21 Oct The Goal is still an Essential Read for Entrepreneurs and Executives
One of the books that has significantly influenced my thinking as an entrepreneur is The Goal by Eliyahu M. Goldratt. It’s a business book written in the form of a novel, and it follows a fictional plant manager named Alex Rogo as he methodically fixes processes in a last-ditch effort to save his floundering factory. It’s become a standard read in business schools and was named one of the 25 Most Influential Business Books by Time magazine.
The day-to-day mechanisms of business in the book may be a bit dated, but the high-level messages about business stand the test of time. I still believe The Goal has lessons for entrepreneurs – even those in the digital era. Here are a few of my favorites:
Focus on the right goal
While this is the most prominent message of the book, it’s not uncommon for leaders today to fail to define the goal of their business. Digital brands have a lot of metrics to chase: There’s app downloads, daily active users, clicks, views, and conversions to name a few. In the case of The Goal, it took the characters a surprising amount of time to realize the goal of the plant was to make money. This doesn’t need to be your goal, but you should make sure the activities in your business are aligned around whatever your goal is.
For example, a conservation nonprofit may choose to align their activities around saving a species of animal or protecting a certain amount of forest land. A scholarship fund may measure their success around how many students they serve. The point is: you can’t hit your goal unless it’s clearly defined, and articulated for everyone. Often, even a slight change in how you define the target can have ripple effects through the organization.
Optimize systematically, not departmentally
The fictional company in The Goal lost its way when it reacted to the market, and forced plant managers like Rogo to follow best practices that didn’t treat the factory holistically. Since cost was the driving force behind the outsourcing that was crushing them, leadership decided their success metrics would be based upon reducing cost in production. They mandated new operating procedures for each stage of their manufacturing process to maximize productivity. But because some processes took longer than others and some of the parts they manufactured had higher demand, this new efficiency created bottlenecks and excesses in inventory that ultimately hurt the efficiency of the plant as a whole.
Even if you don’t work in manufacturing, the factory analogy still applies. Work originates somewhere in your company, moves through a process, and eventually ships – literally or figuratively – to a customer. You can’t optimize a single part of a business without factoring in how it may affect others. Even digital brands or professional services firms must be mindful of the limits of throughput at every stage. If you increase sales efficiency, do you have the capacity to handle the new business you close? If you increase the frequency of your software updates, do you have the ability to ensure quality? There are endless dependencies for any business, and your productivity must be balanced across the whole organization.
Today, software can play the role the conveyor belt once played in manufacturing. Your systems can help with timing, and move work and information from team to team by employing automation. These systems for work management can also give leadership updates on the status of projects so you won’t need to march down to the floor demanding answers when there’s a delay.
You can’t get what you don’t ask for
On two occasions in the book, Drogo successfully earned concessions that people said were impossible. At one point, he needs to shuffle staffing schedules, which requires approval from union leaders. In another case, he pushes back on a customer and asks if he can deliver their order in small batches instead of all at once. In both instances, his team insisted the parties would never agree. But by approaching the parties as a professional and providing context behind his asks, he was able to reach agreements that actually worked better for everyone.
New founders are often intimidated when they need to partner with or sell to much larger companies. But business is always a conversation, and you shouldn’t be afraid to ask for what you need to succeed. If you talk things out with your contacts, build relationships based on trust, and deliver on your handshakes, you’ll find that people are willing to compromise more frequently than you think. Sometimes, you just need to ask.
Operational excellence is the key to profit – and balance
At the beginning of The Goal, we learn that the failing plant isn’t Alex’s only challenge. His wife is fed up with his long hours, frequently missed dinners and lack of communication. She leaves him, and while he’s saving his business, he’s also trying to win her back. As he starts to turn around his factory, he finds the plant can run with less overtime from himself and his team. He trusts his process and isn’t always putting out fires. Thus, he can spend more time with his family and be more present.
In addition to meeting his goal of making money for his company, Drogo’s new processes saved jobs and his marriage. For entrepreneurs who are struggling to balance it all, The Goal will help you design and optimize the way work flows through your company. While not every lesson in the book is relevant in today’s world of digital work, there’s an “A-ha moment” waiting in it for everyone. Thirty-five years after it was first published, Goldratt’s classic remains an essential book for all entrepreneurs and executives. It will change the way you think about your business, and sometimes, a shift in mindset is the most important change you can make.
Article written by Andrew Filev (Founder of Wrike) 7th May 2019