Eliyahu M. Goldratt - Necessary But Not Sufficient: A Theory of Constraints Business Novel

NECESSARY BUT NOT SUFFICIENT

OTHER BOOKS BY ELIYAHU M. GOLDRATT

The Goal

The Race

What Is This Thing Called Theory of Constraints?

The Haystack Syndrome: Sifting Information Out of the Data Ocean

It's Not Luck

Critical Chain

For more information on Eli Goldratt and his current projects visit: www.eligoldratt.com

A Theory of Constraints Business Novel

Eliyahu M. Goldratt
with Eli Schragenheim and Carol A. Ptak

First published 2000 by The North River Press

Published 2017 by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
711 Third Avenue, New York, NY 10017, USA

First issued in hardback 2017

Routledge is an imprint of the Taylor & Francis Group, an informa business

Copyright 2000 Eliyahu M. Goldratt

All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.

Notice:
Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe.

ISBN 13: 978-1-138-41877-6 (hbk)

ISBN 13: 978-0-566-08450-8 (pbk)

NECESSARY BUT NOT SUFFICIENT

"Come on in" Scott stands up and shakes hands with Jay Johnstone, one of his account managers.

Calm and elegant, Scott Duncan looks more like an aristocrat than an American homegrown boy made good. At the age of 46, he heads one of the most successful computer software companies in the world.

"Have a seat." Scott gestures to the other side of his office. "I was wondering how we're doing with Alkar."

Jay lights up. Rumor has it that the nature of the discussion is indicated by on which side of Scott's office you sit. Those invited to sit in one of the chairs facing Scott's huge desk will go through a barrage of grilling, fact-finding, and an impatient string of questions. In five minutes or less you will find yourself outside the office feeling like a squeezed lemon.

But if you are guided to the other side, to one of those comfortable leather armchairs, you are likely to hear how you fit into the global picture. And there is nothing more interesting than hearing Scott Duncan unfolding the global picture. Not just his people, but now also the Wall Street analysts, are fascinated by his ability to read where businesses are heading. Business in general, and information technology in particular. Growing his company from a modest software house into the giant it is now, with a market value of well over ten billion dollars, certainly adds a lot of credibility to what otherwise might seem as daring speculation about new technology and its impact on the market needs and trends.

As they sit down, Jay repeats Scott's question, trying to find the most concise, yet impressive answer. "How are we doing with Alkar? Well, we were one of nine companies bidding for Alkar's business. Now it's only us and FDP"

"And?"

"And it looks good."

Scott's expression causes Jay to elaborate. "We followed our standard tactic, and it's working."

If a company wants to survive in the incredibly competitive large computer system market, it has to have a lot more than just a good product. Good selling tactics are essential when the average sale is a few million dollars, and deals of several hundred million are not rare.

Scott has carved out a unique tactic for his sales force. He noticed that computer systems rapidly expand to cover more and more clerical work and that the rapid expansion is not accompanied by suitable standards. He found a way to turn this handicap of the industry into a competitive edge.

Very early in the game, preferably before the client has even put out a formal request inviting the software companies to bid, his people have already done their homework. They have identified the "techies" involved in the prospect; the people who are likely to be the ones to do the more technical evaluations of the proposed systems. These professionals become their prime target. While the competition is busy trying to locate and build bridges to the decision makers, Scott's people are busy educating these targeted professionals. Not on how the BGSoft system works, that will not do. But how in general a computer system suitable for the prospect's type of industry should be designed; the pluses and minuses of the various possible configurations; which features are key, and which ones are just good at impressing the novices.

The whole idea is that by the time the real match is reached, and the proposals are compared by the selection team for best fit, the know-how planted by Scott's people is taken as the standard. In an industry where no real standards exist, it gives Scott's company a huge advantage.

Scott looks at his computer screen, "I see that FDP was forced to add many more features into their order-entry module before a final decision could be made."

"Yes," Jay smiles. "Their first and second tries were total flops. And yesterday they had their last chance to demonstrate the process of streamlining the financial data. We were told they only succeeded in embarrassing themselves. I think that Alkar is keeping them in the race just to squeeze better terms out of us."

"How are we doing on that front?"

"Better than expected. The budget is approved and we have agreed upon the number of concurrent users. I understand that KPI Solutions has finalized the negotiations on the implementation support." Jay leans forward and softly comments, "And we still haven't used our secret weaponthe option to charge maintenance on each module separately."

With confidence he adds, "Next Monday we meet with them to finalize the details. I don't expect any real problems."

Scott smiles. He waits until Jay is looking directly at him, then he gently asks, "If it looks so good, how come in your sales report..he pauses, and then continues more gently, "you estimated the probability of closing the deal this quarter at only fifty percent?"

Jay shifts uneasily in his chair. "It's only because..." He doesn't finish his sentence.

"You expect some surprises from FDP? Some last minute counter-attack?" Scott tries to help him.

"No, not really. My opinion is that for FDP it's too late. Nothing they come up with at this stage of the game will matter. It has nothing to do with FDP or the client, it's just..."

Jay is obviously uncomfortable. Then he gathers his courage, and finishes the sentence, "It's just that I thought you wanted us to be cautious."

"You mean my infamous first rule? My saying: 'be paranoid'?"

"That's right," Jay says sheepishly.

"So in your sales progress reports, that you know I read, you are trying to be paranoid?"

"Yes."

Scott leans back smiling. "Jay," he says, "if you want to mimic me, you must take into account that in my vocabulary, being paranoid means something quite different than the usual connotation. In my eyes, most people confuse being paranoid with what I call being shortsighted. Do you know how difficult it is to be truly paranoid?" He pauses as if he expects an answer.

Wisely, Jay doesn't reply.

"To be paranoid you must constantly assess the impact of your actions on the global picture. Which means that first you must relentlessly search for a deep understanding of the global picture. Do you understand?"