Book Review for Goldratt, E. M: The Goal: A Process of Ongoing Improvement
The Goal is a fiction novel written for the management profession. The author of the novel is the business consultant and physicist Eliyahu Goldratt. The novel premises on the theory of constraints. It highlights methods that the company can utilize to maneuver through bottlenecks, inventory, and other challenges that come with management. The book is written in a straightforward and succinct style that is applicable for college and working people alike. It is a stellar for people in the management career. The main character in the novel is Alex Rogo who is a reckless manager of a production plant called Unico Manufacturing. Alex’s production firm has numerous problems arising from lack of effective management programs and organization. Alex is under pressure to make a turnaround for the company especially from his boss Bill Peach. Alex’s friend, Johan (a fictional character representing Goldratt) helps Alex make a turnaround for the company after a series of phone conversations and short meetings.
The major part of the book focuses on identification of bottlenecks. According The Goal, identification of bottlenecks is essential in a manufacturing process. Goldratt makes a case that identification of bottlenecks reduces the pressure of challenges by providing formidable applications for measuring and controlling the inventory. In the novel, Jonah advices Alex to identify constraints in the work place. In Jonah’s view, identification of problem speeds up capacity by offering a chance to find solutions. Alex employs the use of technology by buying an outdated machine that he uses together with two other machines. The acquisition of the machine called NCX-10 enables the firm to increase their speed of production. The second constraint that Alex identifies is the delay at the heat treat process. The heat treat was broken and did not function well forcing some products to be reheat treated.
Jonah teaches Alex a problem solving method called Socratic Method. This method employs a managing process that includes brainstorming. Using the Socratic Method allows members of the team to feel appreciated and find diverging solutions for a problem. The method becomes applicable for Alex to help sort out his marital issues. In general, The Goal emphasizes the role of common people and regular management operations to fix problems of constraints in a company. The approach is identifying problems and dealing with them as they appear. However, while emphasizing the vital place of effective leadership on the success of organization, Goldratt admits that there is no conventional and universal form of leadership. However, he posits that there are vital components of leadership that transcends across all generations. Accordingly, effective running of an organization requires leadership that must be able to have clearly defined priorities, visionary thinking, and efficient strategies. These are the common best practices that could define leadership.
Still, the success of an organization depends on effective communication. The goal of every business environment to foster communication strategies fosters peace and understanding in an environment. The book focuses on how communication between different segments in a work environment can increase productivity.
THE CASE OF BANK OF AMERICA
The major premise of Goldratt’s theory of constraints is that every company struggles with some bottlenecks. The bottlenecks limit performance and achievement of excellence. The bottlenecks are categorized in two groups. On one hand are the internal constraints while, on the other hand, there are market constraints. Goldratt’s argues that in order for the organization to rise beyond the constraints, the organization must identify the constraints. The company must be managed in a manner that solves the problems. However, companies must realize that different constraints come with different approaches, and there is no single solution for all the problems. Still, the management of constraints must be an ongoing process that adapts to different situations and needs (Goldratt, 2004). Bank of America is one of the leading financial institutions in the United States’ financial industry. Bank of America serves individual customers, business, corporations, and government with a variety of services that range from asset management, financial and risk management, and other services and products. In addition to providing the conventional banking services, the bank also engages in business with the non-banking institution such as card service holders like Visa, Investment Management, and Global Commercial Banking etc (NYSE, 2012). In this section of the paper, we document how Bank of America can use Godlhatt’s concept of theory of constraints as used in the book The Goal to solve some of the challenges that the company faces.
The Customer Service Scorecard, (2009) a website that lists reviews of customer service complaints or approvals from different banks and business organizations report that Bank of America has one of the worst Customer Care Service Approvals. According to the website, Bank of America ranks Number 472 out of 553. The company has a score of 25.62 out of the total 200. This report has been calculated from the reviews of 1104 customers. The customer support system is rated Terrible. Among the issues that the customer complains about include the inefficiency of the automation system. The reviewers say the automation hangs up on the customers even after a long time of waiting on the line. The automation also hangs up every time the call is transferred to another department. The customers also cite rudeness of the customer representatives on the phone as well as waste of time with restating the social security number, account number, and other details while on the phone with the customer service representatives.
The customers have cited the lack of adequate training on the part of customer care representatives, unpreparedness for different situations and the constant transfer of cases to other customer care representatives. Baying bills using phone conversations with the customer representatives of Bank of America is difficult and time consuming. Couples with other problems, these provides a base upon which the bank has to restructure the customer. The application of Goldratt’s The Goal methods is necessary. Bank of America’s customer care problem is an example of a market constraint. A market constraint occurs when the demand of the company’s products or services is under capacity. In the case of bank of America, the demand for customer service from the representatives exceeds the capability of the company owing to an apparent lack of organization or adequate response. Goldratt reasons that regardless of the nature of the constraint, the influence of the constraint utterly depends on the performance of the organization. Customer care is pivotal place in a company’s organization and structure.
Goldratt’s theory of Constraints is based on three principles that are all applicable to the case of Bank of America. The first principle of the theory posits on the argument of “inherent simplicity”. In this concept, Goldratt makes a case that a complex a system lacks accurate description; the easier it is to solve the problem. This means that the problem is complex because they are interconnected in some way. Solving one problem provides an automatic solution to the rest of the problem just alike a falling domino. The second principles assume that an organization requires one goal for effective management. The third aspect of the theory argues in the basis of respect as fundamental in the running of the organization (Gundlach, 2009).
Using the Theory of Constraints to Solve Bank of America Customer Service Problem
The challenge of Quality
It is common that every business has to deal with situations that results into constraints with customers. However, the manner in which the company responds to customers is key to the success of the organization. The customer is the voter for the organization, and customer satisfaction should be the primary goal of the organization. Successful companies do not satisfy customers. They work hard to please them. Superior customer values mean continually creating a business experience that exceed the ordinary expectations. Value is the strategic driver that most multinational corporations utilize to differentiate themselves from the rest in view of customers. In the abstract form, values mean the excellence usually based on the desirability or usefulness. Value driven marketing strategy help organizations in several areas. Goldratt emphasizes the influence of value by reducing constraints, creating teamwork and developing cohesion at the work place. Bank of American can improve its customer relations if it follows those mechanisms.
Barrier to effective customer engagement is “organizational and conceptual.” A change in the organization of farm from the traditional methods of customer engagement to more comprehensive marketing system that includes all stakeholders in the product will go a substantial way in stimulating success. A comprehensive marketing approach that is interactive and focuses on equality will be beneficial to a company in the end.
Examples of companies that have developed a marketing plan that is inclusive of all the stakeholders in the company. For example, the luxury hotel group developed a plan that identified customers on demographic groups. This created a brand portfolio that was specific to each new demographic group. In doing this, company was able to make prices and offer services that suited the needs of different customers. Delivering unique customer experience on different dimensions was possible because of the diversity of needs. Similarly, the company’s ability to meet the specific needs aided the process. Similarly, Louis-Vuitton launched a magazine called NOWNESS that offer information to customers on the trendy products that the company was offering. The company also had a Facebook with streaming feature videos of new products on the market. The common thing about the two companies is their ability to create a sustainable customer relation system that is interactive and sustainable while ensuring quality at the same time.
The challenge of Teamwork
The company has to work as a team, disintegrated into smaller teams. Each team is challenged to identify bottlenecks and to generate improvements in their area of operations. A measurement procedure is then established that provides feedback on the improvements in the entire company. If there is a general improvement in work speed, a reward system that includes an exciting celebration is organized to recognize the workers for their achievements.
In order for our team to work efficiently and to develop competency, we sought the advice According to the two, for a team to be successful, it must do the following:
1. The team must articulate the goals and methods of achieving the goals.
2. Ensuring that each individual in the team understands their assignment and knows how their work contributes to the team
3. Every member makes effective decisions
4. That there is effective communication that includes receiving and getting feedback
5. Disputes are resolved peacefully
High performing teams have not developed by accident. Instead, they have developed by the ability to change by having stable and consistent team building processes that assist in evaluating the team context, team composition, and team competencies. A company must aspire to create high performance by following the above-mentioned guidelines.
The challenge of Technology
Social media also have the advantage of creating trust between customers and business. A combination of social media with CRM will make my company able to build a network of trust with its social media network. This will be realized by sharing information and interacting online with the customers. The trust will be enhanced with the company’s capacity by viewing applications such as likes (Facebook), comments, and posts on the social page. In addition to building social network, social media are an informative in spreading the word of mouth about new technologies across the globe. The social media’s ability to connect people would be the strongest and cheapest method that my company can use to expand its international connection. I believe that my future in IT premises in my creative ability to combine CRM technology, social media and the business needs.
Customer Service Scorecard. (2009 - 2012). Bank of America Customer Service User Reviews, Ratings and Comments. Retrieved 2012, from Customer Service Scorecard website: http://www.customerservicescoreboard.com/Bank+of+America
Goldratt, E. (2004). The Goal: A Process of Ongoing Improvement. NY, USA: North River Press.
Gundlach, M. (2009, May 13). Goldratt’s Theory of Constraints. Retrieved August 18, 2012, from Project Management website: http://www.brighthubpm.com/project-planning/4088-goldratts-theory-of-constraints-part-one/
NYSE; Financials/Banks. (2012, August 17). Bank of America Corporation. Retrieved August 18, 2012, from The New York Times website: http://topics.nytimes.com/top/news/business/companies/bank_of_america_corporation/index.html