According to the Goal: How Eliyahu Goldratt Helps Organizations Examine Their Processes to Achieve Maximum Results
Eliyahu Goldratt is one of the most influential people in business process analysis. His world-renowned book The Theory of Constraints has overhauled company structures around the world. The Goal: A Process of Ongoing Improvement was published prior to The Theory of Constraints, but includes the core ideas that Goldratt expands on in the latter book.
The Goal is unique because it explains a business model in detail through the use of fiction. In fact, the story includes many personal drama elements. Alex, the main character of the story, has extensive marital problems because he spends too much time at the plant and ignores his spouse and children. Alex eventually balances family life with his career, but only after the deep consideration of business processes and time away from his family.
In order to promote his ideas further, Goldratt founded the Avraham Y. Goldratt Institute (named after his father) in 1996. Over the years, Theory of Constraints (TOC) experts have expanded his model and contracted with businesses to improve their bottom line potential. By now, the TOC model has been applied to diverse industry sectors, including aerospace, automotive, construction, defense, distribution, education, health care, manufacturing, services, semiconductor, technology, and telecommunications (AGI-Goldratt Institute, 1996).
The list of clients that the AGI-Goldratt Institute serves is impressive. Not only does it include over 50 companies, but among them are some of the world’s most renowned companies such as 3M, Boeing, General Motors, Intel, and Lockheed Martin. Goldratt’s TOC has proven to be the most effective way to structure a business, regardless of the business type. Any business will have constraints that directly affect its ability to increase its net profit (bottom line).
This essay summarizes Goldratt’s The Goal: A Process of Ongoing Improvement and the business model he proposes. I will also conduct a case study on i2 Technologies, a Dallas-based supply chain management company founded in 1988 and based on Goldratt's TOC model. Today, i2 Technologies helps companies such as Nokia, Siemens, and IBM improve their net profit and eliminate inefficiencies.