Thanks to Wendy Maxwell, we have a corrected transcript.
I've updated the file on scribd ... http://www.scribd.com/doc/23593618/Clarke-Interviews-Eli-Goldratt.
But here it is in full:
CC: Hi Eli,
it’s Clarke Ching here, I’ve just clicked record, and we’re all go now. Can I
just check: you’re in Amsterdam today, is that right?
EG: Yes.
CC: Do you
live in Amsterdam?
EG: No. First
of all, it’s not Amsterdam. It’s Roelofarendsveen. It’s a small village near
Schiphol. And no, I’m not living here, but this is my main office. I live in
Israel.
CC: Ah,
right, right. You do live in Israel. I must say, I love Amsterdam but I’ve not
been to Israel… yet!
EG: You’ve
missed something!
CC: I know. I
was talking to Eli Schragenheim at one stage, and I zoomed in on Google Earth
to where he was living. It looked like a very nice place. Anyway, let’s get
straight to what everyone wants to hear about, which is your new book. I read
it about two or three weeks ago, but, just this morning, the actual paper
version arrived with the post. It’s called ‘Isn’t It Obvious?’, it’s by
yourself and you have two co-authors – which I might come back to later. But I
wonder if you could perhaps just tell us a bit, or as much as you like, about
the book. Why you wrote it.
EG: Why I
wrote it? You know, sometimes you don’t have a choice. A book is coming, and
grabs you in the throat, and says “Write me!”.
CC: Fair
enough! I noticed that you touched a little bit on the topic of this: the
retail solution in ‘The Choice’. ‘Isn’t It Obvious’ is an elaboration of what
was in ‘The Choice’, and it looks to me, the way I read it, it’s the
distribution solution that you’ve been writing and talking about for a long
time now, but you’ve written this book from the retailer’s point of view.
EG: Correct.
As a matter of fact, I do expect, that, if we wrote the book appropriately,
every reader, on the first reading, will be able to distil three main messages,
which I hope are quite clear in the book. But, first of all, let’s talk about
the title of the book. ‘Isn’t It Obvious?’ is the criterion that every
scientist is using in order to know whether or not he reached a good solution.
You are working on a problem, you can work on it for years, and then, one
morning, you wake up and say to yourself “Oh, it’s right in front of my nose!
How didn’t I pay attention to it. Isn’t it obvious!”. And only then you know
that you have found a good solution. If you don’t have this sensation, suspect
that your solution is not good enough. This is not to be confused with: it was
obvious to find it. As a matter of fact, these solutions are the most difficult
ones to find, but, once you find them, you know
that they are there. So, basically, the message is: if you agree that it’s
obvious, then you know it will work. At the same time, the real message is:
keep on thinking about the solution until you reach this level. Only then you
know that you reached a good solution.
And, as you pointed out, what I’m using in this book is
solutions that I’ve been talking about for years, and have tried, and I know to
what extent it’s working, and this is a solution for retail. I’m flabbergasted
by the fact that retail still believes that the key is to find a better way to
forecast! And they are spending an enormous amount of money on these– I’ll call
them crystal balls, though today they are disguised as computer programs – to
get a better forecast. And this is a huge industry! And nobody is doing even
the most obvious check before they buy another module of forecasting. Let’s
just take the past data of, let’s say, two years ago, load it in the computer,
and see what the computer’s forecasting module will tell you about what should
have happened a year ago, and check it with what really happened, just to find
out that all these new forecasting modules are as bad as the previous ones. And
it’s about time to realize there is no way to accurately forecast consumption
on an SKU level. It’s theoretically impossible. So the only way out is to
reduce dramatically our dependency on forecast. And this is the solution that I
have been talking about for so long in distribution. So what I’ve tried to
portray in this book is almost obvious. How clear is this solution, how well it
works, and, more than that, that the results that are coming when you implement
this solution is not a small improvement and it’s not a 10 per cent
improvement. It’s really propelling the performance of retail to a new level.
The way that I wrote it is a little bit different than
what I’ve done in ‘The Goal’, which is, in this book there is no Jonah. In
other words, people are learning it from their own experiences. There is no
smart, wise man who gives a solution. You’re learning the solution directly
from experience, and that’s why I believe that if ‘The Goal’ had the impact on
manufacturing as it was, this book will have an even bigger impact on
retailing. An even bigger impact, hopefully. So, one message of the book is a
retail solution. A solution for retail in a way that I hope that people cannot
ignore anymore.
CC: Actually,
if I can just say that I read it and it was one of the clearest, quickest reads
I’ve ever read. I think you’ve succeeded there brilliantly.
EG: No, no,
no, no! I will not take the credit here. Here the credit must go to the two co-authors that I had.
CC: Ilan and
Joe? Ilan Eshkoli and Joe LeerBrown
EG: Ilan and
Joe, yes. You see, ‘The Goal’ was so readable not because of me, but because of
Jeff Cox. The only problem was that it was – how shall I say it – painful to
write it. You’re writing with a gifted writer, like Jeff Cox is, and after he
writes, let’s say, two drafts and he writes it a third time, and he’s happy
with what he has. And then to come and say, “No, it’s not good enough. Here and
here it’s not portraying it accurately enough, and here it is not precisely
logical, and write it again, and write it again.” And what is happening is you
start to fight! And, after we finished writing ‘The Goal’, I said “Never
again!”.
CC: Really?
EG: Oh yes. Never
again. It was about 13 months that it took us. The first few months were nice.
After that, we were fighting about the problem of rewrite and rewrite. Maybe
I’m a perfectionist, but that’s what I am. So I said “I’m not going to work
anymore with writers!” So I wrote on my own, but then my problem is that I’m
cramming much too much in each chapter, and that’s why it’s not as readable.
So, this time, I decided “Let me try again.”. But, I tried something new.
Rather than working with professional writers of books, I decided to try to
write with profession writers of TV and movies. That’s what Ilan and Joe are.
You see, my assumption was that, in movies, the one who writes the script has
to change it and change it even on the day of the shooting.
CC: Yes, Yes
of course.
EG: So they
would have, I hoped, much less inertia to re-write all the time and to polish,
and that’s exactly what happened.
CC: And
that’s probably why the book reads so quickly as well, because that kind of
format is much quicker by nature, isn’t it?
EG: Correct.
And, if you notice, for example, there are no pages where anybody is thinking
to himself. Because, if a person thinks for half a page, the camera doesn’t
know how to work the shoot. Or, when there is a dialogue, the heroes are moving,
so the camera will have to move!
CC: Yes,
Actually that does explain something for me, because, when I read this book, I
read it just so quickly. I just raced through it, and I was actually at the end
of it going, “Wow I got so much information out of it!” I almost feel robbed
that I wasn’t reading it a day or two later! So they did a very good job in
that respect.
EG: Very good
job. But, at the same time, you have to realize there isn’t a single chapter
there that was not re-written at least five times! There is one chapter that
was re-written sixteen times! There
were also chapters that went to the basket, even though they were very good,
just because they interrupted the smooth rhythm of the book.
CC: Yes, yes.
I can understand it totally.
EG: And here I
am really grateful for these two people who were so accommodating, and didn’t
have any inertia to re-write it, and re-write it until all three of us felt
very good with the outcome. So the fact that it’s so readable, I would say that
all the credit should go to them.
CC: Very
good. So, you were saying that the retail solution was the first of three
points.
EG: Yes,
correct.
CC: And then
I interrupted!
EG: The other
two points are a little bit more subtle. One point that I wanted to bring
across – and I think that I’ve already started to do it in ‘The Goal’ and in
all my books, but in this book we put so much more emphasis on it – is that in
the formal text books, and certainly in the universities, I think that there is
not enough emphasis on the role of the informal system. And to what extent the
informal system is not just an integral part of running a business, but to what
extent it is important in running a business. And I’m talking about the fact
that there are relationships between people that allow them to not follow the
formula system and, because of it, to improve the performance so much. I’m
talking about family relationships and I’m talking about friendship, and to
what extent this is key in running a business.
CC: Like the
relationship between Paul and Roger?
EG: Roger,
for example. Without that, it wouldn’t have happened.
CC: No, it
couldn’t have.
EG: And such
things do exist in reality, in every
company. Why don’t we pay enough attention to it? Why don’t we understand how
important it is to encourage it, to support it. So that was the other thing
that I put throughout the book; I wanted to show that the informal system is
almost as important as the formal system.
CC: Okay, I
can see that, actually. You’re right, it is subtle. I hadn’t realized, but,
throughout the entire book, everything gets done apart from one bit where Paul
goes to his boss. Is his name Martin, I think?
EG: Yes.
CC: And he
actually starts working the formal system at that stage. Did you start writing
the book with that intention of putting him in such a…?
EG: Absolutely,
absolutely. Otherwise I could not write it. Absolutely. And the third message,
which I hope that everyone that reads it will get, is to what extent, if you
are implementing a good solution and it works and you get now much better
results, to what extent your mind should be not on continuing to polish it –
because then you will reach diminishing returns – but to realize that this
solution that you’ve implemented is really elevating the company into a new
level. It gives a much bigger and better platform to do the next jump, which, by definition, since
the platform is bigger, the next jump is bigger than the previous one. And not
to fall into the trap of saying “We’re already the best in the industry. We are
number one, so we’ve reached it.” No! The opposite is true. Which is: the
better you become, the bigger the next jump can be, if you just allow yourself
not to be trapped in the box that you put yourself in. So what I’ve done in
this book is: I’ve done three such jumps. Every time you think “That’s it!”;
no, no, no, no, it’s just the beginning, And that’s why the last sentence of
the book is ‘Even the sky is not the limit’. And the reader understands that
that’s correct.
CC: It is,
too. Yes, I’m just looking at that page now.
EG: The idea
is, my idea is to write six such books. As a matter of fact, those who know TOC
know very well that what I’ve done here is nothing but taking one of the
standard S&T trees and to turn it into a novel. Now, there are six S&T
trees for the various segments of the industry. So this one is for retail. But
there are five more, which my intention now is to find excellent writers and to
write them one at a time. So the next book will be called, most probably,
‘Isn’t It Obvious 2?’ and then ‘Isn’t It Obvious 3?’ Each one covering a
totally different section of the industry, but with the same ideas, which are
every huge step, that really changes and really elevates the company to another
level of performance is just the platform for another jump, for another jump
which never ends. And that’s what I want people to realize.
CC: Okay,
that’s interesting. One of the things that I noticed in it, which I thought
might have been another theme – actually I suspect it might have been one of
the three – was to do with the current economical situation. How by reducing the amount of inventory and
the amount of cash they needed, that was (it just seems very relevant now) the
less cash you need to run you business.
EG: It’s not
just the less cash. As a matter of fact, if you are talking about the current
situation, this financial crisis that’s after this super sophistication that
was so stupid and created the financial meltdown, it turned into an economical
crisis only because there were too many inventories in retail. If there were
not these mountains of inventories in retail, we would have passed through it
without any trace of economical crisis. But no, this was not my intention,
because, when I’m writing such a book, I’m not writing it for this year.
CC: This is
an evergreen, isn’t it?
EG: Yes,
correct. Correct.
CC: And here
I was, I thought I was clever, because I just…
EG: Yes, it’s
more relevant now than ever, but this wasn’t the intention.
CC: Okay,
that’s good. So you’re here with three points. Now I’m familiar, passingly, I
suppose – if that’s actually a word – with the S&T trees. I know that
project management is one of them. Is that right?
EG: Right.
CC: So, would
you intend doing a rewrite effectively of ‘Critical Chain’ with the new
knowledge that’s out now, in ‘Isn’t It Obvious 5’ say, or…?
EG: Yes,
correct. As a matter of fact, the book that we’ve started to work on right now
– and we are really well advanced into it – is not a critical chain, but the
‘make to order’ environment. In other words, we are going back to the
environment that is described in ‘The Goal’ in order to put all the new
knowledge in. And, if you notice, ‘The Goal’ is finishing much too early. In
‘The Goal’ there isn’t a clear way to show that the sky is not the limit. In other
words, I have to take it through three jumps, where what ‘The Goal’ has shown
is just half of the first one.
CC: Aha.
Actually, here you did write; he’s got to the point where he’s rescued his
factory. They’ve found new capabilities, but they’ve not really exploited them
beyond the one factory.
EG: Not at
all. Even that factory was not really capitalized. Anyhow, the real thing is
the three other messages that I’m afraid that people will not distil after the
first reading. And then, maybe, if you highlight it, people will get it, even in the first reading.
Are you interested in hearing about them?
CC: I suspect
I probably am, Eli, yes!
EG: The first
one is: how do you invent? Invent powerful solutions to your real problems, to
your environment. And most people think that, maybe, you have to be born with
this ability to invent. What I’ve tried to show here is that every good manager
is a fantastic inventor. But you don’t pay attention to it, and you waste all
the inventions. Let me explain a little bit what I mean, okay? Every manager
faces emergencies. And he reacts to emergencies. What can he do? As a matter of
fact, a good manager will react quite well to emergencies, and he solves the
problem. And what we have to realize is: whenever we react to an emergency we
actually deviate from the standard rules. Always! What people do not pay
attention to is that you don’t just deviate from the standard rules, you are
actually following a different set of rules. And the point is: after the
emergency is over, why won’t you take the time to verbalize the new set of
rules that you just followed? Then think on the following; if I would have used
this set of rules not just in emergencies, but in the normal day to day, what
damages will happen? What undesirable effects will result, and how can I
prevent them? Because, if you will now augment this new set of rules with what
should be happening, in order that, when I’m using them in day to day life at
the normal time they do not lead to
anything negative, what you are ending up with is a set of rules that is so
much better than your current rules. So much better, that even emergencies are
handled as if there is no emergency.
And that’s what I’ve shown in this book, if you notice. Okay, a pipe is broken.
Emergency. Fine, you react to it. But then what is even Paul saying? He’s dying
to go back to normal! Wait a minute, pay attention. Look at how much the
situation is better now. Think, how can you use it on a daily basis, because
then you get this huge improvement. And that’s what’s happening in this book.
CC: It sounds
like you’ve done it deliberately in the book.
EG: Absolutely.
CC: As a plot
device, I thought that the emergency with the pipes at the beginning was
ingenious, and I thought your co-authors had done a fantastic job of coming up
with that, because it just works so well. But, of course, that was planned, is
what you’re saying here.
EG: Absolutely!
But what I’m saying is: this is always
the case. For example, take ‘The Goal’. In the first chapter, he faces an
emergency. As a matter of fact, the emergency is so big that the head of the
division comes to say, “There is an order which you are late on. You must
expedite it!” So they expedite it. And he’s bitching and moaning about it. At
the end of the book he’s doing exactly the same for the big order that saves
his bottom line. If he would have just stopped after the first chapter and
said, “I’ve deviated from the rules of how we are running a plant. It did work,
I did send the order earlier. What are the new rules that I’m following?”, he
would have saved the whole book, and he would have invented it rather than
Jonah. Because, let’s face it, the way that he handled his big order at the end
is exactly the same concept that he handled the emergency in the first chapter.
It’s always the case. So, if people would just pay attention to it, everyone
becomes an inventor.
CC: That’s
intriguing. We have the same problem. My specialty is software development, and
we have the same pattern. It goes on and on, over and over again in projects.
They get to the end, they realize they can’t finish on time, and then they do
what they should have done to start with.
EG: Yes. But
there, distil the new rules that you are actually following in the emergency.
Trim the negative ramifications of them, and then you have the new system. This always works.
CC: Yes, yes.
And it’s just amazing, though. Your advice is very good, but very, very few
people do it.
EG: Almost
nobody! Almost nobody. Everybody will just want to go back to normal.
CC: Yup. I had
a medical emergency three years ago where I ended up in hospital and nearly
died, but I was very, very healthy for six months afterwards! And then, of
course, slowly reverted back to the old ways. And I guess it’s the same.
EG: Yes, it’s
the same. Well, this is the second message which I’ve tried to show: that, even
if you do it once and as long as you don’t fall into the box, the sky is not
the limit, because there is only one emergency in the whole book! **
CC: Yes, yes
there is. Everything flowed very elegantly after that.
EG: Correct.
CC: Can I
ask, with this book, was it based on – I know you’ve done the solution which is
embedded in the real world – but was this based on any particular company when
you were writing it?
EG: No, no, no, no. Let’s put it this way, okay?
We have tried this idea in dozens of companies, so the knowledge, the detailed
knowledge of exactly how to do it and so on, was evolving through the years. So
this book is just the accumulation of this knowledge.
CC: Right.
EG: But it’s not any particular company. It’s not
like in ‘The Goal’, where I based it on three companies that I’ve dealt with at
that time. So I see these three companies; here it’s dozens. The experience
here is enormous. And, by the way, the numbers in the book are accurate, but
conservative relative to reality.
CC: Okay.
EG: Those are the minimum numbers that we ever
got.
CC: Right, right. Why is that? Is it that you
didn’t want to sound too crazy?
EG: Anyhow, nobody will believe the numbers!
CC: That makes good sense, okay. I understand
that. Can I come back; you said there were three points.
EG: Yes.
CC: That the first one was, how do you invent.
EG: How do you invent, yes.
CC: The second one, i.e. …
EG: The second one is much, much different. It’s
different, but in many senses it’s broader, which is the whole subject of
resistance to change.
CC: Now we’re cookin’.
EG: You know that I was adamant against ‘People
resist change!’ and all this mumbo jumbo. Yes, of course people resist change
when they have to resist it. And people embrace change when they have to
embrace it. As a matter of fact, look at the usual thing like, people want to
get married even though they know that this change will change all their life,
they still want it. So they are not born resisting change. As a matter of fact,
what people are doing is looking on the proposed change, and they evaluate for
themselves if it’s good or bad. And, remember, a major part of the good or bad
is the risk involved, the unknown involved. This influences the decision
dramatically. But, when they come to the conclusion that it is good, they
embrace it, and when they come to the conclusion that it’s bad, they resist it!
What is important to realize is that, when we come to judge any suggestion if
it’s good or bad, we are judging it according to some patterns that we have in
our minds. Patterns that came from our own experience. These patterns, many
times, are not correct. And if you notice, in the book, what I’m trying to show
is some very important things like: the first one to resist change is the
inventor himself. Paul is resisting his own change. He just wants to go back to
normal. And, if you read very carefully why, there are patterns in his head
that say “Ah! All the good results that I’m seeing are just a fluke.”
CC: Yes, yes.
EG: Now, where is it coming from? And, as a
matter of fact, our own patterns are coming from two different things. One is
that, when we have a major problem that really hurts us and we’ve tried and
we’ve tried, and we cannot rectify it, protective mechanisms are coming into
the game. And these protective mechanisms are actually that we’ve become blind
to the problem. We accept it as part of life, it’s not a problem anymore. These
are very wrong patterns. Now, if you notice, the first one that I’m talking
about is: how much sales are lost due to shortages? Paul knows very well that
about 25 per cent of the SKUs that were supposed to be in his shop are missing.
But how many sales are lost? And, if you notice, he’s totally convinced that
it’s only two or three per cent. And this is not just Paul, this is almost
every retailer that I’ve talked to. Now, when you start to analyze, it’s crazy
to think that it’s only two or three per cent. Because: why are these items
missing? Because they are not selling? Or because they are selling more than
the average that are missing? So if 20 per cent of the better running items are
missing, how can you say that sales were impacted only 2 per cent.
CC: Yes!
EG: That’s the defensive mechanism patterns that
exist in people’s heads, which block them from judging the value of the change.
This is one type of pattern. The other type of pattern is that, when you are
used to some environment, you will draw patterns from it. And you will not pay
attention to the fact that there are other environments. For example, the
second pattern that blocks Paul is that he says “If sales are going up by so
much, how much did the profit go up? I know that I’m making six per cent profit
and this means that, if sales went up by X, my profit went up by this X times
the profitability that I have, which is only six per cent of it.” What is it
based on? It’s based on the fact that usually, when sales go up, all the
expenses that are associated are going up at the same rate.
CC: Right.
EG: What happens when sales go up and expenses
stay exactly the same? Then the impact on profit is huge.
CC: Enormous, yes.
EG: But he doesn’t see it anymore, because the
pattern is there.
CC: And he can’t see it, because he doesn’t have
the lens. He just doesn’t have the experience.
EG: “He can’t think.”, “If he would think about
it.”, and so on. Or, somebody will highlight it to him. We are not stupid.
Nobody is stupid, so, when the fallacy of the pattern is highlighted, then he
has a base to evaluate his own invention and then he becomes almost zealous
about it.
CC: Right. Right. Yes.
EG: But this is not just Paul. This is every
person. What is important to realize,
and that’s what I’m showing in the
book: that when you go below, to people below you, they are blocked by patterns
as well. But different patterns. And, as long as you don’t address it, they
will fight you to the hilt. If you identify these patterns and show the fallacy
of them, then immediately they are in favor of the change. Look at the people
who are working for Paul. There is the pattern: if inventory goes down and we
don’t bring more inventory, this means the shop is about to be closed.
CC: Yes. Yes.
EG: This is a pattern. As long as this pattern
exists, they will resist the change and they will even take actions that will
kill you. You have to identify it, you have to take the action to show them
that the pattern is false, and then they are all for it. Likewise, after that,
when Paul talked to his peers, they are blocked by the same patterns that he
was blocked with. But there is a huge difference. Paul went through an
experience that enabled him to be more open to evaluate the change. They had
not. Which means that the amount of work which is needed in order to verbalize
these erroneous patterns much better, and how to prove that they are false, is
much bigger. You do it, everybody is with you. You don’t do it, you will never
change people. How to identify the patterns and how to go about exposing their
fallacies; if you look, there are two chapters devoted to it. One is a chapter
where they are preparing the presentation and the other one is the chapter
where they give the presentation. Follow this chapter, this is a recipe, a
generic recipe of how do you identify the wrong patterns and how do you overcome
them. And then everybody’s with you.
CC: I’m just making a note to re-read those two
chapters right now!
EG: Then you have to realize that, above you, the
people are blocked by different patterns. It’s not the patterns that blocked
you and your peers, it’s not the patterns that have blocked your people – there
are different patterns that block the top management. And, again, the same
thing: you have to identify them and to show that they are false, and then
everybody is with you. And that’s the real message throughout the book. I’m
showing that the only resistance to change is coming from erroneous patterns
that cause people to judge the change as not
good, as too risky, and so on. And, when you identify the patterns and you show
the fallacy, how quickly people change their attitude! To the extent that the
whole change has happened in nine months. And everybody’s for it. This is
generic. This is what I’ve seen again and again in reality. My problem is to
what extent we don’t understand it, and then we are trying to use force or
incentives and all of that, rather than addressing the real thing! And that’s
the real message of the book.
CC: Right. I do remember those two chapters. They
did change pace slightly, and that’s interesting. I hadn’t realized what was
going on there, but you did talk about that, so I’m going to go back to them.
But can I ask, you’ve overcome your own inertia, your own patterns, you’ve
figured out something. You’ve then got to get into the world of the people,
that say, work for you, and the people you work for, above you, or even in the
case of the book, the vendors – getting them
to work differently. How do you get to understand the world that other people’s
patterns have. How do you go about that? That was a very poorly articulated
question!
EG: No, no. It’s a very good question. But, for
that, you have to read another book, which is ‘The Choice’. In ‘The Choice’
I’ve shown exactly how it is done. And what are the obstacles that prevent you
from doing it, and how to go about overcoming them. That’s the whole message of
‘The Choice’. My problem is that most people who have read ‘The Choice’ did not
fully understand it. And then what I’ve done is: I went back to complain, or to
cry on my daughter’s shoulders, saying, “Nobody understands it.” And she said
to me, “Father, I told you so!” And I said, “What do you mean?” She said “Look,
when you have asked me to work, and to give you my input” – which has changed
the book dramatically; ‘The Choice’ started as a fictional book, basically a
documentary almost on the discussions that I had with my daughter – she said,
“From time to time, I’ve asked you what is the whole logic of this thing? And I
gave you a logical map with, you know, entities and arrows, and, in the
beginning, you said “Ah! That’s not the case!” and you scribbled for me the
logical map.” She said, “I worked on it so hard. I understood these maps. I
wrote the notes on it: it was the only way that I could understand what you
were talking about.” And then I said, “Can I see again these logical maps and
your notes?” And we worked a little bit more on them, and the next version will
contain, for each chapter in ‘The Choice, an Appendix which is maps and notes,
so people could really understand it.
CC: Ah, fantastic, fantastic. I must say, I liked
‘The Choice’. I read the early version, the draft that you sent out. I can’t
remember what it was called, but the early version. I haven’t read the latest
version.
EG: So, if you want and you don’t want to wait
until the new edition is published, Wendy will be delighted to provide you with
the Appendices. Of course, in the next version I have to acknowledge fully the
contribution of my daughter so she becomes a formal co-author because, first of
all, all the Appendices were written by her. The second thing is: her editing
or her talking to me in the book has change the book totally, so it became
almost a real description of the dialogues that we had.
CC: Ah, right, right. I really enjoyed ‘The
Choice’ as it came out. It was harder to read than the other books, because it
made me think so much more, and it was one I’ve set aside to take away for
Christmas so I have something to read!
EG: If that’s the case, I will highly recommend
that you get the logical maps and the notes of Efrat. This will make it so much
easier to read.
CC: Very good. My favorite book of yours is
probably ‘The Essays’ book. [Essays On The Theory Of Constraints]. It probably
says a lot about me; I mean, I love ‘The Goal’, and I’ve read every single one
of your books at least three times, apart from the last two, which I’ve only
read once each so far, but ‘The Essays’ book I sort of keep dipping into that
at random. Actually I don’t think I’ve read it the whole way through since the
very first time, but I really enjoyed that. And I think ‘The Choice’ would be
another one of those ones where the ideas will take a long time to percolate.
EG: I hope it will take a shorter time now,
because in my eyes ‘The Choice’ is by far the most important book that I have
ever written.
CC: Actually, you know, when I read that, it was
like – I remember reading it and trying to explain it to someone – it was like
“ah, ah, ah....”. I suppose it’s been 10, 12 years since I first read ‘The
Goal’ and I’m quite convinced that I think very differently now than I did 10
years ago, and largely that – I would say, if I summed it up – it is probably
the simplicity and the win-win. And I
read those ideas, I got them, but it’s only, probably, in the last five or six
years that… I almost think in terms of clouds at times now, which…
EG: Lovely, lovely. And once you think not just
in terms of clouds, but in terms of trees, then you will see how clear the
world around you will start to become. And, more than that, how good the people
are that are surrounding you.
CC: That was the other thing, that people are good.
EG: Yes.
CC: That’s one of the ‘isn’t it obvious’. I have
a friend with whom I often argue, and he will say people are stupid, and I’ll
say they’re not stupid. They start out, they’ve got good intentions…
EG: They are so far from stupid. The problem is
that the wrong patterns are causing their conclusions to look stupid sometimes.
They are not stupid at all! Which brings me to the last message of the book,
which is: if you recognize that the resistance is coming from patterns and you
learn to overcome them, then, actually, you can change a company from anywhere
that you are in within the company. You don’t have to go from top down, you can
go from bottom us as well. And almost at the same speed. If you notice the
whole change in this book is starting from bottom up.
CC: Yes, yes, yes it is. Because Paul’s in the
store manager position.
EG: Yes! And what I’m trying to show people is
that it doesn’t matter where you are in the organization. It doesn’t matter how
big the organization is. If you just approach it in this way, you can change
the whole organization.
CC: Okay. That’s quite remarkable, actually.
You’re right. These last three points, they’re subtle, but they’re, they’re all
through the ...
EG: They’re there all through the book, and, if
you are keeping them in mind and you read the book again, you will see how
clearly they are coming out, and to what extent in this book. It’s not just
about retail, it’s a recipe about all these comments.
CC: Mm, mm. I’m not going to call you a liar
here, but how do you – when I write, I’m always amazed at what comes out the
other end. Yet you sound like you write very clearly to me. Thoughts that are
already very, very clear in your mind. I write to learn, and that takes me a
long time!
EG: But still, don’t forget, this book, even
though Ilan and Joe were so helpful,
it took one and a half years.
CC: Really! Really.
EG: Mm hmm. It’s what it takes to write such a
book.
CC: Of course it does. My version of ‘The Goal’,
I’m currently in the re-write of that at the moment. I’ve been going for five
years, sort of dipping in and out of it, and I can completely understand one
and a half years, but I’m awed by that. Anyway. So, when did you finish this?
EG: ‘The Choice’?
CC: ‘Isn’t It Obvious?’
EG: ‘Isn’t
It Obvious?’. I think that I finished it in May.
CC: Right, right. And so it’s taken you about six
months or so?
EG: That’s what it takes until the proof reading
and the publishers and all of that. And, more than that, who cares? It took so
long for the book to be written, it can take another two months, that’s not the
problem. Especially when I was not standing idle waiting for the book to come
out, as a matter of fact, I immediately moved to the next book.
CC: That was going to be my question. So this is
the ‘Make To Order.’ Is that right?
EG: Yes. Yes.
CC: And you have another year, roughly, to go on
that?
EG: Hopefully. Look, what I’ve learned is that
I’m too old to have deadlines, and the pressure of deadlines! I am doing what –
let’s do a very good job in how much it takes and, as much time as it takes.
CC: I like that. I’m going to get a cup made up
of that, ‘I’m too old for deadlines’.
EG: Absolutely. I’m too old for deadlines.
CC: Do you enjoy the writing?
EG: Er, sometimes. Sometimes I hate it.
CC: Right.
EG: Sometimes it’s painful, but always rewarding.
CC: Yes. Yes. What’s your favorite book? Apart
from ‘The Choice’. I know people pick out ‘The Goal’.
EG: The book that I enjoyed writing, and I still
think that it’s a very important book, is ‘The Haystack Syndrome’.
CC: Ah!
EG: I’ve tried to say – with this book, I’ve
tried to say the whole very important subject, which is artificial
intelligence. Do you remember the time that everybody was talking about
artificial intelligence?
CC: I do. I was at university studying computer
science, at the time.
EG: How lovely. And then, what I find out is,
that they start to deviate into what they called ‘expert systems’.
CC: Yes.
EG: And I knew that that was the end of
artificial intelligence. So I wrote ‘The Haystack Syndrome’ in order to save
artificial intelligence. To show how
an artificial intelligence should be
developed. The three main steps, and so
on. Unfortunately, nobody paid attention, and artificial intelligence is almost
sunk.
CC: Right.
EG: So I failed.
CC: That’s intriguing. I’m just looking, and I
can’t see ‘The Haystack Syndrome’ on one of my bookshelves here. I’m going to
have to read it again now, aren’t I? When you frame it like that, it was such a
big leap away from what you had been doing beforehand. I suppose it would have
been hard for your – I’m not sure that followers is the right word – your
audience to move and probably pick up on that message, was it?
EG: Er, let’s put it this way. I didn’t do a good
enough job in describing – how shall I say it – people did not distil from it.
That I’m not talking here about just computer programming and how to schedule a
plant. That I’m really talking about: how do you go about inventing and writing
effective artificial intelligence? And, if you notice, the first section –
there’s three parts to the book – the first one is: how do you go about
formulating the decision rules?
CC: Yes.
EG: Without it you will never have artificial
intelligence. The second one is: once you have the decision rules, how do you
verbalize and formulate the applications of them?
CC: Aha, yes.
EG: And the third one is: how do now take all
this body of knowledge and convert it into specifications for a computer.
CC: Right!
EG: And what I tried to show is a generic way to
do them. When the ERP, or the scheduling problem, was just an example.
CC: Yes, yes. Of course, because that was your
example.
EG: Yup. And people pay attention to the example
and not to the…
CC: Rather the concrete... rather than the lessons
that surround it. Ah! That’s intriguing. It’s been so long since I looked at
that. Probably ten years, I’m guessing.
EG: if you go back to it and look on it, you’ll
see to what extent I was so meticulous in describing the process that you are
using, you know, to do it.
CC: Yes. I remember the information; the answer
to the question you asked…
EG: Mm hmm. What is information?
CC: It was the answer to the question you ask, is
that right?
EG: Basically, whenever you have confusion, go
and find out the word that has more than one definition, that causes the
confusion. That’s the starting point of the book.
CC: Right! I’m going to be busy reading over
Christmas, I think! Okay, well that’s very interesting. Do you mind if I ask
you a little bit about Japan? You’ve just been over there for the conference.
EG: Yes.
CC: I’ve not actually attended any TOC
conferences, but I’ve seen the videos of a few of them, the DVDs.
EG: Yeah.
CC: Was there anything special come out of this
particular conference that you’d like to talk about? I’m hoping there is, when
I put it that way!
EG: For me, this conference was quite different
from the previous conferences but, in one aspect, which is: I was talking –
like in every other conference – on the new developments that I’ve done since
the last conference, in other words, the new developments of the last 12
months.
CC: Right.
EG: And I was talking and giving just the
highlights of it for two days. Now, in the past, whenever I came with new
knowledge, the experts – and remember, this conference is for the professionals
– I had mixed emotions. I couldn’t but feel that, from one side the happiness
was in the new information – new inventions, if you want to call them this –
but at the same time they are reluctant. It’s as if the new information somehow
diminishes the importance of what they know already, or criticizes what they
know already. And this always gave me a hard time. Because, for example, when
you are a physicist and you are going to a conference, what are you expecting to
hear? Why are you going at all? Only for the new things.
CC: The new stuff. Of course, yes.
EG: So you take it for granted there will be new
stuff. More than that, every new stuff is totally taken for granted that it’s
built on the previous stuff, and that it’s adding another layer, an important
layer, not that it’s criticizing the previous one. And, somehow, in the most
social subject of management, this is not the attitude. The attitude is that if
there is a new thing, it is replacing or criticizing the previous thing, which
shouldn’t be the case.
CC: Right.
EG: This year, at least my impression was that
the community at large greeted the new developments in the right way. Even
though, I think, that there was, in the year before, that I’ve presented so many
breakthroughs, important breakthroughs, the whole attitude was: “Give more,
give more, we do realize how
important it is. We do realize that it’s built on the previous. We are not
taking it as criticism of what we know already, but the opposite.”
CC: Why do you think it was different?
EG: Maybe
because the community is more mature.
CC: I presume
it was a large Japanese, or…?
EG: No, not
so much. I would say that about one third were from the area of Korea, Japan
and so on, and the other was from the rest of the world.
CC: Okay,
okay.
EG: So it was
a real international conference. Maybe the TOC community are starting to
understand that TOC is much more physics, than it is economics.
CC: Right!
EG: That it’s
a real science and that its evolution is an evolution of real science.
CC: Right,
right.
EG: So in
this sense, it was beautiful.
CC: I was
just going to say…
EG: Yes. The
other things were the things that I expected. You know, many more testimonials
of companies which are further along the line, so we are hearing more and more
about companies that have already reached ‘ever flourishing’.
CC: Right.
EG: And what
is the meaning of ‘ever flourishing’? Maybe this year it was more clear,
because 2009 was supposed to be a big recession year. And to see these companies’
performances on the background of the recession, shows to what extent the claim
that, if a company does know what they are doing, the world around them can go
through whatever turmoil, they will continue to flourish without any dent in
their growth.
CC: Right.
EG: And to
get such cases, for example, a company that shows growth year after year, and
then they have to put an arrow to show ‘here is a recession’. And if they
wouldn’t put the arrow, you wouldn’t have known that there was a recession. And
to get these kind of testimonials, and the companies are not talking anymore
about DBR, or about CCRP or about the T, I and OE.... They’re talking about the
gestalt of the whole way of running a business.
CC: Right.
EG: And
that’s what is starting to be more and more testimonials because more and more
companies are reaching this stage – remember it takes years to reach this stage
– and this is, let’s say, so reassuring. It gives you so much confidence on how
many people are good, and are able to use it. And each one of these companies
have brought all the management team, and you see how the relationship and how
– these people in terms of team, of collaboration – these are a different type
of companies now. And to see it with your own eyes and to talk with them is
such a delight.
CC: I can
imagine. This is probably going to sound like a silly question, but I believe
you turned 60 a couple of years ago?
EG: Yes, I’m
old!
CC: I don’t
want to rub it in!
EG: I’m old,
yes.
CC: Well I
just turned 40, and I’m reeling from the shock! I’m rolling back, I can
remember 20 years ago, when I was 20, I couldn’t have imagined, then, doing
what I’m doing now. I was a programmer, and that was me for life, and I was
sorted. Forty-ish years ago, you were a physics student.
EG: Mm hmm.
CC: Could you
have possibly imagined that you would be having this conversation, or going to
conferences and hearing these stories, 40 years later. Did you ever have that
as a goal of where you were going? Put it this way; has life turned out remotely
like you expected it to?
EG: I will
answer it, but, please, don’t take it as arrogance! When I was 20 years old, on
my birthday, I committed to my goal in life, so yes, in a way, it was all
planned. My goal in life at that time was – and still is – to teach the world
to think. And that’s why I went to learn physics, I wanted to teach myself to
think, not in order to learn physics. So in a way, yes, I’ve seen it. But, at
the same time, I can tell you without any hesitation, I never believed that I
would live long enough to see what I’m seeing now. It’s beyond all my
expectations.
CC: Really,
really?
EG: Yes, You
know, some people are saying, “Why are things still moving so slowly, and why
is not everybody adopting it?” This is a
huge collection of paradigm shifts. If you would look on everything that
involves a paradigm shift, you will look and see how many years it took until
the paradigm shift was accepted as a norm.
CC: Yes.
EG: And, if
you are really comparing the speed in which TOC is accepted by business, I don’t see anything in parallel. TOC is
moving much, much faster than anything
that I’ve seen. Let me give you an example, okay?
CC: Mm hmm.
EG: The first
article on critical path was written in 1906.
CC: Oh,
really? Wow.
EG: Yes. Now,
this is a real paradigm shift. Here you have a PERT of, let’s say, 3000 tasks,
and here comes a person who says “Forget it, just look at the critical path
that is composed of maybe 30 tasks. That’s the key, on that you have to focus;
everything else is just supporting.”
CC: Right.
EG: Huge
paradigm shift. Now, the first real articles that start to refer to it are –
you have to wait until 1936. PERT implementations you have to wait until 1950.
Only in the 70s it started to become the norm, and everybody is taking critical
path as the norm.
CC: Yes.
EG: This is
60 years. Now look at Critical Chain, which is a bigger paradigm shift. Along
the same lines, but much bigger.
CC: Yes.
EG: That book
was published in 1997. It’s only 12 years! And look to what extent it’s used now,
in so many of the largest companies in the world, by ministries, by everybody.
12 years only! So can we complain on this slow adoption? That’s why it’s still
flabbergasting to me. To what extent TOC is
accepted! And I’m very grateful, to tell you the truth.
CC: That
makes good sense, actually, when you look at it like that. I hadn’t realized
that critical path was that old, but then we often look back on the great
buildings, the pyramids, and so on and so on, and I wonder how they planned
them.
EG: Oh! By
intuition, they have used critical path for it, for sure. By intuition. But I’m
talking about the verbalization of it.
CC: Right.
EG: And even
then, how much time it takes.
CC: And they
were maybe too old for deadlines as well! I’d venture they built things in
decades.
EG: They had
a very, very strict deadline. Don’t forget, the pyramids were the tombs, and
they had to be ready for when the pharaoh is dead.
CC: Yes, yes.
It’s a shame they didn’t have a way of lifting up each layer so that they would
always start with it this tall, and then as they go on and on and on, jack it
up another level. It would have actually always finished precisely on time.
EG: These
were huge inventions.
CC: I’m
conscious of your time here. We’ve just been talking for an hour now, so. Is
there anything you would like to add? I’m going to pop this out…
EG: Not
really. I think that your questions were very nice in guiding me to really
express what…, so I don’t have anything to add.
CC: Very
good, and thank you very much. I will just click pause now, just hang on for
just one moment after this. This will go up on my website and all of the
various TOC groups on the internet.
EG: Excellent.
CC: Thank you
very much for your time. I’m just going to press pause now, and that’s us.
EG: Thank you
for your time.
[End of interview]
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