Book Summary: Choice: Eliyahu Goldratt

Title: The Choice
Author: Eliyahoo Goldratt
Publisher: North River Press
ISBN-10: 0884271897
ISBN-13: 978-0884271895
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Goldratt – The Business Management Guru

Eliyahu Goldratt is to business management what Adam Smith is to economics and Michael Porter to marketing. He introduced many revolutionary concepts that questioned traditional accounting practices. His methods are now widely accepted and taught in business schools and professional programs across the world.

Choice was one of Goldratt’s last publications where he has explicitly extended his concepts that had revolutionised the business world to everyday Life. This book has been built as a conversation with his daughter Efrat. The discussion revolves around how anyone can live a meaningful life and what the obstacles to it are.

Freedom of Choice: Easy life vs Meaningful life:

“If you want an easy life, you can drop a hammer on your head”, Goldratt jokes, “You will even get food at your bedside.” However to live a meaningful life, one needs to think clearly, like a scientist. For a scientist, every action is an experiment and the results are only outcomes. A scientist doesn’t label them as failure and get disappointed. Instead, he learns what works and what doesn’t and uses the knowledge to come up with a better version. This is what Goldratt refers to as the freedom of choice.

Obstacles to thinking clearly

Thinking clearly can enable us to spot opportunities all around us, even in situations that appear ideal and optimised.  Efrat and Eliyahu explore further on what the obstacles to thinking clearly are and how anyone may attain it.

easy life vs meaningful life
easy life vs meaningful life

Obstacle 1: Myth: Reality is complex.

Goldratt believes in Inherent simplicity i.e every phenomena at its core is simple and controlled only by one or few elements. As an example, he provides a case study where a Big Brand Retail, an industry leader with profits above industry standards, is able to almost quadruple their success without significant investment by changing just one assumption.

Case Study 1:

Getting sold out is common in retail. So are end of season clearance sales. This is because the production time is a lot more than the duration of the season and the forecasts are off the mark.

Proposed Solution for Case Study 1:

Eliminating forecasts and producing only a minimum at the beginning of the season. Proceed with production based on actual sale data received from retail.

Challenge 1: Reducing the production lead time: Stitching is a manual process done on a per unit basis. However dyeing of fabric is a batch process and cannot be done in smaller batches. There may also be a difference in colour between the batches.  So dyeing and stitching are decoupled and raw material is held as dyed fabric and not as stitched material. This allows for smaller batches and flexibility to respond to real demand.

Obstacle 2: Myth 2: Conflict is a given

Retail stores have a good margin by selling the products at full price at the beginning of the season, but very less in a clearance sale. As stuck inventory is a drainer, much of the retail efforts including display space are spent in clearing the slow moving items.

This is a long standing conflict in the industry. Is compromise the only solution or can this conflict be removed?

Conflict resolution
Conflict resolution

Challenge 2: Incentivise retail to sell the popular products:  Promising to take back unsold inventory at full refund during the season ensures retail effort is spent optimally. Big Brands also know exactly which items sell how many. Big Brands have significantly more profit margin which will allow them to take returns without any significant impact on their margins.

Obstacle 3: Tendency to blame other people

When things fail, we have a strong tendency to blame other people rather than find out what went wrong and how it may be resolved. We say things like people resist change. However, most people look forward to major changes in their life like marriage, child, change of place etc.

We need to further deep dive and understand the source of the conflict/hesitation and remove it.

Tautology or Circular Logic:

think like a scientist

Its is common to see arm chair activists and media personnel come up with many ‘obvious’ reasons something failed.  The stated causes state are often substantiated only by the event. One may often see this in many business case studies. When successful, frequent changes, may be defined as dynamic and when unsuccessful as chaotic.

Further testing or other examination of facts may be required before such conclusions may be made. One has to ask multiple why’s to get to the core of the issue rather than settle for a superfluous answer.

Efrat summarises Eliyahu Goldratt’s thoughts as below:

(1) People are Good.
(2) Every conflict can be removed.
(3) Every situation however complex it looks is exceedingly simple.
(4) Every situation may be suitably improved, even sky is not the limit
(5) There is always a Win- Win Solution

Critic Review:

I’ve been a fan of Goldratt ever since I read one of his books. So I should probably call this a fan review rather a Critic’s. His books ‘Goal’ are the bible of the operations manager world over.

Even in his very famous books – Goal I , II and III, Goldratt has used an innovative approach of business novel and has explained how everyday situations may be understood and resolved based on his concepts. The fundamentally new approach is simple and obvious, once understood. Goldratt is one of the business management icons and Choice has given us all a chance to look into his brilliant mind. Please do read his book and enjoy the nuggets of wisdom.

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Priya Krishnamoorthy

Exploring the Journey of life everyday with a new outlook