The Goal: A Process of Ongoing Improvement, page 40
Only after we pull out of the parking lot do we let ourselves go; it takes us more than fifteen minutes to settle down. That is, Lou and Ralph dive into polishing the numbers. From time to time they come up with a slight correction, usually not more than a few hundred dollars. Compared to the total deal it’s not significant at all. But Lou finds it relaxing.
I don’t let it bother me. I sing at the top of my voice. It takes us more than half the way home until they are satisfied. Lou announces the final number. The contribution to the net profit of the plant is an impressive seven digits, a fact that doesn’t deter him from specifying it down to the last cent.
"Quite a profitable deal,’’ I say. "And to think that Johnny was about to drop it.... What a strange world.’’
"One thing for sure,’’ Lou concludes. "You can’t rely on marketing people to solve the marketing problems. They’re captured by old, devastating, common practices to an even larger extent than production.
"Try to imagine,’’ he continues, "the reaction of people when I start to explain to them they are the ones who believe too much in cost accounting.’’
"Yes, I sigh. "Judging from today I shouldn’t expect much help from these guys. Even though, you know, there might be something in Dick.’’
"Hard to tell,’’ he comments. "Especially when Johnny is holding him so tightly under his thumb. Alex, how are you going to do it?’’
"Do what?’’
"Change the entire division?’’
That puts an end to my euphoria. Damn you Lou, why did you have to bring it up?
"God have mercy on me,’’ I say. "Yesterday we were talking about inertia. We were complaining about the inertia that we have. Compare it to the inertia that we are going to face in the division.’’
Ralph laughs, Lou groans, and I feel pity for myself.
This week, even though we made such impressive progress, one thing was definitely proven—I’m still managing by the seat of my pants.
Take yesterday, for example. If it weren’t for Ralph’s instinct that something was missing, we wouldn’t even have noticed the huge, open opportunities. Or today. How close was I to giving up? If it hadn’t been for Lou putting us on the right track ....
I must find out just what are the management techniques I should master. It’s simply too risky not to. I must concentrate on it. I even know where to begin. . . .
Maybe I was holding the key all along. What did I say to Julie in the restaurant? My own words echo in my head: "When did Jonah have the time to learn so much? As far as I know he never worked one day of his life in industry. He’s a physicist. I can’t believe that a scientist, sitting in his ivory tower, can know so much about the detailed realities of the shop floor.’’
And then, the idea of ‘scientist’ came up again, when Lou and Ralph were arguing about the usefulness of classifying data. And I myself supplied the answer: How does one go about revealing the intrinsic order? Lou asked it as if it is a rhetorical question, as if the obvious answer is that it is impossible. But scientists do reveal the intrinsic order of things . . . and Jonah is a scientist.
Somewhere in the scientific method lies the answer for the needed management techniques. It is obvious. But what can I do? I cannot read a book in physics, I don’t know enough mathematics to get through even the first page.
But maybe I don’t need it. Jonah stressed that he wasn’t asking me to develop the methods, just to determine clearly what they should be. Maybe popular science books would be sufficient? At least I should give it a try.
I should go to the library and start digging. The first modern physicist was Newton, that’s probably the place to start.
I’m sitting in my office, my feet up on the desk and staring blankly into the room.
The entire morning, I got only two calls—both from Johnny Jons. First he called to inform me that the deal with the French is signed. He was very proud of the fact that he negotiated a better deal than expected; in return for the flexibility and immediacy of our response to their future requests, he succeeded in squeezing slightly higher prices.
The second time he wanted to know if he could approach our domestic clients with the same concept. That is, to shoot for a long-term contract where only the overall yearly quantities are fixed, and we promise three weeks’ delivery for any specific request.
I assured him that we don’t have any problem responding, and encouraged him to go ahead.
He’s excited. I’m far from it.
Everybody is busy. Launching this huge new deal has made them really busy. I’m the only one who has nothing to do. I feel redundant. Where are the days of the telephone ringing off the hook, when I had to run from one important issue to the other, when there were not enough hours in the day?
All those calls and meetings were fire fighting. I remind myself. No fires, no fighting. Now, everything is running smoothly— almost too smoothly.
Actually, what bothers me is that I know what I should be doing. I need to guarantee that the current situation will continue, that things are thought out in advance so fires will not break out. But this means finding the answer to Jonah’s question.
I stand up and leave. On my way out I say to Fran, "In the unlikely event that anyone needs me, I’ll be at the public library.’’
"Enough for today,’’ I say and close the book. I stand up and stretch, "Julie, join me for a cup of tea?’’
"Good idea, I’ll be with you in a minute.’’
"You’re really into it,’’ I comment as she joins me at the kitchen table.
"Yeah, it’s fascinating.’’
I hand her a steaming cup. "What can be so fascinating about ancient Greek philosophy?’’ I wonder aloud.
"It’s not what you think,’’ she laughs. "These dialogues of Socrates are really interesting.’’
"If you say so,’’ I don’t try to disguise my skepticism.
"Alex, your perceptions are all wrong, it’s not at all like what you think.’’
"So what is it?’’ I ask.
"Well, It’s hard to explain,’’ she hedges. "Why don’t you try to read them yourself?’’
"Maybe one day I will,’’ I say, "but for the moment I’ve enough reading to do.’’
She takes a sip from her cup. "Did you find what you’re looking for?’’
"Not exactly,’’ I admit. "Reading popular science books doesn’t lead you directly to management techniques. But I’ve started to see something interesting.’’
"Yes?’’ she says encouragingly.
"It’s how physicists approach a subject; it’s so vastly different from what we do in business. They don’t start by collecting as much data as possible. On the contrary, they start with one phenomenon, some fact of life, almost randomly chosen, and then they raise a hypothesis: a speculation of a plausible cause for the existence of that fact. And here’s the interesting part. It all seems to be based on one key relationship: IF... THEN.’’
Somehow this last sentence causes Julie to straighten up in her chair. "Keep going,’’ she says intensely.
"What they actually do is to derive the unavoidable results logically from their hypothesis. They say: IF the hypothesis is right THEN logically another fact must also exist. With these logical derivations they open up a whole spectrum of other effects. Of course the major effort is to verify whether or not the predicted effects do exist. As more and more predictions are verified, it becomes more obvious that the underlying hypothesis is correct. To read, for example, how Newton did it for the law of gravity is fascinating.’’
"Why?’’ she asks, as if she knows the answer but is anxious to hear it from me.
"Things start to be connected to each other. Things that we never thought were related start to be strongly connected to each other. One single common cause is the reason for a very large spectrum of different effects. You know Julie, it’s like order is built out of chaos. What can be more beautiful than that?’’
With glittering eyes she asks, "Do you know what you have just described? The Socratic dialogues. They’re done in exactly the same way, through exactly the same relationship, IF . . . THEN. Maybe the only difference is that the facts do not concern material but human behavior.’’
"Interesting, very interesting. Come to think about it,’’ I say, "my field, management, involves both material and people behavior. If the same method can be used for each then it’s probably the basis for Jonah’s techniques.’’
She thinks about it for a while. "You’re probably right. But if you are then I’m willing to bet that when Jonah starts to teach you those techniques you’ll find that they are much more than techniques. They must be thinking processes.’’
We each dive into our thoughts.
"Where do we take it from here?’’
"I don’t know,’’ I answer. "Frankly, I don’t think that all this reading really gets me closer to answering Jonah’s question. Remember what he said? ‘I’m not asking you to develop the management techniques, only to determine what they should be.’ I’m afraid I’m trying to jump to the next step, to develop them. Determining the management techniques must come from the need itself, from examining how I currently operate and then trying to find out how I should operate.’’
39
"Any messages?’’ I ask Fran.
"Yes,’’ she answers, to my surprise. "From Bill Peach. He wants to talk to you.’’
I get him on the phone. "Hey Bill, what’s up?’’
"I just received your numbers for last month,’’ he says. "Congratulations hotshot, you definitely made your point. I’ve never seen anything even remotely close to this.’’
"Thank you,’’ I say pleased. "By the way, what are the results at Hilton Smyth’s plant?’’
"You must turn the dagger, huh?’’ he laughs. "As you predicted, Hilton is not doing too well. His indicators continue to improve, but his bottom line continues to sink into the red.’’
I cannot contain myself, "I told you that those indicators are based on local optimum and that they have nothing to do with the global picture.’’
"I know, I know,’’ he sighs. "As a matter of fact, I think that I knew it all along, but I guess an old mule like me needs to see the proof in black and red. Well, I think that I’ve finally seen it.’’
"It’s about time,’’ I think to myself but to the phone I say, "So what’s next?’’
"This is actually why I called you, Alex. I spent the entire day yesterday with Ethan Frost. It seems that he’s in agreement with you, but I can’t understand what he is talking about.’’ Bill sounds quite desperate. "There was a time that I thought I understood all this mumbo jumbo of ‘cost of goods sold’ and variances, but after yesterday, it’s obvious that I don’t. I need someone who can explain it to me in straight terms, someone like you. You do understand all this, don’t you?’’
"I think I do,’’ I answer. "Actually it is very simple. It’s all a matter of....’’
"No, no,’’ he interrupts me. "Not on the phone. Besides, you have to come here anyway—only one month left, you should get familiar with the details of your new job.’’
"Tomorrow morning okay?’’
"No problem,’’ he answers. "And Alex, you have to explain to me what you’ve done to Johnny Jons. He goes around claiming that we can make a lot of money if we sell below what it costs us to produce. That is pure baloney.’’
I laugh, "See you tomorrow.’’
Bill Peach abandoning his precious indicators? This is something I have to tell everyone; they’ll never believe it. I go to Donovan’s office, but he’s not there, nor is Stacey. They must be on the floor. I ask Fran to locate them. In the meantime I’m going to Lou to tell him the news.
Stacey reaches me there. "Hey boss, we have some problems here. Can we come in half an hour?’’
"No rush,’’ I say. "It’s not so important, take your time.’’
"I don’t agree,’’ she says. "I’m afraid that it is important.’’
"What are you talking about?’’
"It probably has started,’’ she answers. "Bob and I will be in your office in half an hour. Okay?’’
"Okay,’’ I say, quite puzzled.
"Lou, do you know what’s going on?’’ I ask.
"No.’’ he says. "Unless of course, you’re referring to the fact that Stacey and Bob have been busy for the last week, playing expeditors.’’
"They are?’’
"To make a long story short,’’ Bob concludes the briefing of the last hour, "already twelve work centers are on unplanned overtime.’’
"The situation is out of control,’’ Stacey continues. "Yesterday one order was not shipped on time, today three more will be delayed for sure. According to Ralph, we’re going downhill from there. He claims that before the end of the month we’ll miss the shipping dates on about twenty percent of our orders, and not by just one or two days.’’
I’m looking at my phone. It won’t take more than a few days and this monster will ring off the hook with furious complaints. It’s one thing to be consistently bad; the clients are used to it and they protect themselves by stocks or time buffers. But now we have spoiled them, they are already used to our good performance.
This is much worse than I’ve imagined. It might ruin the plant.
How did it happen? Where did I go astray?
"How come?’’ I ask them.
"I told you,’’ Bob says. "Order no. 49318 is stuck because of...’’
"No Bob,’’ Stacey stops him. "It’s not the details that are important. We should look for the core problem. Alex, I think that we simply accepted more orders than we can process.’’
"That’s obvious,’’ I say. "But how come? I thought we checked that the bottlenecks have enough capacity. We also checked your seven other problematic work centers. Did we make a mistake in the calculations?’’
"Probably,’’ Bob answers.
"Not likely,’’ is Stacey’s response. "We checked and double checked it.’’
"So?’’
"So, I don’t know,’’ Bob says. "But it doesn’t matter. We have to do something now, and fast.’’
"Yes, but what?’’ I’m a little impatient. "As long as we don’t know what caused the situation, the best we can do is to throw punches in all directions. That was our old mode of operation. I had hoped that we learned better.’’
I accept their lack of response as agreement and continue, "Let’s call Lou and Ralph and move into the conference room. We must put our heads together to figure out what is really going on.’’
"Let’s get the facts straight,’’ Lou says after less than fifteen minutes. "Bob, are you convinced that you need to keep using so much overtime?’’
"The efforts of the last few days have convinced me that even with overtime we are going to miss due dates,’’ Bob answers.
"I see,’’ Lou doesn’t look too happy. "Ralph, are you convinced that at the end of the month, in spite of the overtime, we are going to be late on many orders?’’
"If we don’t find a smart way to solve this mess, without a doubt,’’ Ralph answers confidently. "I can’t tell you the dollar amount, that depends on Bob and Stacey’s decisions of how much overtime to use and which orders to expedite. But it is in the neighborhood of over a million dollars.’’
"That’s bad,’’ Lou says. "I’ll have to redo my forecast.’’
I throw him a murderous look. That is the major damage that he sees? Redo the forecast!
"Can we address the real issue?’’ I say in a freezing voice. They all turn to me waiting.
"Listening again to what you’re saying, I don’t see a major problem,’’ I say. "It is obvious that we tried to swallow more than we can chew. What we have to do is to determine by how much and then compensate. It is as simple as that.’’
Lou nods his head in approval. Bob, Ralph, and Stacey continue to look at me with poker faces. They even look offended. There must be something wrong in what I’ve said, but I can’t see what.
"Ralph, by how much are our bottlenecks overloaded?’’ I ask.
"They’re not overloaded,’’ he says flatly.
"No problem there,’’ I conclude. "So let . . .’’
