and also, that kids have potty mouths. “Herpes!”
Pages 99 – 102: a great practical example of the effects of statistical fluctuations on dependent events ( path-dependency). It comes up later in the book (also a chart on pages 110 – 112), but there was actually a chart about this in one of my supply chain management textbooks about demand fluctuations getting passed upstream that looked vaguely like one in Donella Meadows’ (not-so-great) Thinking in Systems.
Pages 113 – 118: The fat kid (Herbie) is at the back of the pack, and Alex stays behind him. The boys in front keep going faster. The analogy to the plant is that the plant is producing stuff it can’t sell (Alex is sales here). Herbie is the bottleneck…
(I’m not the bottleneck; you’re the !@#$ing bottleneck!) <– comic relief helps you learn, science says so.
Also, in a literary move that totally wouldn’t fly circa 2018, Herbie, the fat kid, is carrying a six-pack of soda and a box of candy bars in his backpack.
Page 121: Julie finally works out on Alex, and somehow he didn’t see it coming.
Pages 128 – 130, Pages 133 – 135: the statistical demand fluctuations, combined with event dependency, leads to orders not shipping on time. Alex realizes that they need to change the plant incentives: he notes that one group within the plant “thought they were heroes” because they got their work done.
But in the grand scheme of things, “it didn’t matter that Pete got his hundred pieces done, because we still couldn’t ship.” So they need to move toward prioritizng global rather than local optimums… in some cases, one part of the plant churning through more work to keep busy might actually reduce the ability of the rest of the plant to operate efficiently.
Pages 138 – 140: the concept of a bottleneck is defined here formally. Alex finally figures out that they can’t measure “the capacity of a resource in isolation. Its true productive capacity depends upon where it is in the plant.”
Jonah agrees, noting that bottlenecks determine the capacity of the plant.
Pages 143 – 148: Alex’s team begins to identify the bottlenecks, using the heuristic of “parts that are in short supply probably pass through bottlenecks.” The two bottlenecks turn out to be the NCX-10 machine, which does some sort of widget-y operation, and the heat-treat department. Of course, expanding capacity in these two areas is expensive and out of the question… which brings up a great example of inversion shortly.
Page 149: Alex exercises his adult privilege to not eat his peas.
Pages 151 – 159!: Jonah shows up, and honestly I love Jonah: “If you are like most manufacturers, you will have capacity that is hidden from you because some of your thinking is incorrect.” Or a schema bottleneck!
First, he points out that their bottleneck machine, the NCX-10, isn’t even running 24/7 because its operators take lunch breaks; he does some math to calculate that this is pretty much the most expensive lunch break ever because it literally reduces the whole plant’s capacity.
Also, again referencing Meadows’ book (because I read it recently rather than because it’s good / the best analogy), Jonah thinks via inversion to find capacity. Meadows points out that learning how to more efficiently use a finite resource (such as oil) is mathematically equivalent to more resource magically becoming available in the ground.
Here, Jonah points out that if your goal is to ship product, then having your bottleneck do anything that isn’t getting product out the door is a functional waste of its capacity. This is a really powerful concept more broadly.
Jonah does some more impressive math on costs, then points out more examples of the above: for example, placing QC before rather than after the bottleneck means that it doesn’t have to work on defective parts, thereby freeing up capacity for it to work on useful parts. These pages are worth reading a few times and thinking about.
Page 168: Alex, dude, seriously, stop asking your wife if she’s having an affair. Honestly, if she is, you totally deserve it, and it’s all your fault.
Pages 188 – 189: again, local vs. global optimization, as well as organizational optics. The heat-treat process (a bottleneck) requires user engagement only during loading and unloading; while it’s operating, there’s no “work” for people to do.
So, in the interests of not just standing around and twiddling their thumbs, they’re pulled elsewhere in the plant to help out. But they usually don’t show back up as soon as the heat treat process is done, delaying the amount of time it actually spends operating… and lowering the global (plant-wide) productivity level.
Alex makes the smart managerial decision of saying: yeah, let’s have people stand around here and twiddle their thumbs for four hours, because whatever they’d do during those four hours doesn’t matter whatsoever since the plant capacity is constrained by heat treat, and one minute lost on heat treat matters way more than their (pointless, but optically nice) work elsewhere.
Obviously, in the real world, you probably could figure out some way to make sure people showed up on time. But it’s useful as an example.
Page 191: to make sure people are paying attention to heat treat, Alex provides direct incentivesfor it.
Pages 207 – 209: worth thinking about
Page 210!: if you want the answer to life, the universe, and everything, Jonah gives it to you right here: a focus on utility. When various department heads protest about seemingly reasonable concerns – for example, “well, what if we optimize for the bottlenecks while also keeping this KPI here, or this many people working this percentage of the time, because otherwise XYZ bad thing will happen” – Jonah literally asks “so what?”
Real productivity, whether in a personal or professional context, is driven by doing things that are useful – not by just “doing things.” It’s why I don’t read the news or make my bed: neither of those things contribute, in any way, to me getting anywhere I want to go.
Utility, of course, can be personal as well as professional; if you enjoy watching Netflix, go for it. But don’t do things that you don’t enjoy or that don’t make you better/more capable of doing the things you enjoy…
Pages 217 – 218: again, an example of inversion – they can’t physically move the bottlenecks in the production process (given that certain actions need to be performed before the bottleneck actions), but they can make sure that bottleneck parts are prioritized.
Page 219: Again on the product vs. packaging model:
“So are we just supposed to let everyone stand around out there?” asks Bob.
“Why not?” asks Stacey. “Once somebody is already on the payroll, it doesn’t cost us any more to have him be idle.”
But they remain concerned about the “efficiencies” they have to report to corporate… local vs. global optimization.
Pages 221 – 222: Do or die time – the plant needs to demonstrate a 15% improvement in profit to stay open.
Pages 223B – 224T: Alex considers channel-stuffing as an answer. A good reminder to investors of how things actually work in operating businesses.
Pages 312 – 313: a nice example of incremental margins, which apparently befuddle a middle manager in that era?
Page 319: again, Goldratt almost explicitly discusses global vs. local optimization… doesn’t quite get there though.
First Read: a long time ago… whenever I took my first operations management class (2012, maybe?)
Last Read: early 2018
Number of Times Read: 2
Review Date: early 2018
Notes Date: early 2018