The Goal

work, are difficult and cost us more to manufacture-it clearly pointed that out. And then it also began to show us how technology affects our margins. I mean, we get most of our books on PDF files now, and the cost difference between working with a PDF file and working with what I'll call the old conventional way is incredible. What was happening was that we were being forced by the market to reduce our prices across the board, but then any job done the old way was not very profitable. Hah! Not profitable at all! People were expecting PDF pricing for conventional work, and that just doesn't work. Bot- tom line: In a harsh business climate, in which the market is the new constraint, and sales are declining, we've actually built profitability. Significantly.

DW: Does it help that you're an ESOP company? Does that make it easier for employees to align their interests with the goal?

CM: It depends on the individual. Someone who is ten years from retirement is more interested in the value of the stock. Someone who's been here three or four years, they're looking at the individual-based bonus. So we actually began to implement team bonuses instead of individual-based bonuses. Today we're working on disconnecting the link between compensation and performance feedback. Feedback is going to be all team- based.

DW: You said you had 300 employees before and now you're at 280. Is that the fault of a bad business climate or a benefit of being more efficient?

CM: It's both. The business climate has not been healthy. But at the same time, some of the changes we made freed up capacity, and as people quit we didn't replace them, which built profitability. No layoffs. We just didn't replace everyone who left. And we moved individuals around.

DW: Is the constraint still in the presses?

CM: Well, it shifted to the bindery. DW: What about market constraints?

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CM: Yeah, we have more capacity than the market's willing to give. That's an issue. I think we're prepared to meet the market when and if it comes back. And in order to do that we have to do three things. We have to fulfill the requirements of speed and delivery. We have to stay profitable to maintain our equipment and provide the quality that customers expect from us. And then, three, we have to have em- ployees who are participating fully, who want to come to work every day, and who understand why they're here and why they're doing what they're doing. TOC has allowed us to do all three.

Interview with Eli Goldratt continued. ...

DW: I'm back to my previous question. How come most readers of The Goal do not rush to implement TOC?

EG: TOC is built on the realization that every complex environment/ system is based on inherent simplicity and the best way to manage, control and improve the system is by capitalizing on this inherent sim- plicity. That's why the constraints are the leverage points. That's why the five focusing steps are so powerful. But, what we have to bear in mind is that such an approach is a major paradigm shift. And people will do almost anything before they will shift their paradigm.

From observation, I can tell you that readers of The Goal proceed to implement it mainly when three conditions are met. First, there is a real pressure to improve. But that by itself is far from being enough. The second condition is that it is obvious to them that there is no remedy within their existing paradigm. In other words, they had already tried everything else. And the third condition is that something helped them to do the first step. This something might be a 'how to' book, like Production The TOC Way, a course, a simulator, or a consultant.

DW: Can you guide me to a case where all the three condi- tions exist?

EG : Frankly, once the three conditions had crystallized in my mind it became easy to detect them in every case. It is just a matter of asking the right questions and the pattern is apparent. Actually, there is no need even to ask guiding questions, you just have to listen.

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Interview with Stewart Witt, Ongoing Improvement

A consultant

DW: I understand that your introduction to The Goal came be- fore you became a consultant

SW: Right. I was VP of operations at the time for a small manufactur- ing company, Ohmart/Vega Company, in Cincinnati, Ohio. Someone gave me the book with the recommendation to read it. And I read it, and it was very entertaining and made a lot of sense, and I promptly put it right back on the shelf.

DW: I've heard stories like that before.

SW: Right. I just wasn't ready yet. This company had hired me specifi- cally to improve their operations and prepare them for growth and make them more efficient, all that stuff. I had talked the president into hiring a consulting firm, saying, 'I can do these things but we can get it done that much quicker with some help,' and he was fine with that. So we hired Grant Thornton, and they came in. We rear- ranged everything, streamlined everything. They took a look at the software we were using and made some other recommendations. We paid them about $120,000 and in about 6-8 months we started to see some results. Everyone was very happy because we took lead times down from, like, two weeks to one week. It was, wow, that's pretty good! The problem was that the same improvements were happening in sales and marketing. So here comes 40% more orders in the same time frame, and as it trickled out into the shop, so trickled away my improvements. The capacity I had freed up was now being doubled up by all these extra orders and I was back in the same boat that I was in before.

DW: What were you manufacturing?

SW: Nuclear measuring devices for the oil industry. Essentially, it's a non-contact measuring system, kind of like a Geiger counter.

DW: So, you were back in the same boat

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SW: Yeah, I spent all this money, all this time. All the things I knew how to do I had done. I couldn't rearrange everything again. I couldn't look at the software and come up with any new ideas. I had already employed the best consultants that I knew.

DW: Right So what did you do?

SW: I signed up for Porsche mechanic school in California. It must have been a weak moment in my life. I do amateur racing and there's a saying that goes: you didn't make any mistake when you spun the car and flew off the track; what you did was you went into the corner and ran out of talent. That's how I looked at it-I must not be cut out for this job, there must be something I'm missing. I couldn't figure it out

DW: How old were you?

SW: That was ten years ago; so, early 30s. Mechanic school wasn't a waste of time. I still use what I learned. I save 600 bucks doing my own tune-ups. But right before I left to go out there, someone said: 'You know, in San Jose there's a software company that has been cre- ated to support the rules that are stated in The Goal, and by the way, the Goldratt Institute has just issued a self-learning kit that you might be interested in.' So I went to my mechanic class, that was very fun. Then afterwards I stopped in San Jose, took a look at the software, and completed the workbook on the way home. I was so excited that on Monday morning I got my staff together and I said: 'This is what we're going to do. We've got nothing to lose. It looks like it's possible. It almost looks too simple. Let's give it a try.' They weren't very con- vinced. In fact they were pretty skeptical. I'd put them through a lot already. One more thing, huh?

DW: This was their first exposure to TOC?

SW: Yes. Short story is, it took us about a month to go through the training materials, which came with a tutor guide and a workbook for all the participants. I went through the tutor guide step by step, they went through the