Written in 1984, The Goal is a management classic. Written in a unique fictional narrative form, it mixes principles critical to any manufacturing or distribution business with the personal life story of the main character, Alex Rogo. Alex handles serious marital issues while he seeks to save his company’s plant from closing in his hometown. Along the way, Alex enlists the help his friend and mentor Jonah to change the way he looks at his business.
Why we love this book
Anyone who focuses in the weeds on increasing percentage margin deal by deal, or focusing too much on the efficiency of every machine or business unit in their facility will benefit from reading this. The core of the book is about identifying and planning around bottlenecks, which is more professionally called “The Theory of Constraints”. Along the way this creates a shift in mentality from what financial statement oriented cost accountants call cost of goods sold to a different way of looking at growing a business.
As the book lays out, what’s most important is increasing overall throughput (producing and selling the most product) in the form of incremental contribution margin dollars while reducing costs and reducing inventory spend. It’s a great reset away from getting lost in the weeds of percentages. At the end of the day we take dollars to the bank, not percentages.
Any criticisms
At this point the book is 40 years old, and the way they get the numbers to solve their problems has changed significantly. Also, while the personal life part of the book may be charming for some, it also roughly doubles the length of the book and may frustrate others. However, the business principles are as relevant today as they were 40 years ago.
