CRITICAL CHAIN

by E.M. Goldratt

CRITICAL CHAIN Chapter 1

"This board meeting is ad o!rned"" anno!n#es $aniel %!llman" the domineering #hairman and C&' o( Genemodem. The elegant #on(eren#e room h!ms )ith #on*ersation as the dire#tors start to depart. The last +!arter )as the best in the history o( the #ompany. The dire#tors are pleased" b!t no one is o*erly e,#ited. They ha*e #ome to e,pe#t it. &or the past si, years" almost e*ery +!arter has been better than the pre#eding one. "I )ant to ha*e a )ord )ith yo!"" %!llman tells Isaa# le*y" smiling and #ontin!ing to sha-e the hands o( the e,ternal board members. .hen e*erybody else lea*es they sit do)n. "Ha*e yo! had a #han#e to read M#Allen/s (inal report/0" %!llman as-s. It )as Le*y" the e,e#!ti*e *i#e1president o( engineering" )ho had insisted on hiring a #ons!lting (irm to do an in1depth analysis o( Genemodem/s prod!#t de*elopment. The analysis )as not restri#ted !st to engineering" it #o*ered the entire pro#ess. 2tarting )ith e,amining the )ay they de#ide on the (eat!res o( a ne) modem" thro!gh the de*elopment pro#ess" and o( no less importan#e" e,amining the )ay the ne) design is handed o*er to prod!#tion and mar-eting. Not that they had been #ompla#ent. Embar-ing on ne) te#hnologies" ne) tools" e*en ne) management methods is the norm in their #ompany. 3o! #annot be among the leaders other)ise. Ne*ertheless" Le*y insisted on bringing in e,perts (rom the o!tside. "There m!st be many things that )e ta-e (or granted"" he had #laimed. "Things that only o!tsiders are able to see." %!llman s!pported him (!lly. A#t!ally" no one really ob e#ted. It )as no small e((ort" and it did not #ome #heap" b!t at last" a )ee- ago" they had re#ei*ed the (o!r1h!ndred1page report. "I really thin- they/*e done a *ery good ob. There are many things they point o!t that )e o*erloo-ed. .e got o!r money/s )orth and then some"" Le*y says. "Agreed. The report #ontains many good things. 4!t I am #on#erned )ith )hat it does not #ontain. Isaa#" i( )e )ere to implement e*erything they tal- abo!t" ho) m!#h do yo! thin- o!r de*elopment time )o!ld shrin-0" "Hard to tell. Maybe (i*e per#ent. Maybe not e*en that." "That/s my impression as )ell. 2o" )e e,plored e*ery #on*entional a*en!e and" as )e e,pe#ted" the ans)er is not there." %!llman stands !p. "There is only one thing le(t to do. Isaa#" la!n#h the thin- tan-." "It/s a long shot." Le*y stands !p as )ell. "5ery long" b!t )e are s-ating on *ery thin i#e." 'n his )ay o!t" %!llman adds" ".e m!st (ind a )ay to re#ti(y it. .e m!st." Isaa# Le*y loo-s at the three yo!ng managers sitting in (ront o( his des-. He does not parti#!larly li-e )hat he sees. They are not senior eno!gh. All three are too yo!ng and too ine,perien#ed (or the tas-. 4!t that )as %!llman/s de#ision. "Isaa#"" he had said" "a senior person is already engra*ed )ith the )ay )e are doing things. I( there is someone )ho #an (ind !s a m!#h better )ay" it/s a yo!ng person. 3o!ng eno!gh to be rebellio!s" yo!ng eno!gh to be !nsatis(ied )ith o!r r!les. $o yo! remember ho) yo!ng and ine,perien#ed )e )ere )hen )e started0 .e bro-e e*ery #on*ention" and loo- at )here )e are no)6" Isaa# didn/t see any point in reminding him that they also "s!##eeded" in r!nning their (irst #ompany into the gro!nd. "$o yo! -no) ea#h other0" he as-s the three. ".hy not introd!#e yo!rsel*es. Mar-" yo! start." "I/m Mar- 7o)als-i. I/m )ith engineering." Mar- is thirty1t)o years old. A big man" )ith a *oi#e to mat#h. He has been )ith the #ompany (or eight years and re#ently )as promoted to pro e#t leader o( the A889 model. He is not the rebellio!s type that %!llman )anted" and Le*y is not happy abo!t ris-ing the de*elopment o( the A889" b!t they need a good gro!p leader. "Mar- )ill be yo!r gro!p leader"" Le*y adds. ".e thin- hr is open eno!gh to handle #onstr!#ti*e #riti#ism" -no)ledgeable and sensible eno!gh to re e#t impra#ti#al #riti#ism" and pleasant eno!gh to ens!re harmony. And i( he is not" yo! tell me." They are too ner*o!s to la!gh. This is the (irst time any o( them has e*er been in*ited to an E,e#!ti*e 5%/s o((i#e. Le*y gest!res to the )oman to spea- !p. 2he (ollo)s the pattern Mar- !sed: "I/m R!th Emerson. And I/m (rom mar-eting." "And yo!r ob there0" Le*y en#o!rages her to elaborate. "I/m a brand manager. I )as on the team that planned the introd!#tion o( the A1;9." The other t)o are impressed. The A1;9 is the #!rrent big s!##ess.

"R!th )as #hosen"" Le*y e,plains" "be#a!se o( her e,#eptional integrity. 3o! are going to (ind o!t to )hat e,tent she is not a(raid to as- +!estions." "I/m &red Romero." The last member o( the gro!p responds to Le*y/s loo-: "I/m a bean #o!nter." "Not e,a#tly a bean #o!nter"" Le*y la!ghs. "&red is the rebel o( (inan#e. And at the same time the most respe#ted pro e#t a!ditor that )e ha*e. 3o! are all probably )ondering )hy yo! are here0" Mar- and R!th nod. &red maintains his po-er (a#e. "&rom no) on" yo! are a thin- tan-. 3o!r mission is to (ind a sol!tion to the biggest threat endangering the (!t!re o( this #ompany.< He pa!ses to loo- dire#tly into the eyes o( ea#h one. "Let me start by e,plaining the problem." 2tanding !p" he grabs a mar-er and plots a #!r*e on the )hite board. "$o yo! re#ogni=e this #!r*e0"

"3o!/ll (ind it in e*ery te,tboo-. It/s s!pposed to des#ribe the li(etime o( a prod!#t. &irst" sales are pi#-ing !p as the prod!#t is introd!#ed into the mar-et" then they stabili=e it be#omes a mat!re prod!#t" and (inally" it (ades o!t. $oes it (it )hat )e -no) abo!t o!r prod!#ts0" They belie*e this is a rhetori#al +!estion !ntil he says" ".ell0" "In o!r #ase" it loo-s more li-e a triangle"" Mar- *ol!nteers. "4e(ore )e (inish introd!#ing a ne) modem into the mar-et" )e obsolete it by la!n#hing an e*en ne)er one." ".hi#h doesn/t ma-e sense0" Le*y +!estions. "I didn/t say that>" Mar- h!rries to #lari(y. "I( )e don/t la!n#h the ne) modem"" R!th #omes to his aid" "o!r #ompetitors )ill. In any e*ent" the #!rrent modem )ill be obsolete. The only di((eren#e is that )e/ll also lose mar-et share." "Corre#t. The (ranti# ra#e in the mar-et (or#es !s to la!n#h a t ne) generation o( modems e*ery si, months or so." They all nod. "No) let me e,plain something that yo! might be less (amiliar )ith. '!r #ompany/s shares trade on .all 2treet (or si,tyt)o dollars and (orty1eight #ents" a##ording to yesterday/s paper. This high pri#e is not !sti(ied by the #ompany/s assets" or e*en the #ompany/s pro(it. It is mainly based o( the shareholders/ e,pe#tations o( (!t!re gro)th and (!t!re pro(its. .ell(o!nded e,pe#tations based on o!r impressi*e tra#- re#ord. 4!t do yo! reali=e ho) (ragile that is0" .hen no one ans)ers" Le*y #ontin!es. "To miss on#e" to la!n#h an in(erior prod!#t" or e*en to la!n#h a good prod!#t three months a(ter the #ompetition" )hat )ill the impa#t be0 R!th0" "It )o!ld be a disaster. .e )o!ld lose signi(i#ant mar-et share." ".here is good old1(ashioned #!stomer loyalty0" Le*y sighs. "Gone." And then" in a more serio!s tone" "I( )e miss on#e" o!r per share *al!e )ill pl!mmet. The damage to the shareholders )ill be mammoth. I( )e miss t)i#e in a ro)" maybe there )on/t be a #ompany (or !s to )or- at." He pa!ses. The three yo!ng managers loo- at ea#h other. "'!r prod!#ts ha*e a *ery short li(e1span. Right no) it/s abo!t si, months" and all indi#ations are that it )ill #ontin!e to shrin-. At the same time" in spite o( all o!r e((orts" o!r prod!#t de*elopment time is ro!ghly t)o years. $o yo! see o!r problem0" He pa!ses again.

A(ter a )hile he e#hoes their tho!ghts: "A de*elopment time o( t)o years" )hen )e ha*e to la!n#h the (r!its o( o!r de*elopment e*ery si, months" means only one thing. The +!estion is not /are )e going to miss0/ The +!estion is /)hen are )e going to miss0/ And remember" )e #annot a((ord to miss e*en on#e." They sit silently" digesting )hat has been said. &inally Le*y spea-s !p. "3o!r mission is to (ind a )ay that )ill enable !s to drasti#ally #!t o!r de*elopment time. &or years )e ha*e been loo-ing e*ery)here (or the ans)er" and ha*e not (o!nd it. 3o! are )hat )e ha*e le(t. 3o! are the ones )ho m!st (ind the ans)er." "4!t" ho)0" Mar-/s (a#e is red. "That/s the )hole point" Mar-. .e don/t -no) ho)6 3o!/ll ha*e to tell !s." ".hat help #an )e e,pe#t0" he desperately as-s. "3o! )ill #ontin!e to be in #harge o( the A889. 3o! )ill !se that pro e#t as yo!r test gro!nd. 3o! #an #hoose anyone yo! li-e as yo!r ba#-!p. R!th and &red" yo! are released no) (rom all yo!r other d!ties. I( yo! need to *isit other pla#es" to attend #on(eren#es" or e*en to register (or a (ormal E,e#!ti*e M4A program" !st as-. No b!dget restri#tions." "To )hom do )e report0" "$ire#tly to me" and I do e,pe#t periodi# progress reports." "Ho) m!#h time do )e ha*e0" "The A889 is s#hed!led to be ready in si,teen months. I e,pe#t it to be #ompleted on or be(ore time. 4y the )ay" thin- tan-" i( yo! #ome !p )ith a good ans)er" there are a lot o( shares )aiting (or yo!." "Ho) many are a lot0" &red #an/t hold himsel( (rom as-ing. "Ten tho!sand shares ea#h"" Le*y ans)ers. "Good l!#-." A(ter they lea*e" Mar- says" "Good l!#- is appropriate. I g!ess )e ha*e abo!t as m!#h #han#e as )inning the lottery." "The re)ard is li-e the lottery" too"" R!th #omments. "Ten tho!sand shares is a (ort!ne. .e are going to be millionaires." "&at #han#e."

Chapter 8
I pi#- !p the memo and read it again" (or the h!ndredth time. Dear Rick, You have been assigned to teach a course in the Executive MBA program. We need to determine which course it wi be. Does Monda! at " #.M. suit !ou$ %im. 'nly three senten#es" b!t the impli#ationsA The impli#ationsA I tea#h at a b!siness s#hool. 4!t I am no longer at the bottom o( the a#ademi# hierar#hy. A year ago I )as promoted (rom the doormat le*el o( assistant pro(essor to the semi1respe#table position o( asso#iate pro(essor. &ran-ly" it )as a mira#le" #onsidering the abysmal n!mber o( a#ademi# papers I ha*e had p!blished. 'n the other hand" it )asn/t" not i( one ta-es into a##o!nt the name I/*e b!ilt (or mysel( as an e,#eptional tea#her. It/s no small e((ort t!rning ea#h session into a learning e,perien#e" b!t it pays o((> my #o!rses are al)ays the (irst ones to (ill !p. Here" in bla#- and )hite" is the latest proo(. B!st three senten#es. This time I read the memo alo!d. "3o! ha*e been assigned to tea#h a #o!rse in the E,e#!ti*e M4A program." The )ords so!nd li-e a symphony. No )onder. 4eing assigned to tea#h in the E,e#!ti*e M4A program is a s!re sign that ne,t year I )ill be re#ommended (or ten!re. And ten!re is 2hangri1La. It/s ha*ing a permanent position. .hate*er yo! do" or don/t do" yo! #an/t be gotten rid o(. It/s being in> it/s se#!rity. And se#!rity is )hat I need. And so does my )i(e. Li-e e*erybody else )ho )ants a pla#e in a#ademia I )as" listen to this" I )as "a##epted on probation." I thin- that only paroled #riminals and yo!ng pro(essors are (ormally on "probation." The i((eren#e is that pro(essors are on probation (or a longer period. &i*e years to pro*e mysel( as a good tea#her. &i*e years to pro*e mysel(" to the other (a#!lty members" as a team player. "$oes Monday at 8 %.M. s!it yo!0" Bim" b!ddy" it de(initely s!its me. T)o o/#lo#- seems an eternity a)ay. I de#ide to ta-e a )al-. It/s #old o!tside. There/s o*er a (oot o( ne) sno) on the gro!nd" b!t the s-y is #lear and the s!n is high. It/s almost one o/#lo#-. The (irst time I tried (or ten!re I ble) it. &i*e years do)n the drain. 1t )as a good !ni*ersity" bigger and more prestigio!s than this one. 4!t I had to open my mo!th. It/s one thing to #riti#i=e the inade+!a#y o( o!r te,tboo-s" or to highlight that )e are s!pposed to tea#h o!r st!dents not !st ma-e them memori=e. 4!t it/s a di((erent ball game to #riti#i=e the p!bli#ations o( my1(ello) pro(essors. Espe#ially the senior ones. They say that smart people learn (rom their mista-es )hile )ise people learn (rom others/ mista-es. .ell" I/m not )ise. I )as ne*er )ise" b!t I am smart. All it ta-es is to be hit on the head" (i*e to ten times" and I immediately learn my lesson. The details are !gly. It doesn/t matter. .hat matters is that this time it/s di((erent. This time I/m ma-ing it. 4ig. Almost nobody is o!tside. 'r more a##!rately" no one e,#ept (or me is idly strolling. In spite o( the pat#hes o( i#e almost e*eryone is r!nning. It/s simply too )indy. 4!t I/m not #old. Li(e is bea!ti(!l. I/m already an asso#iate pro(essor. Ten!re is in the bag. The ne,t step is getting (!ll pro(essorship" and then a #hair. That/s the !ltimate. A #hair means more time (or resear#h. It/s being one o( the big boys. It/s a salary o( o*er one h!ndred tho!sand dollars a year. 2!#h a salary is beyond my #omprehension. Gi*e me hal( o( it and I/ll be happy. A(ter years o( being a do#toral st!dent li*ing on a grant o( t)el*e tho!sand a year" and too many years o( li*ing on the salary o( an assistant pro(essorA Hell" e*en a high s#hool tea#her seemed ri#h. I r!b my i#y nose. I/ll ne*er get promoted to (!ll pro(essor i( I -eep negle#ting the need to p!blish arti#les. 'ne might get ten!re by being a good tea#her and a ni#e g!y" b!t (!ll pro(essor is another story. "%!blish or perish." That/s the name o( the game. I hate this game. Maybe I hate it be#a!se I don/t ha*e the -ind o( ideas that #an be #on*erted into a##eptable arti#les. I don/t -no) ho) they do it. Ho) they (ind those small e,amples that )ith eno!gh mathemati#al modeling they #an t!rn into another p!bli#ation. I need something more tangible" more #onne#ted to the real )orld" real problems. 4esides" no) I am getting #old. I/d better head ba#-. I )onder )hat #o!rse Bim is planning to land on me. He )rote that )e need to determine it" b!t it really doesn/t matter. .hate*er it is I/ll ha*e to spend a lot o( time preparing. 3o! #an/t #ompare tea#hing an E,e#!ti*e M4A #o!rse )ith tea#hing reg!lar M4A #o!rse" not to mention an !ndergrad!ate #o!rse. In the E,e#!ti*e M4A program the st!dents are not (!ll1time st!dents. A#t!ally" they are (!ll1time managers spending one 2at!rday in #lass e*ery t)o )ee-s. C

My strides be#ome longer. It/s not !st the (l!sh o( adrenaline" I/m hal( (ro=en. Tea#hing managers" that )ill be a ne) e,perien#e (or me. They/re not going to a##ept e*erything I say !st be#a!se I/m +!oting (rom a te,tboo-. They )ill (or#e me to deal )ith the real li(e sit!ations they (a#e. This may a#t!ally be a good thing. It might e*en gi*e me some ne) ideas (or resear#hA and arti#les. Ideas are not eno!gh. I #an/t do resear#h in a *a#!!m" at least not the type I/m )illing to do. 4!t maybe" i( I play my #ards right I #an !se these st!dents as bridges to #ompanies. It/s possible. I rea#h my b!ilding. A #!p o( hot #ho#olate )ill help me de(rost. I stop near the ma#hine> it/s ten /till t)o. I/d better h!rry. "3es" than- yo!"" I a##ept Bim/s o((er o( #o((ee" and (ollo)ing his gest!re" lo)er mysel( into one o( his s+!ea-y" !n#om(ortable !pholstered #hairs. "Ma-e it t)o"" he says to Miriam" his #olossal se#retary" and #hooses the so(a. 2tat!s symbols are important in !ni*ersities and Bim has a room that mat#hes his position. A big room" a #orner room. I sho!ld rephrase that. I don/t -no) i( stat!s symbols are important in e*ery !ni*ersity" b!t they s!re are (or the dean o( o!r b!siness s#hool. '!r dean )ill not let anyone (orget )hi#h is the most important s#hool. And he has a point. The b!siness s#hool has gro)n" by no)" to o*er si, tho!sand st!dents1almost hal( the st!dent pop!lation. &!ll pro(essor Bim .ilson heads the most prestigio!s program o( the s#hool" the E,e#!ti*e M4A program. It/s no )onder Bim )as assigned s!#h premises. I only )ish he had better taste in (!rnit!re. 'n se#ond tho!ght" -no)ing the e,tent to )hi#h Bim is obli*io!s to anything materialisti#" it/s probably Miriam/s #hoi#e. 3eah" that (ig!res. "Than- yo! (or the opport!nity"" I earnestly say. "I )ill not let yo! do)n." "I hope not"" he smiles. And then" )itho!t a smile" "Ri#hard" that/s one o( the things I )anted to dis#!ss )ith yo!." I lean (or)ard. .hen Bim #alls me Ri#hard it is serio!s. "Ri#hard" as yo! -no)" there is no la#- o( more senior #andidates )ho )ant to tea#h in the program. $o yo! -no) )hy I insisted on yo!0" I don/t. I only -no) that Bim li-ed me e*en be(ore I )as his do#toral st!dent. I/ll ne*er (orget that )hen I )as str!ggling to get a se#ond #han#e in a#ademia he )as the one )ho arranged (or me to #ome here. "I #hose yo! be#a!se o( yo!r !ni+!e style o( tea#hing"" he s!rprises me. "Tea#hing thro!gh open dis#!ssion0" I/m astonished. "3es"" he says #ategori#ally. "&or this program I/m more and more #on*in#ed that that is the only pr!dent )ay. The st!dents ha*e the rele*ant day1to1day e,perien#e. 'pen debate" steering a gro!p o( people to de*elop the -no)1ho) themsel*es" is ho) )e sho!ld tea#h them. And I don/t ha*e many instr!#tors )ho are both )illing and -no) ho) to do it." No) I !nderstand" b!t it s#ares me. "Bim"" I start to protest" "it/s one thing to do it )ith reg!lar st!dents" b!t I/m not s!re I #an do it )ith a#t!al managers." ".hy not0 .hat/s the di((eren#e0" ".hat I/m a#t!ally a(raid o( is that I )on/t be able to steer them. That my theoreti#al -no)ledge )ill be ins!((i#ient relati*e to their pra#ti#al -no)ledge"" I ans)er (ran-ly. "$on/t." Bim is (irm. "4!tA" "Listen Ri#-. .ith these st!dents" the most important thing is not to pretend to -no) )hen yo! don/t. They pay a lot o( money (or t!ition1m!#h more than reg!lar st!dents" and they ha*e an open door to the dean and e*en the president" and they don/t tolerate garbage." I start to )onder i( I/m !p to it. Maybe it )ill be my do)n(all. My tho!ghts m!st be )ritten all o*er my (a#e be#a!se Bim starts to #heer me !p. "Ho) many years ha*e )e -no)n ea#h other0 H!h0 I -no) that I #an tr!st yo! to be open )ith the st!dents. And o*er and o*er yo!/*e pro*en to me that yo! -no) m!#h more than yo! thin- yo! do. $on/t be a(raid to !se yo!r reg!lar style. I/m s!re it )ill )or- )ith them." Not ha*ing m!#h #hoi#e" I promise" "I/ll do my best." "Good." Bim is pleased. "No) all )e ha*e to do is de#ide )hi#h #o!rse yo!/ll tea#h." Heading to)ard the door he #as!ally adds" "Ha*e yo! gi*en it a tho!ght0 Miriam" )hat happened to o!r #o((ee0" He disappears into her room. A min!te later he reappears )ith a tray. "Bim" )hen I started my do#toral thesis" do yo! remember the )arning yo! ga*e me0" "I ga*e yo! so many"" he grins" handing me a #!p. ".hi#h one are yo! all!ding to0" "Not to bite o(( too m!#h"" I remind him. "To (orget the dreams abo!t #hanging the )orld and ta-e on a s!b e#t I #o!ld (inish." "3es" I do. Good ad*i#e. Espe#ially to a %h.$. st!dent." I ta-e a sip o( #o((ee. ".hen is the right time to dream0" I as-. 9

He loo-s at me (or a little )hile. "The middle age #risis6" he anno!n#es his diagnosis. ".hat does that ha*e to do )ith )hi#h #o!rse yo! )ant to tea#h0" I de#ide to ans)er his +!estion )ith a +!estion. "Isn/t the #o!rse I/m going to tea#h in the E,e#!ti*e M4A program going to a((e#t )hat resear#h I/ll be #on#entrating on0" He thin-s abo!t it. "It might"" he admits. .hen I don/t reply" he grins" "2o yo! )ant to ma-e a di((eren#e. 3o! )ant yo!r resear#h to be a yardsti#- (or an entire (ield." I nod. He e,amines me (or a little )hile longer. "I g!ess that the only )ay to (l!sh it o!t o( yo!r system is to gi*e it a try. 2o in )hi#h (ield do yo! #ontemplate ma-ing yo!r #ontrib!tion" $r. 2il*er0" "I don/t -no)"" I admit" ignoring the sar#asm. "A (ield in )hi#h the e,isting -no)1ho) is not eno!gh." "That/s tr!e (or e*ery (ield in b!siness"" he dryly says. ".hat I mean isA" I/m sear#hing (or the )ords. "A (ield )here it/s apparent that the e,isting -no)1ho) is not gi*ing satis(a#tory ans)ers." ".hat satis(a#tory ans)ers are is a matter o( opinion." Bim is tho!ght(!l. "Try to spe#i(y )hat yo! don/t )ant> maybe that )ill lead some)here." "I don/t )ant to #hase (ads"" I (irmly say. "And I don/t )aist a (ield that is o*er#ro)ded )ith resear#h." "That ma-es sense. Go on." "I )ant a (ield that is in real need"" I repeat mysel(. "A (ield in )hi#h no real progress has o##!rred (or +!ite some time." "&ine"" he says" )aiting (or me to at last spe#i(y )hi#h #o!rse I do )ant to gi*e. The problem is" I don/t -no). It/s *ery embarrassing. "%ro e#t management"" Bim slo)ly says" "(its yo!r des#ription li-e a glo*e. I( yo! are loo-ing (or a (ield in need" pro e#t management is a prime #andidate. And in the last (orty years or so" at least in my opinion" nothing ne) has been s!ggested." "4!t" Bim" yo! tea#h that #o!rse." "Tr!e" tr!e." He starts tal-ing to the #eiling. "And besides" I ha*e !sed the #o!rse to start some interesting resear#h. D!ite interesting resear#h." "I #o!ld help yo! (inish it. 3o! -no) that I/m good at doing the library digging" and my )riting abilities are de#ent." "3es" they are." He still stares !p)ard. "Bim" let me tea#h this #o!rse (or one year. 'ne year only. I/ll do my best to help yo! (inish yo!r resear#h. I/ll do all the dirty )or-." He shi(ts his eyes to the table and starts to tal-" more to himsel( than to me. "I )o!ld li-e to #on#entrate on my prod!#tion systems #o!rse. 2o m!#h has happened in that (ield lately. It )ill be good preparation (or a ni#e te,tboo-." He loo-s me straight in the eyes. "2o" abo!t the pro e#t management #o!rse and the related resear#h" )hat e,a#tly do yo! s!ggest0"

Chapter ?
2he is tall" o*er si, (eet tall. And slim. Elegantly dressed. Almost too elegant. Al)ays. Not the type one #alls bea!ti(!l" b!t stri-ing. &irst impression is o( e,pensi*e sil-. Maybe be#a!se she ne*er raises her *oi#e" maybe be#a!se o( the tra#es o( a so(t 2o!thern a##ent. 4!t it/s !st a (irst impression and it doesn/t last (or long. It/s the !nderlying steel that is hard to es#ape noti#ing. 2he is analyti#al" ambitio!s" an e,#ellent manip!lator" and she introd!#es hersel( as 4.B. *on4ra!n. That/s also the )ay her name appears on her letterhead. The r!mor is that the (irst initial stands (or 4r!nhilde. Nobody dares *eri(y it. Her letterhead also says: Fni*ersity %resident. The #ro)ned" !n#hallenged +!een. And there is no -ing" not re#ently any)ay. It/s s!mmer" and .ashington" $.C." is s)eltering. It/s hot e*en a(ter s!nset. 4!t not at the resta!rant )here the !ni*ersity presidents are holding their (ormal dinner. 4.B. is seated bet)een 4ernard Goldsmith and Alistair &ran-lin. It )asn/t too di((i#!lt to mane!*er them to sit )ith her. 4oth are sharp" and e,perien#ed old a#+!aintan#es. 4!t most importantly" they ea#h ha*e large b!siness s#hools at their !ni*ersities. "Ho) is yo!r b!siness s#hool registration0" 4.B. as-s" as i( !st ma-ing #on*ersation. "Co!ld be better"" Alistair says #as!ally. 4e(ore 4.B. has a #han#e to probe more deeply into this *ag!e ans)er" 4ernard does the ob (or her. "$o yo! mean that yo!/*e started to noti#e" as )e ha*e" that maybe the bonan=a is abo!t to be o*er0" That/s )hat she li-es so m!#h abo!t 4ernard> lie al)ays gets to the point )itho!t being aggressi*e. .hat she li-es abo!t Alistair is that he ne*er a*oids the iss!e. "It/s too early to tell"" he ans)ers. "4!t yo! may be right. This year )e aren/t going to send many /)e are sorry/ letters." 4ernard nods. "It seems as i( )e are a##epting anyone )ho -no)s ho) to spell his name. Hope(!lly. .hat abo!t yo!" 4.B.0" B!dging by his tone o( *oi#e" 4ernard is as #on#erned abo!t the s!b e#t as she is. "The same" I/m a(raid." Mindlessly she #ontin!es to eat her Caesar salad. 2o it/s not !ni+!e to her s#hool. This is good ne)s in a )ay" b!t alarming in another. Alistair arti#!lates )hat they are all thin-ing. "The last ten years or so )ere *ery good (or !s. 'rgani=ations/ demand (or ne) M4As gre)" and the desire o( yo!ng people to a#+!ire M4As gre) proportionately. .e didn/t ha*e eno!gh #apa#ity to s!pply the demand. No )onder )e en oyed a he(ty +!e!e o( appli#ants banging on o!r doors." He stops to sip his red )ine. They )ait (or him to #ontin!e" b!t he doesn/t. 4ernard pi#-s !p the ball. "2o" is )hat )e are )itnessing no) simply a res!lt o( the !ni*ersities s!##eeding in b!ilding !p eno!gh #apa#ity0" "%robably." Alistair/s eyes are (i,ed on his glass. "4!t it is not as simple as that. 3o! -no) ho) systems tend to rea#t. They almost al)ays !ndershoot or o*ershoot. I/m a(raid that the rapid de#line in the n!mber o( s!rpl!s appli#ants indi#ates that )e o*ershot." "B!dging by the rate at )hi#h b!siness s#hools are still e,panding all o*er the #o!ntry" it/s !st a matter o( time be(ore )e ha*e empty seats"" 4ernard agrees )ith him. Coming here )as a good idea. 4.B. is pleased. 2he is also pleased )ith the t)o partners she #hose (or dinner. "2o )e don/t ha*e eno!gh appli#ants be#a!se the #apa#ity o( b!siness s#hools has gro)n beyond the n!mber o( people )ho )ant to be#ome managers0" she as-s in her so(t *oi#e. "Might be"" Alistair s!##eeds in ans)ering be(ore the )aiters start to ser*e the prime rib. "This means that )e had better restrain o!r b!siness s#hools (rom #ontin!ing to gro) at their #!rrent (ranti# pa#e. At least !ntil )e (ind )ays to en#o!rage more yo!ng people to #hoose management as a #areer path"" 4ernard tho!ght(!lly #on#l!des. Alistair )aits !ntil the o*erly asserti*e )aiter is satis(ied be(ore #ommenting" "It might be m!#h )orse." ".hat do yo! mean0" as-s 2tanley (rom a#ross the table. Apparently this #on*ersation is o( interest to other presidents as )ell. "It might be that )e don/t ha*e eno!gh appli#ants be#a!se )e are already o*er1s!pplying the mar-et demand and the )ord is o!t that an M4A degree doesn/t g!arantee a l!#rati*e ob anymore." "I( that/s the #ase"" 4ernard )onders alo!d" "then it/s not simply a matter o( slo)ing the gro)th o( o!r b!siness s#hools. The #hallenge is ho) to smoothly shrin- them. That/s to!gh."

4.B. #on#entrates on the meat" e*al!ating )hat 4ernard has !st said. He is a#t!ally e#hoing her o)n #on#erns" b!t )hen she hears somebody else saying it she has her do!bts. It #an/t be that badA "'n se#ond tho!ght"" 4ernard brea-s into the silen#e" ")e #an boost the demand. All that/s needed is to pass a la) obliging e*ery manager o( a p!bli# #ompany to hold an M4A. Ma-e it stat!tory" li-e medi#al do#tors or C%As" or attorneys (or that matter." "Too m!#h" too soon"" 2tanley ob e#ts. "I don/t thin- that )e sho!ld e*en thin- o( legislation. It/s against the essen#e o( #apitalism. And it/s not pra#ti#al" there is no )ay to en(or#e it. 4esides" I don/t thin- that the )hole iss!e is rele*ant. Registrations (or o!r s#hool #ontin!ed to gro) this year" e,#eeding last year." "I/*e tal-ed )ith o!r (riends at Har*ard and MIT. They don/t see any signs o( so(tening either"" Alistair #ontrib!tes. "They ne*er do and ne*er )ill"" 4ernard #omments )ith a tra#e o( en*y. He pi#-s at his prime rib and then p!shes it slightly aside. "Their appli#ant list (or e*erything is longer than my arm. .hat am I tal-ing abo!t" m!#h longer than that. I/*e heard they #an a((ord to a##ept only one appli#ant o!t o( (i*e. Considering the pri#es they #harge" it/s heresy." ".hy0" as-s Berry %reston. 4y no) the indi*id!al dis#!ssions ha*e died o!t. E*erybody is )aiting (or 4ernard to ans)er. He is not in a h!rry" he li-es being the #enter o( attention. &irst he drin-s a little red )ine" then he dabs his lips )ith the )hite linen nap-in. "$o yo! )ant to -no) )hy0 I #an tell yo! )hy. Che#- their b!siness s#hool syllab!s. They tea#h almost e,a#tly the same: material that )e do. Maybe their pro(essors are better resear#hers" b!t I do!bt they are better tea#hers. The only di((eren#e bet)een !s and them is that grad!ating (rom one o( the I*y Leag!e s#hools is li-e ha*ing a li#ense to steal. It/s not any di((eren#e in s!bstan#e" it/s !st the rep!tation." "That/s good eno!gh"" 2tanley says (latly. "4esides" there is an important di((eren#e1they ha*e better st!dents. The best (rom all o*er the #o!ntry apply to those s#hools" and as yo! said" they are able to pi#- !st the cr&me de a cr&me." "'n#e again" it boils do)n to rep!tation" not to s!bstan#e." 4ernard doesn/t arg!e" he is !st releasing some steam. It might be that b!siness s#hools are (a#ing a #risis" 4.B. thin-s to hersel(. It might be that 2tanley is right and the #risis is (ar on the hori=on" b!t only the prestigio!s !ni*ersities are imm!ne. All the others are e,posed. "Ho) do yo! b!ild a rep!tation li-e that0" Berry as-s. "5ery simple"" 4ernard replies sar#asti#ally. "3o! b!ild the !ni*ersity t)o h!ndred years ago" and #are(!lly #!lti*ate the al!mni." He loo-s aro!nd the table" #hallenging anyone to de(y him. 2tanley does. "That/s not the only )ay. .e all -no) o( #ases )here (a#!lties ha*e b!ilt national a##laim. They s!##eeded in gathering a gro!p o( e,#eptional s#ientists" )hose brea-thro!gh resear#h p!t their department (irmly on the map. Alistair sha-es his head in disagreement. 4.B. -no)s e,a#tly )hy. There is no )ay a small !ni*ersity li-e hers or Alistair/s #an attra#t people o( s!#h #aliber. These e,#eptional people )ant" and are able" to go to the already a##laimed !ni*ersities. Any)ay" she simply #an/t a((ord the high salaries they #ommand. Maybe she #an #!lti*ate talent already e,isting in her b!siness s#hool0 2!pport and en#o!rage them in some )ayA .hat )ay0 And )hat is the li-elihood that the b!siness s#hool has some !nre#ogni=ed &eynman in their midst0

Chapter @
I loo- aro!nd the #lass. There are many more st!dents than I e,pe#ted" almost thirty" b!t it doesn/t matter> I/*e ta!ght #lasses (o!r times as large and I/m )ell prepared. I sla*ed all s!mmer" reading e*erything I #o!ld lay my hands on. I inter*ie)ed o*er a do=en people )ith a lot o( e,perien#e in pro e#t management" m!#h more e,perien#e than these yo!ng managers ha*e. I thin- I #an handle anything they thro) at me. 'r at least I #an s)ing at it. They all ta-e their seats. It/s +!iet. I/d better start. As !s!al" the (irst ro) is almost empty. The last person to be#ome +!iet is sitting in the ba#- ro). Good. He is a large man" abo!t my age. He #an stand some ab!se. ".hat/s yo!r name0" I as-" pointing at him. I pi#-ed right be#a!se he doesn/t try to pretend I am pointing at somebody else. "Mar- 7o)als-i"" he replies in a booming *oi#e. ".hy ha*e yo! #hosen this #o!rse0" I as- bl!ntly. 'ne thing is (or s!re" I ha*e e*erybody/s attention. They are not a##!stomed to my tea#hing style. A pro(essor is s!pposed to le#t!re" not inter*ie). Hal( are loo-ing at me" hal( are loo-ing at him. 2ome are smiling. "I/m a pro e#t leader"" he ans)ers. .hen I don/t reply" he #ontin!es. "I )or- in a #ompany that prod!#es modems. I/m in #harge o( one o( the de*elopment teams." I #ontin!e to stare at him" b!t he doesn/t add anything more. The sit!ation be#omes really !n#om(ortable )hen I (inally say" "3o! ha*en/t ans)ered my +!estion." I loo- aro!nd. Nobody meets my eye. Nobody )ants to be the ne,t *i#tim. I ret!rn to Mar-. "$o yo! ha*e any problems managing yo!r pro e#t0" "Not really"" he ans)ers. "2o )hy ha*e yo! #hosen this pro e#t management #o!rse0" He starts to grin. "I g!ess I do ha*e some problems"" he admits. "Can yo! elaborate0" ".ell" I didn/t start this pro e#t" and the person be(ore me made some )ild promises that" I/m a(raid" are !nrealisti#." "Li-e0" I press him. "Li-e the e,pe#ted per(orman#e o( o!r ne) modem and the time it )ill ta-e to deli*er it." 2ome other st!dents are grinning )ith empathy. "And yo! e,pe#t"" I loo- him straight in the eye" "that )hat yo! are going to learn in this #o!rse )ill enable yo! to per(orm some mira#les0" "I )ish"" he !n#om(ortably admits. "2o" )hy ha*e yo! #hosen this #o!rse0" I repeat my +!estion. "Loo-"" he says. "I am a pro e#t manager. I am )or-ing to)ard my M4A. This is a pro e#t management #o!rse" isn/t it0" "Ah6 2o yo! #hose the #o!rse be#a!se its title resembles yo!r ob title0" He doesn/t ans)er. .hat #an he say0 It/s time to let him o(( the hoo-. "Can anybody tell me )hy he or she #hose this #o!rse0" I as- the #lass. Nobody ans)ers. Maybe I )as too intimidating. ".hen I )as a st!dent"" I tell them" "I #hose #o!rses that )ere gi*en by pro(essors )ho )ere -no)n to be light on home)or-. I/m a(raid that I/m not one o( them." It helps a little" b!t not m!#h. "Listen"" I #ontin!e. ".e all -no) that yo! are here to get the degree. To get a pie#e o( paper that )ill help yo! #limb the organi=ational ladder. 4!t I hope that yo! )ant something more than that. That yo! )ant to get -no)1ho) that #an really help yo! do yo!r ob." Heads nod aro!nd the room. "3o! ha*e to #hoose bet)een t)o alternati*es. 'ne is that I/ll stand here" on the podi!m" and le#t!re (or the entire semester. I #an (labbergast yo! )ith optimi=ation te#hni+!es and ta-e yo! thro!gh e*ery #ompli#ated he!risti# algorithm. It )ill be to!gh to !nderstand" e*en to!gher to !se and" I g!arantee yo!" )on/t help yo! one iota. "'r" )e #an p!t o!r heads together and" dra)ing (rom yo!r e,perien#e and the -no)1ho) that e,ists in boo-s and arti#les" )e #an try to (ig!re o!t ho) to manage pro e#ts better. .hi#h do yo! #hoose0" Not m!#h o( a #hoi#e is it0 At the ba#-" Mar- raises his hand. "2o )hat sho!ld I e,pe#t (rom this #o!rse0" 1;

Good +!estion. Good man. "Mar-" yo! told !s yo! ha*e problems )ith yo!r pro e#t. I thin- that this #o!rse sho!ld gi*e yo! better ability to deal )ith those problems." "&ine )ith me"" he says. T!rning to the #lass" I start. "Ass!me that I ha*e good -no)ledge o( the -no)1ho) as it is )ritten in boo-s and arti#les. .hat )e ha*e to (ind o!t no) is the le*el o( e,perien#e yo! ha*e )ith pro e#ts. 2o" besides Mar-" )ho else is deeply in*ol*ed in pro e#ts0" A slim redheaded yo!ng man in the third ro) raises his hand. "My name is Ted and I )or- in a #onstr!#tion #ompany. E*erything )e do is a pro e#t.". "Ho) long ha*e yo! been )or-ing there0" I as-. "2i, years." "E,#ellent"" I say. "Anybody else0" To my s!rprise" nobody else raises a hand. I/m sa*ed by a blond )oman" sitting by hersel( in the (ront ro). Hesitantly" she as-s" "Can yo! de(ine )hat yo! mean by a pro e#t0" I s)i(tly s#an in my mind (o!r de(initions I read in te,tboo-s. 2omeho) they all seem too pompo!s to me. Ho) #an one relate to a de(inition li-e "A set o( a#ti*ities aimed to a#hie*e a spe#i(i# ob e#ti*e and ha*e a #lear start" middle and end."0 I( I )ant to bring this #o!rse do)n to earth and relate it to their sit!ations" I/d better not +!ote any o( these o*ersimpli(ied or #ompli#ated de(initions. Rather than de(ining" I #hoose to des#ribe. I say" "In yo!r )or-" ha*e yo! #ome a#ross a #omple, initiati*e that in order to manage it" people ha*e to dra) the pi#t!re o( )hat they are s!pposed to do0" "I don/t !nderstand"" she replies. "2ome blo#- diagram o( the *ario!s steps that m!st be a##omplished in order to a#hie*e the ob e#ti*e" sho)ing )hi#h steps sho!ld be done in se+!en#e and )hi#h in parallel. 'r alternati*ely" some time #harts" )hi#h display )hen ea#h step sho!ld start and )hen it )ill end. I( yo! #ame a#ross a sit!ation )here people !se s!#h #harts" yo! #ame a#ross a pro e#t." "I see"" she says. "Are yo! in*ol*ed in pro e#ts0" I as- her. "A##ording to yo!r de(inition" I am"" she ans)ers. "I am a brand manager" and )e spend a lot o( time b!ilding s!#h #harts be(ore )e la!n#h a ne) prod!#t." "And yo!r name is0" "R!th Emerson." Her e,ample probably helps the others be#a!se it +!i#-ly be#omes apparent that e*erybody is in*ol*ed )ith some type o( pro e#t. 2ome o( them are )or-ing in an almost p!re pro e#t en*ironment" li-e Mar- in design engineering" redheaded Ted in #onstr!#tion or Charlie" in the Ha)aiian shirt" )ho told !s he is in so(t)are programming. 'thers are intera#ting )ith" or e*en #ond!#ting pro e#ts. Li-e R!th in mar-eting> &red" an a##o!ntant )ho also a!dited some pro e#ts" and 4rian" )ho is in*ol*ed in the e,pansion o( his plant. .hat is *ery good is that bet)een them they #o*er a broad spe#tr!m o( pro e#t en*ironments. 4!t that is also dangero!s. I( I do not s!##eed in steering them to #on#entrate on )hat is #ommon to all their pro e#ts" )e are bo!nd to (lo!nder all o*er the map. That is )hy I don/t in+!ire abo!t their spe#i(i# pro e#ts. Rather" I as-" "The #hannel t!nnel" )hat do yo! -no) abo!t it0" Ted" my redheaded st!dent" is the (irst to #omment. "Isn/t it the train t!nnel bet)een England and &ran#e0" .hen I #on(irm" he #ontin!es" "I read that they ha*e h!ge b!dget o*err!ns." "In the billions"" &red" o!r a##o!ntant" adds. "It be#ame s!#h a big problem"" Ted is on a roll" "that at one point they #ontemplated stripping some o( the ambitio!s original design." To en#o!rage more #on*ersation I as- the #lass" ".hat else0" R!th" in the (ront ro)" pi#-s !p the ball. "I sa) the grand opening o( those t!nnels on T5. The +!een hersel( #hristened it. The opening )as a (e) months late and they )ere still !nable to r!n trains." "A #lassi# e,ample"" I s!mmari=e" "o( a pro e#t that didn/t (inish on time or on b!dget." I gi*e them another (amo!s e,ample> the oil rig plat(orms in the North 2ea. These oil rigs are enormo!s plants b!ilt three h!ndred meters abo*e the (loor o( one o( the most stormy o#eans in the )orld. &rom ea#h plat(orm they drill not one" b!t many" oil )ells. They drill at angles o( !p to CE degrees to hit oil three -ilometers belo) the s!r(a#e. Then they ha*e to separate the oil (rom the sand be(ore p!mping it thro!gh pipes to shore. No )onder the in*estment in ea#h one o( those h!ge pro e#ts is #lose to (o!r billion dollars. 'ne might thin- that a(ter p!tting !p se*eral o( these big babies they )o!ld ha*e their a#t together. It/s not the #ase. It/s been said that they plan a pro e#t meti#!lo!sly" then m!ltiply by (o!r and pray. ".ell"" I tell the #lass" "prayers are #learly ins!((i#ient. In the early nineties the top g!n o( 2tat'il" the Nor)egian oil #ompany" )as (or#ed to resign d!e to mammoth o*err!ns on one o( these pro e#ts. "3o! see" Mar-"" I o-ingly add" "yo! are not the only one )hose pro e#t does not meet its d!e date. At least in yo!r #ase" yo! are not going to r!n o*er b!dget." 11

"3es" I )ill"" he #alls o!t" and then e,plains. "The pro e#t manager be(ore me" the one )ho so #arelessly spread promises" is no) my boss. He is determined to sa*e (a#e" so he has (or#ed me to ta-e on more people and !se e,pensi*e s!b#ontra#tors. .e de(initely are going to be o*er b!dget" the only +!estion is by ho) m!#h." "There is another +!estion. .ho is going to be blamed (or it0" I add. "Not him" I/m a(raid. 7no)ing my boss" I/m de(initely the one going to be blamed." "2o )hat are yo! going to do0" Charlie" o!r so(t)are manager" is sin#erely #on#erned. "Nothing"" Mar- br!shes it o((. "In engineering" e*ery pro e#t is o*err!n and o*erd!e. 4esides" there is another ta#-. .hen p!sh #omes to sho*e" )e )ill red!#e the targeted spe#i(i#ations o( the pro e#t." To stress this last b!t important point" I as-" "$o yo! do it (re+!ently0" "More than )e li-e to admit"" he ans)ers. "Has anybody else #ome a#ross a pro e#t that d!e to its o*err!ns and its being o*erd!e" #ompromised on its original spe#i(i#ations0" "I don/t -no) i( yo! #an #all it #ompromising the original spe#i(i#ations"" 4rian #omments" "b!t )hen they (inished o!r ne) o((i#es" only (o!r months a(ter they )ere d!e" )e mo*ed in only to (ind o!t )e didn/t ha*e des-s" and the air #onditioning )as not yet (!n#tioning." 4e(ore I ha*e a #han#e to #omment" Charlie #on(idently states" "E*erybody -no)s that pro e#ts don/t (inish on time or on b!dget" and i( they do it means they had to #ompromise on #ontent. Espe#ially in systems programming or prod!#t design." "That is not ne#essarily the #ase"" I say. "'##asionally" there are design engineering pro e#ts that (inish m!#h ahead o( time" signi(i#antly !nder b!dget and deli*er more than )as promised." Those )ith any e,perien#e )or-ing in or )ith design engineers" )hi#h means abo!t hal( the #lass" (ind it hard to belie*e s!#h a #laim. "In the early (i(ties"" I #ontin!e" "the R!ssians anno!n#ed that they" too" had an atom bomb. That #ame as a total s!rprise. It be#ame apparent to the F.2. that it had to (ind a )ay to monitor )hat the R!ssians )ere doing in their *ast Asian territories." "That/s ho) the spa#e satellite program started"" one o( the st!dents g!esses. "I/m a(raid that at that time satellites )ere to be (o!nd #!rly in s#ien#e (i#tion boo-s"" I ha*e to disappoint him. "4!t" et airplane te#hnology )as rapidly de*eloping. 'ne rep!table engineer" Claren#e "7elly" L. Bohnson" s!ggested b!ilding a plane that #o!ld (ly at altit!des abo*e the #eiling rea#hed by (ighter planes. $o yo! -no) ho) m!#h time it ta-es to de*elop a ne) airplane0 I mean (rom #on#ept to an operational )eapons system0" "'*er ten years"" 4rian says #on(idently. "I ser*ed in the Air &or#e." "That/s doesn/t sna-e yo! an e,pert" yet"" Ted pi#-s on him. "Fs!ally" it does ta-e more than ten years"" I #on(irm 4rian/s ans)er. "The F18 )as de*eloped in a s!rprisingly short time. Eight months a(ter start" this airplane )as already (lying o*er R!ssia" ta-ing pi#t!res." "Fntil 1H9;" )hen &ran#is Gary %o)ers )as shot do)n"" 4rian demonstrates that he does -no) the details. E*erybody is impressed. 2lightly )ith 4rian" mainly )ith the a#hie*ement o( the people )ho b!ilt the F18. The only one )ho loo-s s-epti#al is &red. The a##o!ntant. I loo- at him" raising one eyebro). That/s eno!gh to ma-e him start. "3o! ga*e !s t)o e,amples o( ma or sna(!s" %ro(essor 2il*er. Can yo! gi*e !s more0" "No problem"" I smile broadly" "ho) many )o!ld yo! li-e0" "3o! also ga*e !s one e,ample o( a ma or s!##ess. Can yo! gi*e !s more o( those0" "I/m a(raid not"" I admit" slightly embarrassed. "E,a#tly as I s!spe#ted"" &red responds (latly. $ear &red has gi*en me an e,#ellent opport!nity to dri*e home the #on#l!sion I )anted them to rea#h" b!t I #annot #ontrol mysel( (rom as-ing" ".hy did yo! ha*e this s!spi#ion0" "&rom e,perien#e." And then he elaborates" "I ha*e )or-ed as a (inan#ial manager in three large #ompanies. I ha*e a!dited more ne) prod!#t de*elopment than I #are to remember. And li-e e*ery pro e#t a!ditor" I am +!ite #yni#al. Not that I ha*en/t seen pro e#ts that do (inish )ithin the original" allotted b!dget" b!t they are the e,#eptions." "That is probably the sit!ation in design engineering"" I #on(irm. "Charlie" is it m!#h di((erent in #omp!ter programming0" "In #omp!ter programming )e say that a pro e#t )ill al)ays r!n o!t o( time b!t ne*er r!n o!t o( e,#!ses." I oin the la!ghter. .hen it dies do)n" 4rian #omments" "In the Air &or#e )e al)ays met the (inal d!e date." A(ter three se#onds he adds" "That means that )e didn/t meet the (irst d!e date that )as set (or the pro e#t" or the se#ond one." .hen I #an (inally spea- again" I point at Ted" ".hat is the sit!ation in the #onstr!#tion ind!stry0 '*er there" there is less !n#ertainty regarding the #ontent o( the pro e#t."

18

"That/s #orre#t"" he says. "'!r pro e#ts are !s!ally not so di((erent (rom ea#h other so )e ha*e a lot o( e,perien#e." And grinning" he adds" ".e also ha*e a lot o( e,perien#e !sing any #hange re+!ested by the #lient to #o*er o!r b!tts (or #ost or time o*err!ns." I glan#e at my )at#h. It/s time to start s!mmari=ing. "Can )e #on#l!de"" I as- the #lass" "that the problems #ommon to all pro e#ts are"" and t!rning to the board I )rite as I #ontin!e to tal-" "the high probability o(" 1. 4!dget o*err!ns> 8. Time o*err!ns> and many times" ?. Compromising the #ontent." .all to )all #onsens!s. ".e tend to blame it" in ea#h spe#i(i# pro e#t" on one string o( bad l!#- or another. In my eyes" the F18 pro e#t is important be#a!se it/s di((erent. It/s !nli-ely that they s!##eeded in (inishing in less than one1tenth the time !st be#a!se o( a strea- o( good l!#-. It m!st be that someho) they s!##eeded in a*oiding the generi# pit(alls that get almost e*ery other pro e#t." "Ho) did they do it0" R!th as-s the +!estion that bothers e*erybody. ".o!ldn/t it be ni#e i( )e de#iphered it0" I ans)er. ".hi#h brings me to yo!r assignment (or the ne,t #lass." No matter )hat the age o( the st!dents" the rea#tion is al)ays the same I a deep sigh. Heartlessly I #ontin!e. "2ele#t a pro e#t in yo!r #ompany. A pro e#t that has re#ently (inished oasis abo!t to be (inished. Inter*ie) the person r!nning this pro e#t1the pro e#t leader. Inter*ie) the people )ho did the a#t!al )or-" and inter*ie) the bosses o( the pro e#t leader. %repare t)o lists (or #lass. 'ne: the o((i#ial reasons (or the o*err!ns. The se#ond: the !no((i#ial reasons. "2ee yo! in t)o )ee-s." I stop on my )ay home (rom the !ni*ersity to pi#- !p some (ried #hi#-en. B!dith is in Ne) 3or- (or the )ee-end" so nobody is e,pe#ting me at home. I hope she en oys her trip. 'n se#ond tho!ght" -no)ing too )ell )hat she en oys most" I hope not. B!dith (inds oy in b!ying things" #!rrently" (or o!r ne) ho!se. Not e,a#tly o!rs. .e borro)ed the money (or the do)n payment. And the mortgage payments s)allo) my salary in#rease and then some. This s!mmer I didn/t ta-e m!#h e,tra by t!toring. It/s to!gh. 4!t the ho!se )as s!#h a s)eet deal. A real bargain. B!dith -no)s a bargain )hen she sees one" espe#ially in ho!ses. 2he is a real estate agent. This year she #losed three deals. All in*ol*ing other agents" so her share )as abysmal. The last one she #losed last )ee-. 2i, h!ndred and eighty1se*en dollars. That/s )hy she is no) in Ne) 3or-. The (light and the hotel are abo!t si, h!ndred. Not a #han#e she )ill spend only eighty1se*en dollars" and o!r #redit lines are stret#hed to the limit. Maybe )e sho!ld ha*e another little tal-0 I shi*er. 4etter not.

1?

Chapter C
4.B. loo-s o!t her o((i#e )indo). The #amp!s is parti#!larly bea!ti(!l at this time o( year" )hen the trees are so #olor(!l and the st!dents" on#e again" (ill the !ni*ersity )ith yo!ng li(e. Less then a h!ndred yards a)ay is the main entran#e to the impressi*e #omple, o( the b!siness s#hool. 2he )at#hes $ean %age h!rrying do)n the broad steps. He/s heading straight to her o((i#e. It/s not going to be a pleasant #on*ersation. 4.B. po!rs the tea" and !sing sil*er tongs she neatly trans(ers t)o l!mps o( s!gar and hands the #!p to her g!est. 2he doesn/t need to as-" she -no)s )hat he li-es> she -no)s him inside o!t. 2he has to. He is a *ery important player in her game. "I/m s!re yo! li-ed it"" he gest!res to)ard the general dire#tion o( her mammoth mahogany des-. He doesn/t mean the des-. He/s all!ding to his thi#-" bo!nd do#!ment" no) resting there. "&or the most part"" she smiles. He is slightly older than she is" and dressed as elegantly. A (e) years ago his dress #ode )as +!ite di((erent> snea-ers" openne#-ed shirts" nylon .indbrea-ers" a pro(essor )ho li-ed to blend into the a#ademi# en*ironment. No more. Not sin#e he rea#hed the position he al)ays )anted. He )on by a narro) margin" b!t no) his position is se#!re. The b!siness s#hool is his (ortress. %ro(essor Christopher %age 11 intends to stay the ma,im!m term as dean. Maybe e*en to #hange the r!les that de(ine that ma,im!m. It/s their in(ormal meeting to dis#!ss the b!siness s#hool/s proposed b!dget (or ne,t year. They both pre(er to hammer o!t their di((eren#es in pri*ate m!#h be(ore the b!dget is (ormally d!e. Not that Christopher %age is e,pe#ting any di((i#!lties. His proposed b!dget is )hat 4.B. )o!ld e,pe#t. The same (i(teen per#ent or so in#rease (rom year to year" no s!rprises. '( #o!rse" they/ll ha*e to go thro!gh the rit!al> she )ill as- (or a #!t" he )ill resist" in the end they/ll #ompromise. He e*en -no)s on )hi#h items. He s!spe#ts 4.B. -no)s as )ell. "Let me tell yo! a story"" 4.B. so(tly says. "My (irst ob )as in a small pri*ate !ni*ersity in the Mid)est. It )as not al)ays a small !ni*ersity. As a matter o( (a#t" abo!t t)enty years be(ore my time" it )as +!ite large. $o yo! -no) )hat happened there0" "No idea"" he ans)ers" )ondering ho) she is going to tie it to a demand to #!t his b!dget. "They had a (lo!rishing agri#!lt!ral s#hool"" she #ontin!es in her so(t *oi#e. "They allo)ed it to gro) abo!t ten per#ent a year. It gre) and gre)" and )ith it" !sing yo!r terms" the (i,ed assets gre): the n!mber o( #lassrooms" n!mber o( laboratories" n!mber o( ten!red pro(essors." "And thenA" %age says o!t o( politeness. "And then" agri#!lt!re did not need so many grad!ates anymore. Nat!rally" registration o( ne) st!dents dropped and (e)er )ere eager to #ontin!e on to higher degrees. 4!t the b!rden to maintain the b!ildings remained" and the need to pay the salaries o( pro(essors )ith ten!re remained." "It happens"" he #almly #omments" "in agri#!lt!re." 4.B. doesn/t allo) his #omment to distra#t her. 2he hasn/t yet (inished her story. "The impa#t )as not restri#ted to the agri#!lt!ral s#hool alone"" she #lari(ies. "The (inan#ial b!rden )as high eno!gh to mandate a drasti# #!t thro!gho!t all the other s#hools. 2ome say it )as a mira#le that the !ni*ersity )as not ban-r!pt." 2he pa!ses. He doesn/t #omment. "3o! don/t thin- that it #an happen to !s0" 4.B. in+!ires. "$e(initely not"" %age dismisses the idea. ".hy0" "'ne #annot #ompare agri#!lt!re to b!siness"" he says #on*ersationally. "3o! don/t need a !ni*ersity degree to s!##eed in agri#!lt!re. In that (ield there is no e,ternal press!re that (or#es people to go thro!gh higher ed!#ation." "And in b!siness there is"" 4.B. en#o!rages him. ".itho!t a do!bt. Today" i( yo! )ant to #limb the #orporate ladder yo! m!st ha*e an M4A." "Good (or !s"" 4.B. agrees. %age is a little disappointed. He e,pe#ted more de#isi*e arg!ments (rom 4.B. That/s not the )ay to alarm him eno!gh to *ol!ntarily #!t his b!dget. "Chris"" she #ontin!es" "there is another (ield that (or#es people to go thro!gh higher ed!#ation. La)yers m!st grad!ate (rom a !ni*ersity. Moreo*er" in la) it/s not an option" in b!siness it still is." Ne*er !nderestimate her" lie reminds himsel(" and alo!d" he says" "I don/t see the rele*an#y." "I spo-e )ith %a!l $immers yesterday. 3o! -no) him0" "D!ite )ell." %age is starting to disli-e the dire#tion their #on*ersation is ta-ing.

1@

"They are (a#ing a real problem" he told me. Ne) st!dent enrollments at their la) s#hool are less than hal( #ompared to three years ago." Christopher %age e,amines her (a#e. He #annot de#ipher anything. Impossible to (ig!re o!t. Is she aiming at ne,t year/s b!dget" or at something m!#h larger0 There )eren/t any )arning. Maybe this is 4.B./s )ay o( )arning him0 He de#ides to stop br!shing it aside. At least !ntil he #an (ind o!t )here 4.B. really stands. "Ho) does %a!l e,plain the drop"" he in+!ires non#ommittally. "That/s the interesting part"" she ans)ers. "It loo-s li-e they )ere tal-ing abo!t it (or +!ite some time. I( )e had a la) s#hool in o!r !ni*ersity" no do!bt )e too )o!ld ha*e heard abo!t it be(ore." %age barely stops himsel( (rom saying" ".ell0" "4eing a la)yer be#ame a real (ad"" she starts to e,plain. "No )onder" #onsidering the base salaries that )ere being o((ered. There )as a (lood o( yo!ng people )anting to be la)yers. The s#hools ballooned. Almost a repli#a o( the story I told yo! abo!t my old !ni*ersity." %age doesn/t ha*e any di((i#!lty seeing ho) she intends to b!ild the parallels to his b!siness s#hool. It/s m!#h more serio!s than he tho!ght. 2he/s not aiming at the present" she/s +!estioning the (o!ndation !pon )hi#h his long1term strategy is b!ilt. "3o! #an (ig!re o!t the story (rom there"" she says. Ne*ertheless she #ontin!es> it/s #learly important to her that it be *erbali=ed. "Those many ne) st!dents" a(ter a (e) years" t!rned into many ne) grad!ates. 2o many that they o!tstripped the demand." %age no) has had eno!gh time to (ig!re o!t his response. &irst he m!st demonstrate to 4.B. that he does !nderstand her #on#erns" and then he m!st #on*in#e her to drop them. 2o" )itho!t hesitation" he says" "Not all ne) la) grad!ates #o!ld (ind a de#ent ob. The )ord started to spread aro!nd and the n!mber o( appli#ations o( ne) st!dents dropped." "D!ite so"" 4.B. agrees. "Nothing to )orry abo!t"" %age says in his most a!thoritati*e *oi#e. He lays do)n )hat he #onsiders his tr!mp #ard. ".e are (ar (rom sat!rating the demand (or ne) M4As." It doesn/t )or-. 4.B. is not impressed. "Isn/t the gro)th in enrollment at o!r b!siness s#hool the smallest it has been in years0" "A temporary phenomenon"" he dismisses it. "Nothing to )orry abo!t." "Maybe"" she says tho!ght(!lly. "Maybe not." %age #annot a((ord to lea*e it li-e this. "4.B." ho) #an I p!t yo!r mind at rest abo!t this0" He signals that he is ready (or b!siness. "I/m not #on#erned )ith the immediate (!t!re"" she responds. "My nightmare is to be st!#- )ith an e,pensi*e b!rden that )ill be almost impossible to trim. &or e,ample" *ent are b!dgeting (or ten!re (or eight more pro(essors. I( p!sh #omes to sho*e s!#h de#isions may -ill !s. .hat abo!t p!tting a (ree=e on all ten!re" at least !ntil the sit!ation be#omes #learer0" "No" 4.B." that )o!ld be a mista-e. .e need these people. I( )e don/t gi*e them ten!re no)" )e ha*e to let them go. Thin- o( the impli#ations. Thin- o( the sho#- )a*e it )o!ld send. I !nderstand yo!r #on#erns" b!t" in my opinion" there is no reason (or alarm. $e(initely no reason (or s!#h drasti# a#tions." "$eli*ering some message is appropriate"" she insists. He -ne) that eight ne) ten!re appointments )o!ld not (ly. It )as )orth a try. "Maybe yo! are right"" he smoothly bargains. "Maybe )e sho!ld send a signal. The departments sho!ld not ta-e !s both (or granted." 2he )aits (or his proposal. "I g!ess )e #o!ld a##ept only si,"" he o((ers. To his s!rprise she is not )illing to #o!nter1o((er her n!mber. "I/m still )orried that )hat is happening in la) s#hools #an happen in b!siness s#hools"" she insists. ".hat are yo! s!ggesting )e do abo!t the possibility o( a #hange in the trend0" %age tries his !s!al ta#ti#. "I/m not s!ggesting )e dismiss it"" he #om(orts her. "Not at all. .e sho!ld thin- abo!t it. E,amine the probabilities. $o some resear#h." "E,a#tly right"" she sails along. "$o )e agree that the (irst" de#isi*e indi#ations )ill appear as the ability o( grad!ates to get obs0" "I g!ess so"" %age ans)ers #oldly" thin-ing abo!t this ne) angle. "$o )e ha*e to )ait !ntil it )ill not be easy (or M4A grad!ates to get a ob that mat#hes their initial e,pe#tations0" ".hen that happens I agree that the alarm bells sho!ld go o((. 4!t )e are so (ar (rom it. A#t!ally" I )onder i( s!#h a time )ill e*er #ome." Her )ay o( arg!ing is to say" "$on/t yo! thin- that as the t)o people )ith the responsibility )e sho!ld monitor the sit!ation0" "Good idea." He starts to see ho) he #an drag the iss!e to a #ommittee" )here it #an be b!ried (or good. "Ho) do yo! s!ggest monitoring it0" 1C

"Three years ago the s#hool o( b!siness made a broad1s#ale s!r*ey among o!r grad!ates. They !sed the res!lts as a promotional tool to en#o!rage more enrollment." "I initiated it"" he says pro!dly. "It )or-ed *ery )ell. And I do agree )ith yo!" )e ha*e to repeat the s!r*ey. E*ery year. That )ill enable !s to hold o!r hand on the p!lse o( things. I/ll initiate a #ommittee to handle it. Right a)ay." 2he gently smiles at him. He tries hard to maintain his "#ollaborati*e" e,pression. ".e don/t ha*e time (or #ommittees" Chris." 4e(ore he #an ob e#t" she t!rns aro!nd and )al-s to her des-. "Here are the res!lts o( o!r ne) s!r*ey. I thin- yo!/ll (ind it interesting. E*en +!ite alarming. 4!t on#e yo! st!dy it" I/m s!re yo!/ll agree )ith me that )e ha*e to p!t a total (ree=e on granting more ten!re." "&irst I/ll read it" then I need time to e*al!ate" then )e/ll tal-." %age tries to get ba#- his balan#e. ".e de(initely )ill. More tea" Christopher0"

19

Chapter 9
I enter the #lassroom. It/s still noisy" not all the st!dents are sitting yet" b!t on my table there is a pile o( papers. I arrange them into a neat sta#-" and s-imming thro!gh them" pi#- the one that loo-s the most pro(essionally organi=ed. "&red Romero"" I read alo!d the a!thors name. The #lass +!iets do)n. I -eep on reading" "%ro e#t title: Ne) prod!#tion (a#ility in Malaysia." "May I say something0" &red as-s. "Certainly." "This Malaysian pro e#t is not one that I/m in*ol*ed )ith. I deliberately #hose this pro e#t be#a!se (or the pro e#ts I/m in*ol*ed )ith" I already ha*e some strong opinions abo!t )hy things are the )ay they are." "And yo! )ant to present an ob e#ti*e e*al!ation. Good thin-ing." And I #ontin!e to read (rom his report" "%ro e#t stat!s: the Malaysian plant sho!ld ha*e been (!lly operational eight months ago. C!rrently ma#hines are installed in all departments e,#ept (or one" b!t only three lines o!t o( (i*e are already operating. '!tp!t o( the plant is #!rrently less than thirty per#ent o( target. Anything to add" &red0" "'nly that I/*e heard some #omplaints that the +!ality is not !p to par. 4!t sin#e I #o!ldn/t get any o((i#ial n!mbers" I didn/t in#l!de it." "&ine. Ne,t item on &red/s report is: &inan#ial stat!s. I lo*e the )ay yo! arranged it." "2tandard pro#ed!re." He plays it do)n" b!t it/s apparent that he en oys the #ompliment. "&inan#ial stat!s"" I read again. "$!e to b!dget o*err!ns o( si,teen point t)o per#ent and delays in prod!#tion" the original estimate o( three1year/s payba#- is no) modi(ied to (i*e." "$oes e*erybody !nderstand the term /payba#-/0" R!th probably -no)s the term. Nobody admits that he doesn/t. Ne*ertheless" I e,plain. "%ayba#- is the time period (rom in*esting !ntil )e e,pe#t the (r!its o( o!r in*estment to #o*er the in*estment. &or e,ample" s!ppose that yo! in*est one h!ndred dollars and yo! get (i(ty dollars ea#h year. Ass!ming no in(lation" yo!r payba#- period is t)o years. In &red/s #ase the #al#!lations are a little bit more in*ol*ed sin#e the money is in*ested o*er a period o( time. &or in*esting in a ne) plant" payba#- o( three years is #onsidered to be a *ery good in*estment. Considering the ris-s" (i*e is marginal." "&i*e years is the #!rrent o((i#ial estimate" b!t in my (riend/s opinion it/s m!#h too optimisti#"" &red #omments. "They are p!shing (or a (ormal estimate o( a minim!m o( se*en years" b!t sin#e this pro e#t is the personal initiati*e o( the CE'" I/m a(raid that it )ill be some time be(ore the estimate is #orre#ted." &red/s #omments #ertainly help to bring his report to li(e. "'((i#ial e,planation"" I read" only to be immediately interr!pted by &red. "'( #o!rse" I didn/t inter*ie) the CE'. 2o )hat I/m #alling here the o((i#ial e,planation I too- (rom a memo o!tlining the e,planations gi*en to the .all 2treet analysts." "E*en better"" I say" and #ontin!e" "'ne: %arti#!larly bad )eather #onditions that delayed #onstr!#tion. T)o: Fn(oreseeable di((i#!lties e,perien#ed by the *endors )ho s!pply the ma#hines. Three: Longer than e,pe#ted negotiations )ith the Malaysian go*ernment #on#erning employment terms." I #annot stop mysel( (rom #ommenting" "There is something #ommon to all o( them. $o yo! see it0" Ted is the (irst one to !mp. "It/s all somebody else/s (a!lt. The )eather" the *endors" the Malaysian go*ernment." ".hat did yo! e,pe#t0" &red is slightly impatient. "That/s #orporate mentality> al)ays blame the e,ternal )orld. 4!t loo- at )hat I )rote !nder !no((i#ial reasons. Here yo! )ill (ind (inger pointing at (!n#tions inside the #ompany. "4y the )ay" %ro(essor 2il*er" I #o!ldn/t inter*ie) the #!rrent pro e#t leader" he is in Malaysia" b!t I don/t thin- it matters too m!#h sin#e on#e the emphasis shi(ted (rom #onstr!#ting the plant to r!nning it" the pro e#t leader #hanged. I did inter*ie) the pre*io!s pro e#t leader and some o( his people. Most o( them are ba#- at head+!arters." "Fno((i#ial reasons gi*en by the pro e#t leader"" I read. "'ne: Corporate (or#ed an !nrealisti# s#hed!le to start )ith. T)o: It )as di#tated that )e #hoose the #heaper *endors" e*en tho!gh it )as -no)n that they are less reliable. Three: In spite o( repeated )arnings" e((orts to re#r!it and train plant personnel and )or-ers started too late." "4y the )ay"" &red adds" "on this last point" some other people told me that e((orts to re#r!it personnel )ere late be#a!se the ma#hines )ere late" and they tho!ght it )asn/t pr!dent to hire people and pay their salaries (or nothing." I than- him and #ontin!e. "Additional !no((i#ial reasons" gi*en by people reporting to the pro e#t leader. 'ne: Too m!#h relian#e on *endor progress reports that in s!bse+!ent *isits t!rned o!t to be less than a##!rate." I loo- at &red (or an e,planation.

1E

"'h" there are many stories abo!t *endors reporting progress on b!ilding o!r ma#hines that later" on1site inspe#tions sho)ed they had barely started. 'r" (or e,ample" in one e,treme #ase" a *endor re#ei*ed a he(ty order (rom another #ompany and pra#ti#ally p!t o!r order aside (or almost three months." "I see"" I say" and #ontin!e. "T)o: Too loose s!per*ision o( the Malaysian #onstr!#tion #ontra#tors. Three: The o*er)or-ed pro e#t sta(( )ere mo*ed too (re+!ently (rom one emergen#y to another. &o!r: Too many )aste(!l /syn#hroni=ation/ meetings interr!pted the a#t!al )or-." "$oes anybody ha*e a problem !nderstanding the last t)o reasons0" &red as-s the #lass. "No"" #omes the ans)er (rom all dire#tions. "Can yo! relate to all the items in &red/s report0" I as-. And getting a positi*e response" I #ontin!e" "2o let/s try to !se this report to #ome !p )ith some general obser*ations abo!t pro e#ts. .ho )ill o((er the (irst one0" "I already did"" Ted says. "All the e,planations (or all the problems ha*e one thing in #ommon. It/s somebody else/s (a!lt. All that )e/*e heard is !st a long list o( (inger pointing. ".e heard more than that"" Mar- #omments in his booming *oi#e. "There is a pattern here. The lo)er the le*el o( the person" the more the (inger points internally" rather than e,ternally. 3o!/ll (ind the same thing in my report." "$oes anybody else see the same pattern in their reports0" I as- the #lass. .hen almost e*erybody does" I #ontin!e to as-" ".hi#h reasons sho!ld )e #onsider0 The ones o((ered by top managers )ho see the global pi#t!re or the ones o((ered by the lo)er le*el managers )ho are m!#h more (amiliar )ith the a#t!al details0" The (ollo)ing dis#!ssion doesn/t lead !s any)here. .e start to (lo!nder. Fntil Ted says" "'ne thing/s (or s!re" )e #an/t ignore the lo)er le*el managers/ e,planations. And i( so" at least a ma or part o( the blame is internal." .hen )e all agree" he #ontin!es" "It means that the #ompany #o!ld ha*e managed the pro e#t better." "Ho)0" R!th is not too shy to as-. ".hat do yo! mean" ho)0" Charlie is irritated by her +!estion. "Loo- at )hat they are #omplaining abo!t and (i, it. "I/m loo-ing" and I still don/t -no) ho)"" R!th ans)ers #almly. I loo- again at the list o( reasons s!pplied by the people reporting to the pro e#t leader. R!th is s!rprisingly obser*ant. I start to reali=e that her "inno#ent" +!estions all stem (rom a rare ability to loo- at reality as it is. 2in#e the #lass is not holding &red/s report" I e,plain R!th/s remar-. "These people #omplain abo!t la#- o( s!((i#ient s!per*ision o( the *endors" b!t at the same time they also #omplain that they are so o*erloaded they barely ha*e time to deal )ith (ires." Ted doesn/t gi*e !p on his opinion. "It !st means that the #ompany has to add more people to s!per*ise the pro e#t." "More people means more time and e((ort (or syn#hroni=ation"" I point o!t. "$o!bling the n!mber o( people (o!r1(olds the syn#hroni=ation e((orts. 3o! probably noti#ed that these same people are already #omplaining that too m!#h time is de*oted to syn#hroni=ation." "They !st ha*e to (ind a better )ay to manage themsel*es"" Ted #on#l!des. "Ho)0" R!th nails him. "That/s )hat )e are here to learn"" Ted passes the ball into my #o!rt. "Than- yo!" Ted. 2o" (rom the reasons gi*en by the lo)er le*el managers )e #an #on#l!de that )e ha*e to (ind a better )ay to manage a pro e#t. No do!bt. 4!t )hat abo!t the reasons gi*en by top management. .e #an/t ignore those reasons." Agreed. &rom the ba#- ro)" "Can yo! please repeat the CE'/s e,planations0" "Certainly. 'ne: %arti#!larly bad )eather. T)o: Fn(oreseeable di((i#!lties at the *endors. Three: Longer than e,pe#ted negotiations )ith the Malaysian go*ernment. Can yo! see a pattern here0" "3es"" Ted is on#e again the (irst to ans)er. "4lame it all on !n#ertainty." "E,plain." "%arti#!larly bad )eather"" he +!otes" "!n(oreseeable di((i#!lties" longer than e,pe#tedA They are all e,pressions o( !n#ertainty> o( the things that are hard to estimate at the start o( a pro e#t." "And yo! thin- that there is nothing to it0" "Not at all"" he ba#-s !p. "Fn#ertainty is )hat typi(ies pro e#ts. It/s the nat!re o( the beast." "I( that/s the #ase"" I point o!t" "i( that/s a#t!ally the nat!re o( the beast" then )e sho!ld (ind !n#ertainty !nderlying the reasons o( e*erybody in*ol*ed in the pro e#t" not !st the top managers." ".e do"" R!th +!ietly says. .e go o*er &red/s list again. 2he is right. The pro e#t leader/s #omplaints all re*ol*e aro!nd the !n#ertainty. He #omplains abo!t an !nrealisti# s#hed!le to start )ith" !nrealisti# #ompared to his estimations o( the !n#ertainties. The *endors )ere #hosen a##ording to #ost and not a##ording to their reliability" or in other )ords not a##ording to their ability to #ope )ith

1G

!n#ertainties. And be#a!se o( the !n#ertainty o( the date at )hi#h the plant e+!ipment )o!ld be a*ailable" re#r!itment had to be delayed. .e mo*e to analy=ing the #omplaints o( the people reporting to the pro e#t leader. The *endors/ iss!e. 2!rprisingly" initially the #lass rea#ted as i( it had nothing to do )ith !n#ertainties. It too- some time to agree that the *endors didn/t )ant to deliberately sabotage the pro e#t Ja ma or portion o( their pay )as pending #ompletion o( their obK. .hy )ere they delayed0 &or the same reason &red/s #ompany )as> they also s!((ered (rom !n#ertainties. Then )e agreed that most (ires )ere a dire#t or indire#t res!lt o( !n#ertainties" and the #onstant e((orts to re1syn#hroni=e stemmed (rom the (ires and the ens!ing delays. "Let me s!mmari=e"" I say. ".e obser*ed that (ingers are also pointed internally. .e agreed that this (inger pointing does ha*e merit" and )e #on#l!ded that the #ompany #an do something abo!t it. "Then )e e,amined the details and rea#hed the #on#l!sion that the thing to do is to better manage the pro e#t. ".hat )e no) are saying is that the !n#ertainties embedded in the pro e#ts are the ma or #a!ses o( )hat )e #alled mismanagement." "2o there/s nothing anybody #an do"" is Charlie/s #on#l!sion. "3o! #annot (or#e #ertainty on a sit!ation that #ontains ma or !n#ertainties." These same tho!ghts ha!nted me all s!mmer. Is the lo!sy per(orman#e that )e )itness in most pro e#ts a 'orce(ma)eure0 A res!lt o( the embedded !n#ertainty0 'r is there something that )e #an do0 At (irst it seemed li-e a stone )all. I )o!ld probably ha*e gi*en !p" i( it )eren/t (or the F18 e,ample. I start to steer the #lass to)ard the #ra#- Bim sho)ed me. "E*erybody in pro e#ts -no)s that pro e#ts in*ol*e a high degree o( !n#ertainty. .e are not the (irst ones to #on#l!de it"" I remind them. ".hy isn/t the !n#ertainty properly (a#tored into the original estimation0" "4e#a!se )e #annot"" Mar- booms. ".hat do yo! mean0" I as-. ".ho pre*ents !s0" "Top management"" he ans)ers" and then elaborates" "ta-e my pro e#t" (or e,ample. It )as originally estimated to be #ompleted in thirty months. 4!t top management said that )as !na##eptable and trimmed all the sa(ety. My boss agreed to try and do it in less than t)o years" )hi#h is an impossibility." "2o" yo! )anted thirty months and top management (or#ed it do)n to t)enty1(o!r months. The di((eren#e is t)enty per#ent. Mar-" do yo! really belie*e" #onsidering the magnit!de o( !n#ertainty in prod!#t de*elopment" that t)enty per#ent sa(ety is eno!gh0" "It isn/t" b!t )hat #an )e do0 Top management doesn/t allo) !s e*en that." "I don/t thin- so" b!t maybe o!r disagreement stems (rom the (a#t that )e are tal-ing abo!t t)o di((erent things. 3o! are tal-ing abo!t the sa(ety added to the pro e#t as a )hole. I am tal-ing abo!t the sa(ety added to ea#h and e*ery step in the pro e#t." B!dging by the st!dents/ e,pressions" I/d better e,plain. "Let/s ta-e it slo)ly. &or e*ery step in the pro e#t there is a time estimate> the length o( time" )e estimate" it )ill ta-e (rom the start o( that step !ntil #ompletion o( that step. Mar-" )hen yo! or yo!r people are as-ed to estimate the time re+!ired (or a step" ho) m!#h sa(ety do yo! embed in yo!r time estimate0" "No sa(ety. .e gi*e realisti# estimations. As m!#h as )e #an." He is not playing games )ith me" he belie*es in )hat he is saying. I don/t see any #hoi#e b!t to di*e to a deeper le*el. "3o! all learned abo!t probability distrib!tions"" I start my e,planation. 7no)ing the e,tent to )hi#h st!dents disli-e statisti#s I de#ide to ta-e it in *ery #lear steps all to the point. "Consider a good mar-sman aiming to hit a b!ll/s1eye and !sing a )ell1balan#ed g!n. .hat is the probability o( the mar-sman hitting a spe#i(i# point on the target0" I dra) the Ga!ssian distrib!tion on the board. "3o!/*e probably seen this bell shape more than on#e." Ne*ertheless" I e,plain" "The probability o( o!r good mar-sman missing the target #ompletely is *ery lo). His probability o( hitting the b!ll/s1eye is not one h!ndred per#ent" b!t it/s higher than the probability o( hitting any other point on the target. And here is the probability distrib!tion o( an e,#ellent mar-sman." And I dra) a m!#h thinner and taller Ga!ssian.

1H

"No) let/s #onsider another #ase. Ho) m!#h time )ill it ta-e yo! to dri*e (rom the !ni*ersity to yo!r ho!se0 4rian" )o!ld yo! *ol!nteer0" "Abo!t t)enty1(i*e min!tes"" he ans)ers" not really -no)ing )hat I/m as-ing (or. ".hat do yo! mean by /abo!t/0" "Abo!t means abo!t. 2ometimes it may ta-e thirty min!tes" sometimes less. $epends on the tra((i#. Late at night" and )ith my radar dete#tor on" I might do it in less than ten min!tes. In r!sh ho!r on a bad day it might e*en ta-e an ho!r." He starts to see )hat I mean" be#a!se he #ontin!es" "I( I ha*e a (lat tire it )o!ld ta-e more. I( my (riends pers!ade me to stop at a bar" it might ta-e e*en longer."

"%re#isely"" I say" and dra) the #orresponding probability distrib!tion. &i*e min!tes has =ero probability" t)enty1(i*e min!tes has the highest" b!t e*en three ho!rs has some non1=ero probability. "Mar-" )hen yo! estimate the time it )ill ta-e to do a step in a pro e#t" )hi#h one o( these t)o probability distrib!tions more #losely resembles yo!r sit!ation0" "The last one." Grinning" he adds" "A#t!ally it is more li-e 4rian" )ho lo*es to stop (or a drin- and tal- (or ho!rs." "The higher the !n#ertainty the longer the tail o( the distrib!tion"" I remind them. "This is the median o( the distrib!tion"" I dra) the line on the graph. "It means that there is only a (i(ty per#ent #han#e o( (inishing at or be(ore this time." I )ait (or e*eryone to digest this (a#t be(ore I t!rn ba#- to Mar-. "Mar-" )hen 4rian )as as-ed to estimate" he ga*e an estimation that is #lose to the median. 4!t )hen yo! or yo!r people are as-ed to estimate the time re+!ired (or a step in a pro e#t" )hat estimation do yo! !s!ally gi*e0 .ill yo!" please" #ome here and sho) it to !s on 4rian/s probability distrib!tion." It ta-es him some time to rea#h the board. I hand him the #hal-" and )itho!t hesitation he dra)s a *erti#al line" )ay to the right o( the distrib!tion #!r*e.

8;

Line by Mar-

".hy not the median0" I as- him. "4e#a!se M!rphy does e,ist"" he la!ghs. "It also e,ists (or 4rian." "Come on"" he says. "'nly a s!i#idal" ine,perien#ed person )o!ld #hoose the median." "Ma-es sense"" I #omment. "It espe#ially ma-es sense be#a!se in most en*ironments there is little positi*e in#enti*e" i( any" to (inish ahead o( time" b!t there are plenty o( e,planations re+!ired )hen )e are late. Fnder s!#h #onditions" I agree )ith Mar- that almost nobody )ill #hoose an estimate they ha*e a (i(ty per#ent #han#e o( blo)ing. .hat probability )ill yo! (eel #om(ortable )ith0" "Minim!m" eighty per#ent"" #omes the ans)er" "pre(erably ninety." No arg!ments. "Mar-" no) )e !nderstand )hy yo! p!t yo!r time estimate )ay to the right o( the probability distrib!tion. It is some)here aro!nd eighty or ninety per#ent." "2!re." Addressing the #lass" I de#lare" "The di((eren#e bet)een the median o( the probability distrib!tion and the a#t!al estimate is the sa(ety )e p!t in." And I pa!se to gi*e them time to thin- it thro!gh. I t!rn ba#- to Mar-. "2o" in yo!r time estimates" yo! do in#l!de sa(ety to prote#t yo!rsel( against !n#ertainty" or in yo!r )ords" M!rphy0" "I g!ess so." ".hen )e #ompare the time indi#ated by the median to the time yo! indi#ated as a reasonable estimate" it doesn/t loo- li-e the sa(ety yo! added is in the range o( t)enty per#ent." "Closer to t)o h!ndred per#ent"" he admits. "Loo- at the graph"" I !rge them. "$o yo! !nderstand that the time estimate that gi*es !s a (i(ty per#ent #han#e is m!#h shorter than the time estimate that pro*ides an eighty per#ent #han#e o( #ompleting a step be(ore the estimated time0 And don/t (orget" the bigger the !n#ertainty" the bigger the di((eren#e." "2o" t)o h!ndred per#ent sa(ety and more is the norm" not the e,#eption"" R!th says tho!ght(!lly. "E,#ept (or some o*er1=ealo!s engineers" e*erybody ma-es estimates at the range o( o*er eighty per#ent #han#e"" I say. ".hi#h means that (or ea#h and e*ery step o( the pro e#t )e (a#tor in a lot o( sa(ety. Are yo! starting to reali=e"" I as- the #lass" "the e,tent to )hi#h )e do insert sa(ety into o!r pro e#ts0" They all nod" trying to digest it. Mar- ret!rns to his seat" still loo-ing o*er his sho!lder at the probability distrib!tion displayed on the board. I )ait !ntil I/m #on*in#ed that Mar- and the t)o !n(ort!nate st!dents he tripped o*er are o-ay" and start my s!mmary. ".e #on#l!ded that the !n#ertainty e,isting in e*ery pro e#t is the !nderlying main #a!se (or most problems. No) )e see that people are not blind to it and they do add a lot o( sa(ety in their planning. $o yo! agree that )e m!st in*estigate" more deeply" this iss!e o( sa(ety0" &!ll #onsens!s. "Good"" I say. "2o here is yo!r home)or- assignment. Go ba#- to the pro e#t yo! e,amined and pi#-" arbitrarily" at least three di((erent steps (rom that pro e#t. &or ea#h o( the steps yo! sele#ted (ind o!t ho) the time estimate )as arri*ed at. $on/t !st as- the pro e#t leader. &ind o!t )ho ga*e him or her the estimate and inter*ie) the so!r#e." Ted raises his hand in apparent dis#om(ort. ".hat/s the matter" Ted0" "It/s not so simple." 81

L.hy0< Ted is still loo-ing (or )ords )hen Charlie ans)ers" "4e#a!se" many times a step appearing on the #hart o( the pro e#t leader a#t!ally represents many tas-s done by many di((erent people." "2e*eral people are in*ol*ed in generating the time estimate (or e*en one step in the pro e#t"" 4rian elaborates. "2o yo!/ll ha*e to do some digging"" I #yni#ally say. "2ome digging"" Ted e#hoes. ".hat an !nderstatement. It/s a lot o( )or-." "And most o( it is not do#!mented any)here"" 4rian #ontin!es to e,press his #on#erns. "I )onder i( people )ill remember ho) they deri*ed the original estimates." "3o!/ll ha*e to do yo!r best"" I reply. "Remember" )e !st #on#l!ded that it/s *ital (or !s to gain a better !nderstanding o( this iss!e o( the sa(ety embedded in the planning o( a pro e#t. I #an tell yo! that *ery little e,ists in the literat!re abo!t this topi#. I( )e )ant to ma-e any head)ay" )e/ll ha*e to dig !p the data o!rsel*es. There is no other #hoi#e." "It/s a lot o( )or-"" Ted is *o#al. ".e #an/t do it (or ne,t session." I try to arg!e" b!t there is little yo! #an do against a !ni(ied #lass. It/s a problem. I/ll ha*e to de*iate (rom the se+!en#e I had planned to (ollo). 'n se#ond tho!ght" it )on/t be too disr!pti*e. I #an de*ote the ne,t session to the s!b e#t o( %ERT and #riti#al path. .e #ompromise" and agree that they )ill s!bmit the assignment the session a(ter ne,t. At least they promise to do an in1depth ob. Mar-" R!th and &red are sitting in their tiny o((i#e" reading ea#h other/s reports. Mar- is the (irst one to (inish. He )aits patiently (or the others. He spea-s only a(ter &red p!ts his papers on the table. ".hat do yo! thin-0" "It seems"" R!th slo)ly says" "that )hat )e ha*e (o!nd s!pports )hat )e/*e learned in #lass. %eople do gi*e their /realisti# estimates/ a##ording to their )orst" past e,perien#e." "That/s )hat it loo-s li-e"" Mar- agrees. "E,#ept (or one o*er1#on(ident indi*id!al. In all other #ases" I )o!ld say that people tend to gi*e estimates that #o*er their b!tts. Maybe $r. 2il*er is right" maybe there is a lot o( sa(ety. And i( soA" ".ait"" &red interr!pts him. "That is the impression )e got by tal-ing to the engineers." "And e*en more so to the p!r#hasing department"" Mar- m!st add. "$o yo! really belie*e that it ta-es se*en )ee-s to get a lo!sy #onne#tor0" "I agree. 4!t I thin- that yo! are o*erloo-ing something." &red r!ns his (ingers thro!gh his thi#- bla#- hair. They )ait (or him to #ontin!e. "In some o( o!r #ases" the )or- is already #ompleted. And yo! -no) )hat0 The original estimates )ere not (ar o((. '!t o( the (o!r I #he#-ed" in one #ase the )or- )as reported #omplete ahead o( time. In t)o it )as on time" and in one it )as )ay o((. In any #ase" I didn/t see this /t)o h!ndred per#ent pl!s/ sa(ety." "Maybe time estimates are a sel(1(!l(illing prophesy0" R!th spe#!lates. ".hat do yo! mean0" Mar- is p!==led. "Remember )hat )e learned in prod!#tion0" R!th as-s. "R!th"" Mar- ans)ers desperately" "sin#e )e got this lo!sy assignment )e/*e learned so many things abo!t so many s!b e#ts. Can yo! be a bit more spe#i(i#0" ".e sa) the same phenomenon in prod!#tion." 2ighing" Mar- begs" "4e m!#h more spe#i(i#." "Remember that tall" material manager" the one )ith the beard0" "2te*e0 The #reep yo! had a #r!sh on0 '( #o!rse I remember. Ho) #an )e (orget0" &red teases her. "I didn/t ha*e a #r!sh on him. 4esides" he is married." 2he t!rns ba#- to the s!b e#t. "2te*e told !s that his plant got too many #omplaints abo!t late deli*eries> they had lo!sy d!e1date per(orman#e. 2o they started to promise their #lients three )ee-s deli*ery time instead o( t)o. That ga*e him the ability to release the )or- a )ee- earlier." "And nothing #hanged"" Mar- re#alls. "They #ontin!ed to s!((er (rom the same lo!sy d!e1date per(orman#e." "They said the )or- )o!ld ta-e t)o )ee-s" it too- t)o )ee-s pl!s. They added more sa(ety time" and said that it )o!ld ta-e three )ee-s" it too- three )ee-s pl!s. A sel(1(!l(illing prophesy"" R!th s!mmari=es. "3es" b!t that/s be#a!se prod!#tion is di((erent"" &red arg!es. "In prod!#tion" most o( the time parts spend in the plant they are )aiting in +!e!es in (ront o( ma#hines" or )aiting (or another part in (ront o( assembly. Most o( the lead time is not a#t!al prod!#tion" it/s in )ait and +!e!e. That/s not the #ase in pro e#ts." "And i( $r. 2il*er is right" and ea#h step in a pro e#t #ontains so m!#h sa(ety0 .hat then0 Then in pro e#ts also most o( the lead time is )ait and +!e!e." "R!th. &red. Calm do)n. Let/s thin-." Another hal( an ho!r o( stormy debate doesn/t lead them to any #on#l!sions. "Can )e #on#l!de"" Mar- tries to p!t an end to it" "that it loo-s promising b!t )e don/t ha*e eno!gh to t!rn it into any pra#ti#al line o( a#tion0" 88

"No"" says &red. "I don/t thin- that o!r (indings #on(irm that there is a lot o( sa(ety." 4e(ore the debate starts again (rom s#rat#h" Mar- s!ggests a #ompromise" "Let/s gather m!#h more data." R!th doesn/t agree. ".hat/s the point"" she says. ".e don/t ha*e to assemble more data" it )ill not help !s (ig!re o!t )hy )e ha*e a sel(1(!l(illing prophesy. .e ha*e to thin-." "&ine"" Mar- smiles. "3o!/ll thin-" )e/ll assemble more data." "I( in some mysterio!s )ay yo!r data pro*es that there is not so m!#h sa(ety" I/ll ne*er (orgi*e yo!"" she )arns them. ".hy is it so important to yo! to be right0" &red as-s. "B!st be#a!se I teased yo! abo!t 2te*e0" "&orget 2te*e" I ha*e a m!#h better reason. There m!st be a lot o( sa(ety or )e don/t stand a #han#e o( rea#hing the pot o( gold. Ten tho!sand shares. I )ant them." "Me" too." &red smiles. "4!t I/ll bet on o!r /aro!nd the #lo#-/ idea to e*ent!ally lead !s there." "&orget it. .ith the in(lated egos o( o!r engineers" it )ill ne*er )or-." "Maybe )e/ll (ind a )ay"" &red says" b!t e*en he doesn/t seem to ha*e m!#h hope. "$r. 2il*er/s sa(ety is m!#h more promising." R!th stands (irm. Mar- doesn/t ta-e sides. "2ho!ld )e report to Isaa# Le*y that maybe another a*en!e is starting to open !p0" he as-s. "Too early"" is R!th/s opinion. "M!#h too early." &red is (irm.

8?

Chapter E
.hen Chris is sho)n in" 4.B. is behind her des-. He p!ts her memo in (ront o( her and sits do)n" not saying a )ord. 4.B. pi#-s !p her memo and pretends to read it" slo)ly. ".ell0" she says at last. "It/s totally !na##eptable6" Christopher %age de#lares. ".hy0 3o!r b!dget )as appro*ed based on a (ore#ast. The (ore#ast pro*ed to be e,aggerated by o*er three h!ndred st!dents." 2he is (irm. ".hat/s so strange abo!t trimming the b!dget a##ording to a#t!al registrations0" "That/s not the )ay to r!n a b!siness s#hool"" he states" ma-ing a #onsiderable e((ort to #ontrol his (r!stration. ".e are not a mom and pop gro#ery store. .e #annot and sho!ld not #hange )ith e*ery small (l!#t!ation. .e ha*e to )or- a##ording to a long1term strategy." ".hat long1term strategy0" 4.B. so(tly in+!ires. That thro)s him o(( balan#e. There is no strategy" !nless one #alls the tradition o( in#reasing the b!dget by (i(teen per#ent ea#h year a strategy. 'n the other hand" he doesn/t )ant to #ontin!e the debate abo!t the (!t!re o( the b!siness s#hool at this meeting. "Chris" the b!siness s#hool m!st trim the b!dget a##ording to a#t!al registrations"" she repeats. "It/s impra#ti#al and yo! -no) it"" he ans)ers impatiently. "The (a#t that there are (e)er st!dents per #o!rse does not red!#e the #ost o( gi*ing the #lass." ".e #an red!#e the n!mber o( #o!rses"" she insists. "Too late"" he says" #ategori#ally. "No" it/s not"" she is as (irm. "In the last t)o years the s#hool has in#reased the n!mber o( ele#ti*e #o!rses by o*er (i(ty per#ent. 3o! don/t ha*e to )ait (or ne,t year" yo! #an trim some ne,t semester." "It )ill be an administrati*e nightmare"" he ob e#ts. Ignoring him" she sails on. "And in so many re+!ired #o!rses yo! are r!nning t)o or e*en three parallel #lasses. Merge them. .e #an do )ith (e)er ad !n#t pro(essors." T)enty min!tes later" de(eated" %age retreats (rom 4.B./s o((i#e. 2he is not happy" either. 2he -no)s she )on !st a battle. The b!siness s#hool/s #ommittees are still pro#essing re#ommendations (or ten!re and are still a#ti*ely p!rs!ing donations (or another b!ilding. 2he has no do!bt that i( she thro)s her )eight aro!nd she #an blo#- them. 4.B. ma-es !p her mind. 2he presses the inter#om. "%lease get me 4ernard Goldsmith"" she re+!ests o( her se#retary. 4ernard pi#-ed 4.B. !p at the airport. .hen they rea#hed his #ar" 4.B. said" "Let/s not go any)here" !st dri*e." He is not s!rprised. They had dis#!ssed it be(ore. A #ar is one o( the (e) pla#es they #an ha*e a dis#!ssion )itho!t being interr!pted. T)o min!tes later they are on the high)ay heading a)ay (rom to)n. The tra((i# is light. "4ernie" I don/t -no) )hat to do"" 4.B. almost )hispers. 4ernard has -no)n her (or a long time. He -no)s that he doesn/t ha*e to help this strong and sharp )oman to #lari(y her dilemma. 2he )o!ldn/t tal-" not e*en to him" be(ore she *erbali=ed it #learly to hersel(. 2he #ame to him to try and (ind an ans)er. 2o he patiently )aits (or her to #ontin!e. He has to )ait (or +!ite some time. "Remember o!r last #on*ersation" in .ashington0" "The drop in appli#ants (or o!r b!siness s#hools"" he says" demonstrating that he remembers. '( #o!rse he does. 4eing the president o( a !ni*ersity" )hi#h has a large b!siness s#hool" 4ernard is nat!rally interested in the s!b e#t. Not !st interested" #on#erned. He )as #on#erned be(ore the dinner dis#!ssion in .ashington. The dis#!ssion intensi(ied his #on#erns" b!t day1to1day responsibilities distra#ted him. 4.B./s phone #all bro!ght it all ba#-. "I thin- that at the gathering in .ashington )e didn/t analy=e the problem #orre#tly. It/s m!#h )orse than )e s!spe#ted"" 4.B. #ategori#ally states. Regarding 4.B. as one o( the most (or)ard thin-ers in his pro(ession" her last senten#e really )orries him. An,io!sly he )aits (or her to e,plain. ".e )ere #on#erned abo!t a potential" grad!al de#line in enrollments at o!r b!siness s#hools"" 4.B. starts her e,planation (rom the *ery beginning. "In .ashington" )e said that it )as be#a!se the b!siness s#hools/ #apa#ity gre)" and #ontin!ed to gro)" beyond the mar-et need (or M4As." ".e also said it might be that the )ord is o!t that an M4A degree doesn/t g!arantee a l!#rati*e ob anymore"" 4ernard adds. "Corre#t. And sin#e then I/*e #ond!#ted a large s!r*ey that *eri(ies it." "Can I ha*e a #opy0" 8@

"Certainly. 4!t 4ernard" I/m a(raid that )e had a #on#ept!al mista-e in o!r e,planation. Cons#io!sly" or s!b#ons#io!sly" )e )ere e,trapolating (rom the drop that happened in registrations to the la) s#hools. The symptoms are the same" b!t I/m a(raid that the #a!ses are *astly di((erent." 2he pa!ses be(ore she #ontin!es. "In la) s#hools they are going thro!gh the normal ad !stment bet)een demand and s!pply. Their problem is that they o*er1s!pplied the mar-et needs." "'*er1s!pply is an !nderstatement. .ho needs so many la)yers0" 2he ignores his remar-. "That is not the #ase (or b!siness. .e are not e*en #oming #lose to s!pplying the mar-et needs. '*ers!pply #annot possibly be the #a!se." "Ho) do yo! -no)0" "E*erybody -no)s that there is a big short(all o( +!ali(ied managers. Co!ldn/t yo! !se some in yo!r organi=ation0" "I( I #o!ld get rid o( some o( my inept b!((oons" I de(initely #o!ld." 2he smiles. "'h" 4ernie" it/s so good to be )ith yo!." "I )ill not say /same here/ !ntil yo! tell me the ans)er." "The ans)er (or )hat0" "I( )e aren/t o*er1s!pplying the mar-et demand" )hy ha*e )e started seeing the same symptoms0" 4.B. be#omes tense again. "I didn/t say that )e aren/t o*ers!pplying the mar-et demand" I said that )e are not e*en #lose to s!pplying the mar-ets/ needs." "Ha*e mer#y on me" stop tal-ing in riddles" I/m !st a simple !ni*ersity president"" 4ernard o-ingly begs. "4ernie" )hen are )e going to open o!r eyes0" she +!ietly says. "%lease open them (or me"" he re+!ests sar#asti#ally. 4.B. doesn/t respond. 2he (eels sad. It/s so ob*io!s" it/s )ritten on all the )alls" it hit them in the (a#e" b!t e*en 4ernie doesn/t )ant to (a#e the ob*io!s. .hy impose it on him. He stro-es her hand. "%lease." His *oi#e #ontains only gen!ine interest. .ell" it too- her a *ery long time to (a#e it" too. In a li(eless tone she starts to e,plain. ".hat la) st!dents get in la) s#hools is not !st a pie#e o( paper b!t essential -no)ledge. $o yo! -no) o( a single person )ho thin-s that one #an be#ome a good la)yer )itho!t st!dying0" "I -no) people (or )hom the only good la)yer is a dead one"" he tries to #heer her !p. "4!t I see )hat yo! mean. Almost nobody )ill #laim that yo! #an/t be#ome a good manager )itho!t (irst ha*ing an M4A. 3o! and I don/t ha*e M4As and )e manage large organi=ations." "In the last (e) )ee-s I/*e !sed e*ery opport!nity to #he#- the opinion o( managers abo!t the *alidity o( o!r tea#hing. 4ernie" it/s horrible. There is )idespread a)areness that it/s basi#ally !seless." "Aren/t yo! e,aggerating0" At any other time s!#h a #omment )o!ld trigger some harsh response (rom 4.B. Any other time 4ernard )o!ld not thin- o( ma-ing s!#h a #omment. "2ome managers told me that they are disill!sioned to the e,tent that they are no longer loo-ing (or yo!ng" bright M4As. 'thers told me that they e*en dis#o!rage their people (rom registering (or an M4A program." 4ernard had s!((i#ient time to relate her message to his e,perien#e. It mat#hed. 2lo)ly" he says" ".hat yo! are #laiming is that )e are b!ilding o!r grand #astles on +!i#-sand." "Let/s (a#e it" 4ernie. .e don/t deli*er and the mar-et" to a large e,tent" already -no)s it." They dri*e in silen#e (or a )hile. 4ernie tries to digest. "4!t 4.B." it #an/t be. I( yo! are right" nobody )o!ld ha*e registered. .e #harge tens o( tho!sands o( dollars" they spend years o( their li*es" and )e don/t deli*er anything o( *al!e0 I( that )ere tr!e they )o!ld ha*e thro)n stones at !s. No" 4.B." yo! m!st be )rong." "4ernie" )hat do yo! )ant0 3o! )ant me to say that I/m )rong0 3o! )ant to #on*in#e yo!rsel( that I/m !st an hysteri#al )oman )ho is absol!tely )rong0 4!t 4ernard" )hat (or0 It does not #hange the (a#ts." At last she rea#hed him. He #annot regard it any longer as a #on#ern" as another item on the agenda. He -no)s she is right. Almost none o( his (riends #onsider an M4A important. He himsel(" )hen hiring managers" doesn/t #onsider it as rele*ant anymore. 2tillA "4.B." ans)er me !st that. .hat is sa*ing !s (rom tar and (eathers0" "The respe#t (or higher ed!#ation"" she ans)ers in a li(eless *oi#e. "Respe#t that is )ell1deser*ed by some o( o!r departments b!t not by others." It ma-es sense to him. His mind is ra#ing no)" trying to see the rami(i#ations. ".hen organi=ations o*er#ome the respe#t (or a !ni*ersity degree the real #ollapse )ill happen. I )onder ho) many b!siness s#hools )ill s!r*i*e then. 4.B." )e m!st do something abo!t it. .e m!st sa*e o!r b!siness s#hools. They amo!nt to hal( the !ni*ersity." "There is nothing to do"" 4.B. says (latly. "Management is an art and )e try to tea#h it as i( it is a s#ien#e. It #annot )or-" it doesn/t )or-" and it )ill ne*er )or-."

8C

"I don/t agree"" 4ernard is adamant. "It/s not art. 'rgani=ations ha*e pro#ed!res. They operate thro!gh de(ined str!#t!res. They instit!te r!les. Management is not based !st on impressions and int!ition. In organi=ations many things #an e*en be meas!red by n!mbers." 2he thin-s abo!t it. "3o! may be right"" she says" not )illing to arg!e. "$o yo! really thin- that" in its #!rrent state" management is li-e an a##!rate s#ien#e0" "I( it )ere" )e )o!ldn/t (a#e the problem"" he agrees. "$o yo! also agree that )e sho!ld not #o!nt on a mira#le0 That )e sho!ld not beha*e as i( )e e,pe#t b!siness -no)1ho) to be t!rned into s#ien#e in the near (!t!re0" 2he doesn/t )ait (or him to agree. "2o one thing is #lear. .e #annot sit aro!nd" doing nothing" )aiting (or the !na*oidable #ollapse o( o!r b!siness s#hools. 4ernard" )e m!st mo*e. It/s o!r responsibility." ".hat do yo! s!ggest )e do0" He spea-s so so(tly she barely hears him. "There is only one thing that )e #an and m!st do. .e m!st start to pr!dently shrin- o!r b!siness s#hools." &or another three miles no one says a )ord. 4ernard thin-s abo!t )hat it means. 4.B. does the same. "4.B." I m!st bitterly than- yo!" b!t yo! didn/t (ly here !st to open my eyes. 3o! ha*e a problem. .hat is it0" "4ernie" I/m not !p to it"" she #on(esses. "I (o!ght to be#ome the president o( a !ni*ersity in order to b!ild. To b!ild a pla#e (or yo!ng and not1so1yo!ng people to gro). No) I -no) I m!st slash" that/s the only )ay" still I #annot bring mysel( to be a b!t#her." "I !nderstand"" he +!ietly says. "4!t 4.B." no) )e both -no) )hat )ill happen i( )e #ontin!e to re(!se to address the iss!e. The b!siness s#hools )ill t!mble any)ay" and i( )e don/t start to trim no)" the tra!ma )ill be m!#h bigger. The b!siness s#hools might ta-e do)n other departments )ith them. .e ha*e responsibility (or h!ndreds" (or tho!sands o( people." "I -no). 4elie*e me" I -no). 4!t 4ernie" I #annot do it. Not e*en the (irst step. I tried to bring mysel( to stop granting ten!re. '!r b!siness s#hool +!ali(ied eight #andidates. I read their (iles. Not m!#h is there" b!t (rom the little there is yo! #an see ho) hard they had to )or- (or it. Ho) many years they de*oted. I #an pi#t!re their (amilies. I #an pi#t!re ho) it )ill r!in them. "$on/t mis!nderstand me"" she adds. "I don/t ha*e any problem getting rid o( a person )ho is not #arrying his )eight. Nobody )ill a##!se me o( being so(thearted" b!t these people deser*e better. They are good" bright" hard1)or-ing people." ".hen yo! are in #harge o( an omelet yo! ha*e to brea- eggs." "Let somebody else brea- people"" she says bitterly. "I/m thin-ing o( resigning." 4.B. is not a person to say s!#h a thing lightly. .ith e((ort" he restrains himsel( (rom re(erring to her sho#-ing statement and says" "3o! don/t brea- them. 3o! do them a big (a*or." 2he almost #ho-es. "Listen to me"" he #ontin!es in a harsh *oi#e. "Let them get o!t no). They are yo!ng. They are bright. They )ill #ar*e themsel*es a good ni#he. E*ery year that yo! allo) them to stay diminishes their #han#es. The mar-et )ill be less appre#iati*e o( their -no)ledge and they )ill be less able to adapt." 2he doesn/t ans)er. &i*e min!tes later" she p!ts her hand on his. "Can yo! please ret!rn to the airport0 I #an still #at#h the si, o/#lo#- (light." They dri*e in silen#e. .hen she lea*es" she -isses him on the #hee-" "4ernie" yo! are a good (riend."

89

Chapter G
There/s a -no#- on my door. I raise my eyes (rom my )or- and see Bim already #oming in )ith a sta#- o( papers in his hand. "It/s bea!ti(!l"" he says" and drops them on my des-. ".ith yo!r t)enty1si, #ases on top o( the ones I/*e gotten in the past t)o years" )e no) ha*e plenty (or a good arti#le." He p!lls !p a #hair. "Here are my s!ggestions (or the *ario!s se#tions." He th!mbs thro!gh the pile and at last hands me a hand)ritten page. I/m an e,pert at de#iphering Bim/s hand)riting" b!t this one is stret#hing the limit. "'*erd!e and o*err!ns"" I (inally g!ess the (irst s!btitle. "Ri#-" there is a lot o( resear#h p!blished on the s!b e#t" and (or most o( o!r #ases )e don/t ha*e the e,a#t n!mbers. 2o" )hat I s!ggest is that yo! assemble the most appropriate re(eren#es and )e/ll report that o!r (indings #on(irm the pre*io!s resear#h." 2o (ar it translates into a minim!m o( t)o boring days in the library" I note to mysel(" )ondering )hat is still to #ome. "The emphasis sho!ld be on #ategori=ing the o((i#ial and the !no((i#ial reasons (or the sna(!s"" he #ontin!es. "I/*e s#ribbled a list o( se#tions. &eel (ree to add." 2o these serpents are the se#tions. I hand him ba#- his page" saying" "It/s better i( )e dis#!ss ea#h one o( them." A(ter abo!t t)enty min!tes I ha*e the (!ll list. I estimate that there are abo!t se*enty reports in the pile. Ho) m!#h time )ill it ta-e me to go o*er all the reports" doing s!#h an elaborate #ontent analysis0 A lot. It/s boring )or-" b!t I ha*e to do it. I #an/t gi*e it to one o( Bim/s %h.$. st!dents. 4!t that )as the deal. I tea#h the #o!rse and I do the dirty )or-. Then I ha*e the honor o( )riting the (irst dra(t o( the arti#le and the se#ond and the . . . And on ea#h dra(t Bim/s name )ill appear be(ore mine. I/d better not thin- this )ay. It/s a#t!ally his #o!rse and his idea" and I do need to p!blish arti#les. I m!st stop these negati*e tho!ghts and be than-(!l (or the opport!nity. I tell him abo!t the pattern the #lass dis#o*ered: the lo)er the position o( the manager the more the (inger points not !st o!tside the #ompany b!t inside as )ell. "Interesting"" he #omments. He thin-s (or a little )hile and then grabs the pile and starts going thro!gh it. I t!rn ba#- to my )or-. At least ten min!tes go by. Bim p!ts the pile do)n and starts to pa#e the room. "Interesting"" he (inally says. I re(rain (rom #ommenting that he had the same opinion (i(teen min!tes ago. "Ri#-" I thin- that )e sho!ld ma-e this *ery interesting (inding the #enter o( the arti#le. '!r #ases #ertainly ba#- it !p. &orty1(o!r di((erent organi=ations" ranging (rom non1pro(it ser*i#e organi=ations to ind!stry> se*enty1eight di((erent pro e#ts" anging (rom less than thirty tho!sand dollars to o*er three h!ndred million" and the same pattern appears in almost all o( them. Ri#-" it/s great6 At last )e ha*e something important aro!nd )hi#h to #enter this impressi*e" in1depth s!r*ey. .e sho!ld e*en #hoose the title in a##ordan#e." Ma-ing so m!#h (!ss abo!t s!#h a min!te point. 4!t he is the e,pert on ho) to dress !p an arti#le" so I/m not abo!t to arg!e. 2tillA "Bim"" I hesitantly start" "there is something else I/*e noti#ed" going thro!gh the reports." I ri(le thro!gh the pile trying to (ind &red/s pages. ".here is it0" As Bim is abo!t to lose his patien#e" I (ind it and hand it o*er. "Read the (inan#ial stat!s." He lo#ates it +!i#-ly. "'-ay. /$!e to b!dget o*err!ns Jsi,teen point t)o per#entK and delays in prod!#tion" the original estimate o( three years payba#- is no) modi(ied to (i*e./ Typi#al. .hat/s yo!r point0" "The b!dget o*err!n" being only si,teen point t)o per#ent" #annot possibly #hange the original estimate (or the payba#period by more than hal( a year." "2o0< "4!t they had to in#rease the estimated payba#- period (rom three years to (i*e. 4y the )ay" the person )riting it is a pro e#t a!ditor and he #laims that his (riends are already p!shing to #hange the o((i#ial estimate to se*en years." Bim still doesn/t get it. It/s not li-e him. %atiently" I #ontin!e" "I( the b!dget o*err!n #an/t possibly #a!se s!#h a #hange in the payba#- period" it m!st be #a!sed mainly by the delays in #ompleting the pro e#t." "2o it seems." He starts to pa#e again. "2o it seems"" he repeats. "Let me see. .hat yo! #laim is that the ma or" negati*e (inan#ial rami(i#ation does not stem (rom spending too m!#h money." "&inan#ially" the o*err!ns are m!#h less important than the o*erd!e"" I stress. "In this parti#!lar #ase yo! are right." "I (o!nd it in si, more #ases."

8E

".hat abo!t all the others0" Bim isn/t o*erly enth!sed. "I don/t -no)"" I admit. "As yo! said" (or many #ases )e don/t ha*e the n!mbers (or the o*err!ns and o*erd!es" not to mention the payba#- period." "%ity"" he says" and p!ts ba#- &red/s report. "It #o!ld be an interesting addition" b!t ne*er mind" )e ha*e eno!gh." "Bim" (orget the arti#le (or a min!te. I thin- that it is an important point. Important eno!gh to highlight it to the st!dents." "%e#!liar maybe. 4!t important0 In )hat )ay0" "In the same report"" I don/t gi*e !p" "it/s indi#ated that they #hose the #heap *endors o*er the more reliable ones. Ho) m!#h do yo! thin- they sa*ed0" "Ho) do I -no)0 Maybe (i*e per#ent. Can/t be m!#h more." "3o! #an also see"" I #ontin!e" "that delays in getting the ma#hines (rom those *endors )as the prime reason (or the delay in #ompleting the pro e#t." "I see )hat yo! mean." He pi#-s !p &red/s report again and loo-s at it intently. &inally" he says" "2o they sa*ed abo!t (i*e per#ent on the ma#hines" )hi#h is" probably" less than three per#ent o( the total in*estment in the pro e#t." 5ery slo)ly he #ontin!es" "And this sa*ings #a!sed them to t!rn a three1year payba#- pro e#t intoA" He stops. "2a*ing a miserable three per#ent #a!sed them to t!rn a *ery good pro e#t into a loser"" I s!mmari=e. "Ri#-" #alm do)n. .e ha*e made a lot o( ass!mptions. It/s not so simple." I don/t -no) )hat he is tal-ing abo!t. The e((e#t is #lear. Companies are so immersed in the mentality o( sa*ing money that they (orget that the )hole intention o( a pro e#t is not to sa*e money n!t to ma-e money. '!t lo!d I say" "It/s a simple (a#t that they try to #!t the b!dget by a (e) per#ent and #a!se the payba#- period to do!ble." "3es" I gi*e yo! that" b!t it/s not so simple. .e ha*e to ass!me a distrib!tion o( in*estment thro!gho!t the li(etime o( the pro e#t. Then )e ha*e to ass!me another distrib!tion o( net in#ome (rom the res!lt o( the pro e#t" the pro(it o( the Malaysian plant in this #ase. .e sho!ld also (a#tor in interest and in(lation. $epre#iation o( the ma#hines and the li(etime o( the prod!#ts that the plant in Malaysia prod!#es. The mathemati#al modeling )ill be +!ite in*ol*ed." He raises his hand to stop me (rom replying. Then he sits do)n and says" "Tell yo! )hat. It/s a good idea. Too good to let it pass )itho!t #he#-ing. &ind o!t )hat is already p!blished on that s!b e#t and i( )e #an (ind a #ra#- I/ll pers!ade Bohnny to do the mathemati#al )or-. 3o! -no) ho) good he is at that. It might )or-. 3es" it might." "$on/t yo! thin- that )e sho!ld add it to the s!r*ey arti#le0 It )ill enable !s to s!pport the mathemati#al model )ith some real1li(e e,amples." ".e don/t ha*e to #ombine the t)o things into one arti#le in order to s!pport the model )ith #ase st!dies. As a matter o( (a#t" I #an ma-e some telephone #alls to my st!dents (rom last year and yo! #an as- yo!r st!dents. Maybe )e #an gather eno!gh o( the missing data to )rite a third arti#le." I/m !n#om(ortable )ith it. It sho)s" be#a!se Bim b!rsts o!t la!ghing. "Ri#-" Ri#-" )hen are yo! going to gro) !p0 Boin the real )orld0 3o! ne*er #ombine t)o arti#les into one> yo! al)ays try to t!rn t)o into more." He #omes aro!nd to pat me on the ba#-. "'ne day )e/ll ma-e a mens#h o!t o( yo!"" and he heads o!t. As he opens the door to lea*e he as-s" "$id the #lass rebel be#a!se o( the home)or- assignment yo! ga*e them0" "Almost"" I smile. "It )ill be another e,#ellent arti#le. .e are #oo-ing." And )ith those )ords o( )isdom" he lea*es my room. "Bim" )ait a min!te. Bim." He doesn/t hear. I h!rry a(ter him" #at#h him near the ele*ators Jit/s ama=ing ho) (ast he )al-sK" ta-e him aside" and as- the +!estion that has bothered me sin#e my last brie( dis#!ssion )ith Miriam. "I heard there are some r!mors abo!t a b!dget #!t"" I/m #are(!l not to re*eal my so!r#e. "$o yo! thin- it might eopardi=e my #han#es o( getting ten!re0" "$on/t )orry" Ri#-." "4!t" I am. 3o! -no) ho) important it is to me. I/ll ne*er get a third #han#e." "Ri#hard" it/s o-ay6 3o!/ll get yo!r ten!re. 3o! earned it (air and s+!are. E*erybody thin-s so. I personally #he#-ed )ith e*erybody on the #ommittee. It/s not the ten!re that sho!ld bother yo!" it/s the promotion to (!ll pro(essor. 3o! are )ay behind on p!bli#ations. 2o )ill yo! start to #on#entrate on )hat #o!nts0 .or- on those arti#les. They are yo!r (!t!re." "And )hat abo!t the b!dget #!ts0" "Rela,. There are some games bet)een 4.B. and the dean. High politi#s. 4!t" I ass!re yo!" it has nothing to do )ith yo!." And he disappears into the ele*ator.

8G

Chapter H
"Ho) many o( yo! are (amiliar )ith %ERT and Gantt te#hni+!es0" Almost e*erybody raises their hand. ".hat do yo! mean by /(amiliar/0" R!th as-s. &or la#- o( a better ans)er I say" "Good )or-ing -no)ledge." "Then" I/m a(raid" I/m not (amiliar." "R!th" I don/t mean that yo! did a %h.$. dissertation on it. Ha*e yo! e*er #ome a#ross a Gantt #hart0" "3es" more than on#e. 2till a brie( re*ie) )o!ld be help(!l." &rom the loo- on the other st!dents/ (ares" I se# that R!th is not the only one )ho )o!ld li-e a re*ie). &ran-ly" I didn/t e,pe#t this> they sho!ld ha*e learned the basi#s in !ndergrad!ate #o!rses. I ha*e s!#h a good #olle#tion o( real #harts" )ith )hi#h I #o!ld demonstrate e*ery possible #on(ig!ration. It/s a pity I don/t ha*e them )ith me. 2ho!ld I go to my o((i#e to (et#h them0 It/s a )aste o( *al!able time. I/ll impro*ise. No big deal. "Let/s ta-e a *ery simple e,ample" !st eno!gh to demonstrate the #on#epts." "Good"" R!th remar-s. They all la!gh> no st!dent li-es #ompli#ated e,amples. Me either. "2!ppose"" I start" still not s!re o( the e,ample I/m going to pi#-" "the pro e#t is to... to b!ild a plant. .e need to b!ild the b!ilding and then to ma-e it (!n#tional." 4e(ore R!th as-s me to de(ine "(!n#tional"" I #ontin!e" "To install the ele#tri#ity lines" the )ater and #ompressed air pipes" et #etera. .e also need to sele#t and #ontra#t the *ario!s *endors to b!ild o!r ma#hines" and allo) the *endors eno!gh time to b!ild them. 'n#e the b!ilding and the ma#hines are ready" )e #an install the ma#hines. The plant is no) ready." "Not !ntil yo!/*e hired and trained the people"" &red m!st remind !s. ".hat/s yo!r point0" Ted is less polite than I )o!ld ha*e been. "%lenty o( other details are not mentioned here" either." "Let/s -eep the e,ample simple"" I tell &red" and in*ite him to #ome to the board and dra) the rele*ant %ERT #hart. Con(idently he #omes to the (ront. It ta-es him less than t)o min!tes to dra) the diagram. "Can yo! in*ent some time estimates (or the *ario!s steps0" I as- him. ".ith pleas!re." 4eing a (inan#ial manager he #annot stop himsel( (rom as-ing" "$o yo! also )ant estimates o( in*estments0" "No need."

I )ait !ntil he (inishes and ret!rns to his seat. "A##ording to the n!mbers that &red pi#-ed" it )ill ta-e ninety days to b!ild the b!ilding and thirty days to ma-e it (!n#tional. A total o( one h!ndred t)enty days." "&red" )here did yo! get s!#h !nrealisti# n!mbers"" Ted sho!ts. "'!t o( thin air"" &red #almly ans)ers. I ignore them both and #ontin!e. "To pi#- the *endors ta-es (i(teen days." "'nly in &red/s dreams." I gi*e Ted a loo-. He signals" "2orry." I (inish my senten#e" "And the time it )ill ta-e them to s!pply is another ninety days. The installation o( ma#hines ta-es an additional thirty days. .hat is the #riti#al path0" "The b!ilding." Ted is *ery *o#al today. ".hy0< "4e#a!se" a##ording to &red/s ridi#!lo!s n!mbers" it ta-es one h!ndred t)enty days to prepare the b!ilding )hile the ma#hines are ready in one h!ndred (i*e days."

8H

"3o! are too hasty"" I tell him. "Criti#al path is de(ined as the longest #hain o( dependent steps. Longest in time" o( #o!rse." "I -no)"" he impatiently says. Then more slo)ly" "The #riti#al path is the path thro!gh the steps o( b!ilding the b!ilding" ma-ing it (!n#tional and installing the ma#hines in it. A total o( one h!ndred (i(ty days." "The #riti#al path"" I remind the #lass" "determines the time it )ill ta-e to (inish the pro e#t. Any delay on the #riti#al path )ill delay the #ompletion o( the pro e#t. That/s )hy the pro e#t manager m!st (o#!s on it." Nobody has a problem )ith )hat I/*e said. No )onder" #onsidering their e,perien#e in pro e#ts. "I( )e #all the time )e start the #riti#al path /time =ero"/ the pro e#t is planned to be (inished at time one h!ndred and (i(ty. .hen sho!ld )e start the other path0 .hen sho!ld )e start pi#-ing the *endors (or the ma#hines0" "There is no r!sh there"" 4rian *ol!nteers an ans)er. ".e #an start pi#-ing the *endors at time (i(teen." ".hat0" Ted e,#laims. I signal Ted to #alm do)n and as- 4rian to #ome to the board and dra) the #orresponding Gantt #hart. He does it )itho!t any di((i#!lty.

"4rian #hose the late start (or pi#-ing the *endors"" I say. "4!t" as )e all heard" Ted probably has another s!ggestion. 4!t Ted" rather than gi*ing !s a )hole spee#h" go to the board and dra) yo!r Gantt #hart." That thro)s him o(( balan#e (or a se#ond" b!t !st (or a se#ond. .hen his #hart is done he t!rns and starts atta#-ing 4rian" "I don/t -no) )hat/s gotten into yo!. 3o! are going to tell me that in the pro e#ts yo! manage yo! really start at the latest possible time0 No )onder yo!r pro e#ts are late. 3o!/*e got spare time" ta-e it6 That/s my motto." "&ine" Ted"" I #alm him do)n. "4!t )ill yo! please go ba#- to yo!r seat so )e all #an see )hat yo! dre)0

"Gantt #harts" !nli-e %ERT diagrams" in*ol*e de#isions"" I highlight to the #lass" "the de#ision o( the planner )hen to start ea#h path. 4rian #hose the late start (or pi#-ing the *endors )hile Ted has #hosen the early start." "'( #o!rse"" Ted almost sho!ts. ".hat/s the point in ta-ing !nne#essary ris-s0" "The point is"" &red inter e#ts" "to postpone the in*estments !ntil they are really ne#essary. $on/t yo! thin- that/s !st as important0" "I/m not s!re"" is Ted/s response" b!t it/s #lear that he is less s!re abo!t his position. "It/s an optimi=ation problem"" 4rian is #on(ident. ".e ha*e to )eigh the sa*ings (rom postponing an in*estment against the #han#e o( damage res!lting (rom (inishing the pro e#t a little late." 'ne thing I passionately hate is optimi=ation problems. There are so many arti#les abo!t these #ases" all )ith in*ol*ed mathemati#al models" all so to!gh and time1#ons!ming to read. And (rom my e,perien#e" all ha*e little pra#ti#al !se. 4!t )hat #an I do> it is an optimi=ation problem.

?;

R!th raises her hand. Here it #omes. No) I/ll be (or#ed to sho) them the e+!ation and ho) to sol*e it. It/s going to be a boring and !seless lesson. '( #o!rse" I don/t remember the mathemati#s by heart. 2ighing" I open my noteboo- and signal R!th to as- her +!estion. To my s!rprise" she starts by saying" "I don/t thin- that it/s !st a (inan#ial #onsideration. It/s m!#h more a management iss!e." "E,plain." I try not to appear p!==led. "In a pro e#t there are many more paths than in o!r simpli(ied e,ample> many more entry steps." "'( #o!rse." "I( )e start all the paths at their earliest start" don/t yo! thin- that the pro e#t leader )ill ha*e too m!#h on her hands0 &rom my e,perien#e"" she adds" "i( I start too many things" I/m bo!nd to lose (o#!s" and losing (o#!s is one thing a pro e#t leader #annot a((ord." I ne*er tho!ght abo!t it this )ay. To gain time I as- the #lass" ".hat do yo! thin-0" "Ma-es sense"" is Charlie/s response. "Ma-es per(e#t sense. In retrospe#t" I thin- R!th p!t her (inger on the biggest mista-e I !s!ally ma-e." The e,pressions on most (a#es indi#ate they agree )ith Charlie. &red maintains his po-er (a#e. ".hat do yo! thin-" &red0" "I thin- that" e,#ept (or #ases )here the in*estment is relati*ely large" R!th/s arg!ment is m!#h more important than the #onsideration o( postponing an in*estment." It ta-es me some time to reali=e that he a#t!ally agrees )ith R!th. Then he e,plains. "I( the pro e#t leader loses (o#!s" the pro e#t is bo!nd to be *ery late. The (inan#ial penalty o( delaying the in#ome (rom the #ompleted pro e#t almost al)ays d)ar(s e*erything else." Nobody arg!es. Not e*en Ted. "5ery ni#e" R!th"" I #ongrat!late her. "It loo-s li-e yo! hit the nail on the head." "I ha*en/t (inished yet"" she de#lines the #ompliment. I )ait (or her to #ontin!e. "Can yo! repeat )hat yo! said abo!t the need to (o#!s on the #riti#al path0" she as-s. I don/t ha*e a #l!e. .hat is she dri*ing at0 4!t I also don/t ha*e any problem repeating mysel(. "The #riti#al path determines )hen the pro e#t )ill be (inished. Any delay on the #riti#al path )ill delay the pro e#t." "I( )e start at the late start" isn/t it tr!e (or all the other paths as )ell0" she slo)ly as-s. I ha*e to thin- it o*er. "I( )e start a path on its late start"" I )onder alo!d" "then that path doesn/t ha*e any time sla#-. .hi#h means that any delay on that path )ill also #a!se a delay in the pro e#t." "E,a#tly"" Ted b!rsts in. "2o i( )e start e*erything on its late start" e*erything be#omes important. And I/ll ha*e to #on#entrate on e*erything. 7iss (o#!sing good1bye." "Con#entrating on e*erything is synonymo!s )ith not #on#entrating at all"" I agree )ith him. "2o )here do )e stand0 I( the pro e#t leaders !se early starts" they )ill lose (o#!s. I( they !se late starts" (o#!sing is not possible at all. .e ha*e to (ind the me#hanism" the r!les" that )ill enable a pro e#t leader to (o#!s." "&o#!sing is important"" says one o( the st!dents" "b!t there are many other things that are !st as important." "May I say something0" &red is pro*o-ed. He stands !p" "In (inan#ial a!diting )e -no) *ery )ell that in pro e#ts" on#e they are appro*ed" there is only one important thing. Not many" !st one. I( the pro e#t manager stays (o#!sed" e*ery problem )ill be sol*ed. I( he isn/t" )e stop e,pe#ting bene(its" )e pray that the losses )ill not be too big." He ma-es his point and sits do)n. "Anybody else )ant to #omment0" "3es"" says Mar-. I gest!re (or him to spea- !p. T)o min!tes ago I )as a(raid that this session )o!ld t!rn o!t to be a boring mathemati#al drag" no) I ha*e an animated dis#!ssion on my hands. It/s good. That/s the )ay ed!#ation sho!ld be. Conne#ted to real li(e. %assionate. Mar- #lears his throat" and starts" "&or those o( yo! )ho don/t int!iti*ely reali=e ho) important (o#!sing is" let me remind yo! that )e -no) that d!ring the pro e#t M!rphy )ill stri-e" and stri-e more than on#e. &rom my e,perien#e" I #an tell yo!" i( the pro e#t leader is not (o#!sed or doesn/t maintain (o#!s" the emergen#ies )ill t!rn the pro e#t into a (ias#o." "Hear" hear." I probably ha*e somebody (rom England in the #lass. "2o )hat are )e s!pposed to do0 Early start" no good. Late start" no good." "Fse middle start0" somebody tries to o-e. ".ell0" I as-" not -no)ing the ans)er. "I said it all along"" Charlie de#lares" and then #lari(ies" "I said that )e need a m!#h better )ay to manage o!r pro e#ts." "That/s )hat )e/re here (or6" Mar-/s deep *oi#e booms. .hat a deep hole I ha*e d!g (or mysel(. Maintaining a straight (a#e" I #almly say" "Maybe )e #an approa#h it (rom another angle0 A proper #ontrol me#hanism sho!ld -eep !s (o#!sed." ?1

E*erybody is +!iet be#a!se nobody" in#l!ding me" !nderstands )hat I a#t!ally said. Not (or long. ".hat do yo! mean by that0" R!th as-s. .hen yo! are in a hole" stop digging" I remind mysel(. I/m abo!t to admit that I/m st!#-" and highlight that it/s not !st me b!t the state o( the e,isting -no)1ho)" )hen I/m sa*ed by the bell. .ell" not e,a#tly a bell" b!t something e*en lo!der. Ted. "It/s ob*io!s6" he sho!ts at R!th. "E*erybody -no)s )hat a #ontrol me#hanism is: it meas!res the progress o( the pro e#t. The problem is"" he t!rns to me" "that by the time the progress report indi#ates something is )rong" it/s !s!ally too late." "3es"" a s-inny st!dent" sitting at the end o( the se#ond ro)" s!pports him. ".hat/s yo!r name0" I as-. "Ah... Tom." 4e(ore he has a #han#e to ret!rn to his #o#oon" I as- him to #lari(y )hy he thin-s that progress reports !s!ally raise the (lag too late. He doesn/t ans)er. &red ans)ers (or him. "A progress report )ill tell yo! that ninety per#ent o( the pro e#t is (inished in one year and then" the remaining ten per#ent ta-es another (!ll year." The #lass b!rsts o!t la!ghing. "It seems li-e yo! all share this e,perien#e )ith &red"" I (inally manage to say. Many heads nod. "In that #ase"" I say" relie*ed" ")e/d better dis#!ss ho) yo! monitor the progress o( yo!r pro e#ts." It/s not long be(ore )e get a good handle on ho) progress is meas!red in reality. Not m!#h di((erent than )hat I (o!nd in the literat!re. %rogress is meas!red a##ording to the amo!nt o( )or-" or in*estment" already done" relati*e to the amo!nt still to do. In all my st!dents/ #ases" in#l!ding the #ases )here milestones and progress payment )ere !sed" this meas!rement did not di((erentiate bet)een )or- done on the #riti#al path and )or- done on other paths. "Can anybody predi#t the impa#t o( meas!ring progress in this )ay0" I as- the #lass. ".e re)ard starting ea#h path at the earliest possible time"" 4rian is +!i#- to noti#e. "This meas!rement en#o!rages the pro e#t leader to start !n(o#!sed." "Moreo*er"" Charlie noti#es" "it en#o!rages the pro e#t leader to #ontin!e being !n(o#!sed." "Ho) #ome0" "4e#a!se a##ording to o!r meas!rement"" he e,plains" "progress on one path #ompensates (or a delay on another. 2o )e en#o!rage progressing (ast on one path e*en tho!gh another path is delayed." ".hat/s bad abo!t that0" Mar- as-s. "I( I ha*e di((i#!lties in one path" )hy sho!ldn/t I mo*e on the other paths )here I #an0" "At the end they all merge together"" Charlie reminds him. "All the ad*an#e that yo! gain in the open paths )ill ha*e to )ait (or the delayed path any)ay. 3o! made the in*estment too early" and )hat is )orse" yo! allo)ed yo!rsel( to not #on#entrate on the pla#e yo! sho!ld" on the delayed path that needs yo!r attention." Mar- doesn/t ans)er. It loo-s li-e he/s doing some so!l1sear#hing. "A shortsighted pro e#t manager"" Charlie/s still tal-ing to him" "#an ignore the paths that are slo)ed do)n by problems" and the meas!rement )ill still indi#ate that the pro e#t is progressing. The pro e#t leader loo-s good. &or a )hile. A long )hile. 'nly )hen the )or- is #omplete on all the other open paths" and only the problemati# path remains" only then )ill the (alla#y start to be re*ealed. Mar-" don/t see this as personal #riti#ism. I do e,a#tly the same thing. 'nly in the last (i(teen min!tes ha*e I be#ome so smart." "Than- yo!"" says Mar-. "4!t I still ha*e to thin- abo!t it." I don/t h!rry to brea- the silen#e. It/s not e*ery day this happens to a pro(essor. 2t!dents learning something *ery important that they #an !se. Learning and a#-no)ledging it. A#t!ally" it/s the (irst time (or me. No )onder I/m slightly irritated )hen &red b!rsts o!t )ith "/No)" I (inally !nderstand." ".hat0" I/m a little too snappy. "No) I !nderstand )hy so many pro e#ts ta-e so long to #omplete their last ten per#ent. It/s be#a!se" in meas!ring progress" )e o*erloo-ed the importan#e o( the #riti#al path. I (o!nd the enemy" it is me. I/m the one )ho prepares all the pro e#t progress reports6" .hat a #lass6 I t!rn into my dri*e)ay and hit the bra-es as (ast and hard as I #an. 2lightly sha-en" I step o!t o( my #ar and #he#- the (ront. I do!bt i( there is eno!gh spa#e to slip a #igarette paper bet)een my #ar and the shiny Che*y 4la=er. It has temporary plates. .hy didn/t B!dith )arn me )e )ere ha*ing g!ests (or dinner0

?8

I )al- aro!nd this magni(i#ent pie#e o( engineering. It/s my dream. A sports1!tility *ehi#le" (o!r1)heel dri*e. A big" roomy" strong #ar. An !nattainable dream" at least (or no). This baby #ost almost as m!#h as my yearly in#ome. I go into the ho!se. No g!ests. B!dith is ta-ing a sho)er. The table is set (or t)o. There are big red #andles on the table. Candles6 I h!rry ba#- to the 4la=er and #he#- the registration in the glo*e #ompartment. .hat am I going to do no)0 It/s gone too (ar6 I go ba#- into the li*ing room and (i, drin-s (or t)o. Then I sit on the #o!#h and )ait. &inally" she #omes do)n. 2he is bea!ti(!l. Ne) hairdo. I/m not s!re abo!t the earrings" b!t I do re#ogni=e the dress. 2he sits near me" ta-es her drin-" and loo-ing at the golden li+!id as-s" "Ho) do yo! li-e yo!r present0" 2o" it/s my present. "$o yo! li-e the #olor0 2il*er is o!r #olor" don/t yo! thin-0" I ta-e another sip. "I -no) ho) m!#h yo! )ant a sports1!tility. It/s abo!t time yo! had a de#ent #ar." "I #o!ld )ait." "3o!r #ar is (alling apart"" she sits hersel( in my lap. It )on/t )or-. Not this time. "B!dith" ho) are )e going to pay (or it0" "Honey" )e/ll manage." 2he br!shes my #hee- )ith her lips. I try to bring her ba#- to reality. ".e #an/t a((ord it"" I say. "'h baby" )e #an." 2he loosens my tie" and )or-s on my shirt b!ttons... "3o!/re getting ten!re and" as yo!/*e told me so many times" it )on/t be long be(ore yo! be#ome a #haired pro(essor." 2he stro-es my #hest. I grab her sho!lders" p!sh her slightly a)ay" and repeat slo)ly" emphasi=ing ea#h )ord" "Right no) )e #annot a((ord to b!y it6" 2he loo-s at me" then she stands !p. "Ri#-" sin#e the day )e got married" I/*e been hearing the same thing. .e #annot a((ord it. .e #annot a((ord it. I #an/t listen to it any longer6 I )aited years (or yo! to (inish yo!r st!dies. I didn/t ma-e a (a#e )hen yo!r (riends made a b!ndle )hile yo! #ontin!ed in a#ademia. 4!t eno!gh is eno!gh. I )ant to li*e. No)." "B!dith" be realisti#. The (a#t is that right no) )e #annot a((ord it. 3o! -no) ho) m!#h )e borro)ed. 3o! -no) )e #an/t a((ord a se#ondhand 2!bar! and yo! go o!t and b!y a brand ne) Che*y 4la=er0" "Listen" Ri#hard 2il*er"" she p!t her hands on her hips. "I don/t )ant to hear it anymore. I don/t )ant yo! to tell me that )e #annot a((ord it no)" that )e ha*e to )ait" that someday..." "4!t" B!dith"" I try to #alm her do)n" "that/s li(e." "Li(e6 3o! dare to tal- to me abo!t li(e6 I/m not going to listen to yo! anymore." 2he starts to #ry. "I/*e listened on#e too o(ten." It h!rts. 3ears ago I said ".e #annot a((ord a #hild. Not no)." A year ago B!dith (o!nd o!t that she #an no longer ha*e #hildren. I stand !p and h!g her. H!gs are lo!sy #ompensation. 2o is a ne) ho!se. 'r a Che*y 4la=er.

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Chapter 1;
"Not bad (or a (irst dra(t." Bim drops o!r arti#le on my table. "I mar-ed some o( the points that need a little )or-." The (irst page loo-s li-e it is s!((ering (rom a se*ere #ase o( the measles. I glan#e at the rest. The disease has spread thro!gho!t all the pages. E*en the tables are #ontaminated. I/m not s!rprised. That/s )hat I e,pe#t (rom meti#!lo!s Bim. 2ighing" I p!t it ba#- on the table. "It/s going to be a ni#e pie#e o( )or-"" he en#o!rages me. "I don/t see m!#h o( a problem getting it past any editor." "Can )e e,pe#t to see it p!blished be(ore the end o( this a#ademi# year0" "I( )e are l!#-y. 4!t that/s not the point. This arti#le is going to be p!blished" (or s!re. .hat yo! need is many more. 4y the )ay" I/*e tal-ed )ith Bohnny abo!t modeling the (inan#ial impa#t o( pro e#t o*erd!es." "And0" "And he is not interested." I/m +!ite s!rprised. It/s not li-e Bohnny. 2in#e )hen is he de#lining the opport!nity to de*elop a mathemati#al model0 4!t -no)ing Bim/s po)er o( pers!asion" there is no point trying to tal- to Bohnny mysel(. "2o )hat are the options0" I as-" a little bit dis#o!raged. " "3o! #an )ait !ntil I (ind the time and stamina to do it..." Considering the (a#t that it isn/t Bim/s idea" it means )aiting (ore*er. "'r yo! #an do the mathemati#al )or- yo!rsel(." No )ay. "It/s as simple as that." "There is a third alternati*e"" I say. "I #an #ome !p )ith some ne) ideas." "And gi*e !p on highlighting the (inan#ial impa#t o( o*erd!es0 I don/t !nderstand yo!" Ri#hard. 3o! ma-e so m!#h (!ss abo!t the (!tility o( most arti#les. I( it )eren/t (or the (a#t that I pra#ti#ally (or#ed yo! to )rite some things )ith me" yo! )o!ldn/t be p!blished at all. At last yo! #ame !p )ith something that e*en yo! #onsider pra#ti#al" something that )e #an t!rn into not one" b!t t)o arti#les" and no) yo! )ant to gi*e it !p0 B!st be#a!se yo! ha*e to (ig!re o!t the math0" He e,amines my po-er (a#e" and almost disg!sted" he adds" "4esides" )here are yo! going to (ind good" ne) ideas." "I ha*e. T)o." He is on a roll. "&o!r years o( #omplete dro!ght and no)" all o( a s!dden" I ha*e to ass!me that yo! got a (lood o( inspiration0 .ill yo! please )a-e !p0" "I ha*e ideas (or t)o important arti#les"" I repeat. "3o! ha*e ideas (or t)o arti#les0" He mo#-ingly !ses his little (inger to #lean his ear. "2ay it again." I -eep a straight (a#e. "Let/s hear them." Bim is s-epti#al" almost angry. ".ith pleas!re. 4!t (irst" let me tell yo! )here these inspirations are s!ddenly #oming (rom. They are not my ideas> they are ideas that pop !p in the brainstorming I/m doing )ith my #lass." "Ahhh"" his e,pression re*eals that it ma-es sense to him. "Those type o( ideas." ".hat do yo! mean0" I/m some)hat o((ended. Ne*er mind" he signals )ith his hand. "The (irst idea"" I start to e,plain" "re*ol*es aro!nd the problem o( early start *ers!s late start." "3o!0 3o! )ant to deal )ith an optimi=ation problem0 And that/s )hat yo! #all an important arti#le0" He stands !p" and pa#ing" he tries to -no#- some sense into my s-!ll. "$o yo! -no) ho) many arti#les ha*e been )ritten abo!t it0 The best mathemati#al brains in the (ield ha*e been toying )ith the min!te details (or years" ho) #an yo! e,pe#t..." I/m #o!nting. &i*e +!estions in a ro). Bim is pretty impatient today. &inally" he noti#es my e,pression and stops. "3o! ha*e an idea on ho) to approa#h it (rom a totally di((erent angle6" he spe#!lates. .hen I #on(irm it" he starts to listen. I tal-> he as-s some rele*ant +!estions> I ans)er. He as-s some more. "Let me see i( I !nderstand yo!" Ri#-. $o=ens" maybe h!ndreds o( arti#les deal )ith the +!estion o( early start o( a non#riti#al path *ers!s late start. Regarding all these arti#les" in )hi#h tremendo!s e((orts and brain po)er ha*e been in*ested" yo! #laim something *ery simple. 3o! #laim that it/s all a )aste o( time6" He pa!ses to allo) me to spea-. I open my mo!th to ans)er" b!t )hat #an I say0 To say" "yes" is too arrogant" b!t I/m not )illing to gi*e any other ans)er. "3o! #laim it"" Bim spea-s (or me" "be#a!se yo! thin- that they ha*e #on#entrated on minor #onsiderations and negle#ted the ma or ones." 4e(ore I ha*e a #han#e to agree" he #ontin!es. "3o! #laim that the main thing is the ability o( the pro e#t manager to (o#!s. 3o! (!rther #laim that both early start and late start eopardi=e the ability to (o#!s" e*en tho!gh to di((erent degrees. And then" yo! #on#l!de that ignoring it is ignoring the heart o( the problem." I open my mo!th to e,plain )hy" b!t he doesn/t )ait. "As strange as it may so!nd" I agree )ith yo!. 'ne h!ndred per#ent."

?@

I #lose my mo!th. "I )ent to all this length to sho) yo! that I do !nderstand. No) let me tell yo!" I/m disappointed." I/m tired o( imitating a (ish" so I -eep +!iet. "$on/t yo! see that this" ho) shall I #all it" intrig!ing obser*ation" is totally impra#ti#al0" This is too m!#h. Then I reali=e he is right. "As long as )e are !nable to re#ommend )hen to start ea#h path" it does ha*e limited pra#ti#al !se"" I admit. "3o! don/t get it" do yo!0" Bim sha-es his head. Apparently I don/t. "Loo- Ri#-"" he starts patiently" "yo! #annot des#ribe (o#!sing o( a person by an e+!ation." "2o0" "2o" this problem #an/t be sol*ed mathemati#ally." I still don/t get it. "4!t it #an be sol*ed logi#ally"" I insist. ".e no) -no) )here to loo-. I( )e -eep on thin-ing )e might (ind a logi#al pro#ed!re. It )ill be immensely help(!l (or pro e#ts." He is not #on*in#ed. I try harder. "Bim" I don/t )ant to so!nd pres!mpt!o!s" b!t I al)ays dreamt o( (inding s!#h a brea-thro!gh. 2omething as po)er(!l as B!st1In1Time or TDM. They are not based on math" either. These methods are so rob!st be#a!se they are based on #ommon sense" on logi#al pro#ed!res. I -no) )e are still (ar (rom rea#hing the brea-thro!gh" )e don/t ha*e the ans)er. 4!t at last )e ha*e identi(ied the right problem. 3o! m!st admit" it/s a ma or step (or)ard." "It )on/t help"" he sighs. "3o!/*e lost me"" I say sin#erely. "Ri#-" yo! entered the a#ademi# )orld o*er ten years ago. It/s abo!t time yo! -ne) the r!les. I( yo! )ant to mo*e ahead yo! m!st p!blish" and to p!blish yo! ha*e to #on(orm to the a##epted a#ademi# standards. 3o! -no) the #riteria (or arti#les. They m!st be based on s!r*eys or on mathemati#al models. That/s it." "4!t" Bim" )hat abo!t things li-e BIT and TDM0 A##ording to )hat yo! say" they are not a#ademi# eno!gh. 2till" )e tea#h them in e*ery !ni*ersity." "They/*e passed the test o( reality." "4!t )hat abo!t ne) s!#h brea-thro!ghs0" "I( yo! (ind one" yo! #an al)ays p!blish it in a boo-. 4oo-s don/t pass thro!gh the s#reening o( a#ademi# re*ie)ers. 4!t remember" boo-s don/t #o!nt to)ard (!ll pro(essorship." "I -no) all that. 4!t it/s ridi#!lo!s6" ".hy0" "Bim" yo! yo!rsel( ha*e said to me more then on#e that the -no)ledge in almost e*ery aspe#t o( organi=ations is (ar (rom being satis(a#tory. At the same time there is a )hole army o( people )ho are s!pposed to impro*e it. Ho) many pro(essors are there in b!siness s#hools aro!nd the )orld0 A h!ndred tho!sand0 And )hat ha*e )e prod!#ed0 Nothing. In the last thirty years -no)ledge has progressed in leaps and bo!nds. Ho) many o( those brea-thro!ghs #ame (rom a#ademia0 Mil#h. $on/t yo! see that the #riteria )e !se to !dge )hat is a##eptable resear#h are the problem0 They #ho-e !s. It/s almost impossible to p!t any meaning(!l #ontrib!tion thro!gh the system. Ho) #an )e..." He raises his hand to stop me (rom #ontin!ing. "3o! may not li-e it" I don/t li-e it" b!t in order to pre*ent a#ademi# anar#hy )e all m!st adhere to the standards. It/s li-e demo#ra#y or o!r legal system. They may s!((er (rom ma or (la)s b!t they are the best )e ha*e." He glan#es at his )at#h. ".hat abo!t yo!r other idea0" "&orget it"" I say bitterly. "It/s important (or pro e#ts" *ery important. 4!t it/s impra#ti#al. It/s not based on mathemati#al models." "2till" I )o!ld li-e to hear it"" he re+!ests gently. ".hat (or0" Ne*ertheless" -no)ing that Bim has a parti#!lar interest in meas!rements" he p!blished a boo- on them" I say" "It/s abo!t ho) )e meas!re the progress o( pro e#ts. The meas!rement is )rong." "Ho) did yo! #on#l!de that0" He is gen!inely interested. "$id yo! !se my #riteria0" "3es" o( #o!rse." And I +!ote (rom memory" " /Criteria number one: Meas!rements sho!ld ind!#e the parts to do )hat is good (or the system as a )hole./ .ell" the )ay )e meas!re the progress o( a pro e#t" the meas!rement does almost the opposite. "/Criteria number two: Meas!rements sho!ld dire#t managers to the point that needs their attention./ In pro e#ts the meas!rement steers the pro e#t leader a)ay. It/s ridi#!lo!s" it/s damaging" and in my opinion" it o(ten leads to the (ail!re o( ma or pro e#ts. 4!t it/s not important eno!gh to be a##epted as a respe#table a#ademi# arti#le." He smiles at me and says so(tly" "3o! ha*e to #ool do)n. I s!ggest yo! go and spea- )ith Bohnny &isher. He #an help yo!." "3eah" s!re." The last thing I need is another le#t!re on the importan#e o( optimi=ation te#hni+!es. ?C

"It/s not )hat yo! thin-"" he responds to my e,pression. "Bohnny )as on sabbati#al last year" b!t not at another !ni*ersity. He spent the year at FniCo." "And !sing his mathemati#al s-ills he pretended to sa*e that #onglomerate a (ort!ne. Good (or him." ".ill yo! please stop anno!n#ing yo!r *ie)s on b!siness pro(essors"" Bim la!ghs. "Bohnny learned a ne) method there. 2omething that" I/m s!re" yo!/ll (ind (as#inating. It/s all abo!t #onstr!#ting logi#al pro#ed!res. E,a#tly )hat yo! are loo-ing (or. Analysis based on #a!se1e((e#t relationships" resol!tions based on #on(li#ts bet)een ne#essary #onditions" str!#t!red #ommon sense" no mathemati#s." .hat is he tal-ing abo!t0 I don/t really #are. "3o! don/t #are" h!h0 No problem. B!st ma-e s!re yo!/re at the ne,t (a#!lty #ollo+!i!m. Bohnny is gi*ing it." 4ig deal.

?9

Chapter 11
Ri#- is among the last to enter. To his s!rprise" the small a!ditori!m is almost (!ll. %robably the )ord )ent aro!nd that this #ollo+!i!m )as going to be di((erent. M!#h di((erent. Bim is )a*ing at him. "I -ept a seat (or yo!." No) he )on/t be able to snea- o!t a(ter (i(teen min!tes. "Than-s." He has !st sat do)n )hen Bohnny &isher starts. "I )as sitting here )at#hing this a!ditori!m (ill !p" and I )as thin-ing to mysel(" all these people #ame to see me. Ho) (lattering. I/m a #elebrity. Then I reali=ed" the %h.$. st!dents are here be#a!se they ha*e to be. The pro(essors are here o!t o( #o!rtesy. And all o!r important g!ests (rom ind!stry #ame" not be#a!se o( me" b!t be#a!se o( the title o( my presentation. .ell" that/s li(e." Ri#- oins the polite la!ghter. Bohnny lea*es the podi!m and starts to pa#e the stage. "I )as as-ed to tal- abo!t the ne) things I learned d!ring my one1year sabbati#al at FniCo. I m!st )arn yo!" one year doesn/t ma-e one an e,pert. It is barely eno!gh time to (orm!late some impression. And that/s all I )ill be able to share )ith yo!" impressions." "E,#ellent"" Ri#- thin-s to himsel(" "e*en Bohnny )o!ldn/t re(er to mathemati#al models as /impressions./ 'n se#ond tho!ght" )ith Bohnny &isher" nobody -no)s. 4etter )ait and see." "FniCo is *ery (amo!s today. This #onglomerate" as yo! )ell -no)" is e,hibiting !nheard o( gro)th and pro(its. It is o( parti#!lar interest to o!r #omm!nity sin#e they are b!ilding a ma or high1te#h operation here. Their gro)th is not !st in their high1te#h s!bsidiaries" b!t in all their b!sinesses. E*ery single one o( them. My grant had a he(ty tra*el b!dget" so belie*e me I #he#-ed." "That/s )hat I #all a grant." Ri#- is probably not the only pro(essor )ho had this tho!ght #ross his mind. "It/s apparent that they ha*e embar-ed on a di((erent )ay to manage their b!siness"" Bohnny #ontin!es )ith his introd!#tion."And they don/t hide it. They #all it Theory of Constraints1" or (or those o( !s )ho lo*e three1letter a#ronyms" T'C. 4!t )hat is T'C0 That/s )hat I/*e tried to get a good grasp o(. Not the details" b!t the #on#ept" the (rame)or-." Ri#-" li-e e*erybody else" has heard more and more abo!t T'C in the last ten years or so. .hat he has heard and read made a lot o( sense" b!t it -ept #hanging. At 'irst it was re ated to production schedu ing. *hen it became a banner to attack +product cost+ methods. *hen marketing. ,ate !, it seems *-. is more connected with methods to remove 'riction between peop e. I( Bohnny #o!ld pro*ide some order (or this mess" it might be )orth)hile sitting (or an ho!r. Not m!#h more than an ho!r. "My impression is"" Bohnny says" as he t!rns on one o( the o*erhead pro e#tors" "that T'C is a blend o( three di((erent" yet related" brea-thro!ghs." He p!ts !p his (irst transparen#y. +The first one, as we a suspected, is that *-. is actua ! a new management phi osoph!./ "Another one o( those"" Ri#- )hispers to himsel(. "In the past ten years"" Bohnny e#hoes Ri#-/s dis#om(ort as he res!mes his pa#ing" ")e #ame to -no) many ne) management philosophies. They #ame one a(ter the other: TDM" BIT" re1engineering" the learning organi=ationA At (irst it loo-ed li-e )e )ere mo*ing (rom one (ad to another. It )as #on(!sing. Nobody li-ed it. Espe#ially not !s" the pro(essors" )ho all o( a s!dden )ere (or#ed to !pdate o!r #o!rse material at an !npre#edented pa#e. "4!t then )e started to reali=e that ea#h one had its important #ontrib!tion. Moreo*er" not li-e (ashions o( the past" all these philosophies are not #ontradi#ting ea#h other. 'n the #ontrary" in many )ays they are #omplimentary. Many started to belie*e that they all are !st pie#es o( the same p!==le. No) that I ha*e been intimately e,posed to T'C" I thin- I -no). They a#t!ally are. And in a m!#h more (as#inating )ay than )e s!spe#ted. I/m going to demonstrate it." He mo*es ba#- to the o*erhead pro e#tor and points to the se#ond line. +*he second, and most important breakthrough o' *-., at east in m! e!es, is the research methods it introduces. Methods that were adapted 'rom the accurate sciences, adapted to 'it s!stems that contain, not )ust atoms and e ectrons, but human beings. +And the third breakthrough is, o' course, the one *-. is known 'or the most, its broad spectrum o' robust app ications.+ He pa!ses" goes ba#- to the podi!m and points to the three senten#es on the s#reen. "Ne) management philosophy" ne) resear#h methods and rob!st appli#ations. I thin- the best )ay to demonstrate them all is by raising the +!estion" /.hat is the biggest problem managers are (a#ing today0/ Anybody #are to ans)er0" A )hite1haired person in the (ront ro) is the (irst to ans)er" "Ho) to )in against the #ompetition6" Ri#- doesn/t re#ogni=e him. He m!st be some hotshot (rom ind!stry. 4!t his ans)er" as tri*ial as it might so!nd" ma-es sense. ?E

"Any other ans)ers0" "My opinion is di((erent"" says another top manager. "I thin- that the real problem is ho)" e,a#tly" )e sho!ld go abo!t ind!#ing o!r people to impro*e. .e hear so m!#h abo!t the importan#e o( empo)erment" #omm!ni#ation" team)or-. At the same time )e hear so little abo!t ho) to a#t!ally a#hie*e it." "He has a point"" Bim )hispers in Ri#-/s ear. Ri#- is not so s!re. "In my #ompany" )e -no) e,a#tly ho) to handle the #ompetitors" and )e don/t ha*e any problem ind!#ing o!r people to impro*e. '!r problem is ho) to shrin- the de*elopment time o( ne) prod!#ts. $oes T'C ha*e an ans)er to this problem0 I( so" I/m *ery interested." "2o am I"" Ri#- thin-s" and )hispers to Bim" ".ho is that g!y0< "That/s %!llman" the #hairman o( Genemodem"" Bim tells him. "2ome o( their people are in o!r program." "My problem is di((erent"" says the person sitting ne,t to %!llman. "My biggest problem is my #lients. They dri*e !s #ra=y." More ans)ers are #oming (rom all dire#tions. Bohnny raises his hands. "%lease" that/s eno!gh. I/m s!re that all yo!r ans)ers ha*e merit" b!t let/s not (orget the s!b e#t o( this presentation." .hen it be#omes +!iet" he #ontin!es. +*-. regards what was said here as )ust s!mptoms. 0t c aims that the! a stem 'rom one, sing e core prob em. I( tr!e" this is a *ery pro(o!nd statement. Ho) am I going to pro*e it0" He starts to pa#e again. "Let me start )ith the obser*ation that most managers )ant to manage )ell> I don/t -no) many )ho #ome to )or- ea#h morning saying /Ho) #an I mess things !p today./ 4!t )hat does it mean" to manage )ell0 Many things. &or o!r dis#!ssion" )e don/t ha*e to list them all. It/s eno!gh to agree that t)o things are absol!tely ne#essary #onditions. 0n order to manage we , managers must contro cost, and at the same time, managers must protect Nthroughput81they m!st ens!re that the right prod!#ts )ill rea#h the right #lients in a )ay that they )ill pay (or them." He stops" (a#es the a!dien#e" and !sing his hands e,tensi*ely" he elaborates. "2!ppose that one o( yo!r managers tells yo! that he has done an e,#ellent ob o( #ontrolling #ost" that he #!t e,penses by t)enty per#ent. 4y the )ay" he also enraged hal( yo!r #lients. .o!ld yo! #all him a good manager0 'r" another one prote#ted thro!ghp!t" shipped e*erything on time" b!t (or that he hired more people and p!t e*erybody on endless o*ertime. Good manager0" "I didn/t -no) Bohnny )as s!#h a good spea-er"" Ri#- #omments to Bim" )ho gi*es him a loo- that says" I told yo! so. +.ontro ing cost and protecting throughput. *wo abso ute ! necessar! conditions. We cannot be satis'ied with one without the other. ".hat I )o!ld li-e to sho) yo! no) is that ea#h implies a di((erent mode o( management. 2o di((erent that there is no a##eptable #ompromise bet)een the t)o. To demonstrate it let me !se an analogy. Let/s *ie) yo!r #ompany as a #hain. A physi#al #hain. It/s not di((i#!lt to see )hy s!#h an analogy ma-es sense." He goes to the o*erhead and p!ts !p a blan- transparen#y. "'ne lin-" the p!r#hasing department" is in #harge o( bringing the materials. Another department" another lin-" is in #harge o( starting prod!#tion. Another department" another lin-" is in #harge o( (inishing prod!#tion." As he spea-s he dra)s o*als representing the lin-s. A #hain starts to (orm on the s#reen. "3et other lin-s are in #harge o( shipping" getting the #lients" in*oi#ing and #olle#ting." The #hain be#omes longer. He p!ts the mar-er do)n and as-s" ".hat is analogo!s to /#ost/ in o!r physi#al #hain0" .itho!t )aiting" he as-s another +!estion. ".hat typi(ies #ost0 Cost is drained by ea#h and e*ery department. .e pay money to and thro!gh o!r p!r#hasing department" o!r prod!#tion departments" and so (orth. No department is (ree. And i( )e )ant to -no) the total #ost o( the organi=ation" one )ay to (ind it is to s!m !p the #ost drained by ea#h department." He pa!ses to #he#- i( the a!dien#e is )ith him. 2atis(ied" he #ontin!es" "In o!r #hain" the #losest thing to #ost )ill be )eight" ea#h lin- has its )eight. And i( )e )ant to -no) )hat the total )eight o( the organi=ation is" one )ay to (ind o!t is to s!m !p the )eight o( all the lin-s. .hat are )e going to do )ith this analogy0" "That/s )hat I )ant to -no)"" Ri#- )hispers impatiently. ".e are going to !se it"" Bohnny ans)ers" "to demonstrate that #ontrolling #ost implies a #ertain )ay o( managing." And )itho!t delay he #ontin!es. "2!ppose that yo! are the president in #harge o( the entire #hain. I/m )or-ing (or yo!. I/m in #harge o( a spe#i(i# department" a spe#i(i# lin-. No) yo! instr!#t me to /impro*e6/ And I am obedient. A(ter some time I #ome ba#- to yo! and tell yo! that )ith ingen!ity" o( #o!rse )ith ingen!ity" and also time and money" I impro*ed my lin-. I made it one h!ndred grams lighter. 3o! are not interested in my lin-" yo! are interested in the )hole #hain. 4!t )hen I tell yo! that I red!#ed the )eight o( my lin- by one h!ndred grams yo! -no) that the entire #hain be#omes lighter by that amo!nt. $o yo! -no) )hat that implies0" Ri#- doesn/t. "It implies a management philosophy. It implies that any lo#al impro*ement a!tomati#ally translates into an impro*ement o( the organi=ation. .hi#h means that to a#hie*e the global impro*ement" the impro*ement o( the organi=ation" )e -no) that )e ha*e to ind!#e many lo#al impro*ements. I #all it the /#ost )orld."/ He pa!ses. ".hat is he tal-ing abo!t0" Ri#- is irritated. ".hy so m!#h (!ss abo!t something (irst1year st!dents -no)0"

?G

".ait"" Bim )hispers ba#-. "Bohnny m!st ha*e some point here" e*en tho!gh I don/t see it yet." "3o!/re probably )ondering"" Bohnny is smiling" ")hy I am hammering on the ob*io!s. 4!t it is so tri*ial to all o( !s not be#a!se it/s the only management philosophy" b!t be#a!se it/s the management philosophy )e all !sed (or so long. We have managed according to the 1cost wor d1 probab ! since the beginning o' the industria revo ution." He raises his *oi#e. ".hat is not #ommon -no)ledge is that /prote#ting thro!ghp!t/ implies a #ontradi#tory philosophy. It implies the /thro!ghp!t )orld./ .hat is that0" E*erybody is no) +!iet. E*en Ri#-. "&irst" let/s #lari(y to o!rsel*es the essen#e o( thro!ghp!t." %ointing to the #hain on the s#reen" Bohnny e,plains: "'ne lin- is p!r#hasing" another starts prod!#tion" another (inishes prod!#tion" another assembles" still another ships to #lients" et#etera. I( one lin-" !st one lin-" drops the ball" )hat happens to the thro!ghp!t o( the #ompany0" "$rops"" many ans)er. ".hen )e deal )ith thro!ghp!t" it is not !st the lin-s that are important> the lin-ages are !st as important." Ri#- (inds himsel( nodding in agreement. "What is the e2uiva ent o' throughput in our ph!sica chain$ .hat is determined not !st by the lin-s" b!t by the (a#t that they intera#t )ith ea#h other0 It/s not )eight. I( )e remo*e all intera#tion" all lin-ages" and )e are le(t )ith !st a pile o( lin-s" the )eight is still the same. 2o )hat property typi(ies a #hain0 0t is the strength o' the chain. I( one lin- brea-s" !st one lin-" the #hain is bro-en> the strength o( the #hain drops to =ero. "No)" I ha*e some seemingly tri*ial" b!t *ery important +!estions (or yo!. .hat determines the strength o( a #hain0" "The )ea-est lin-"" somebody in the (ront ans)ers lo!dly. "And ho) many )ea-est lin-s do )e ha*e in a #hain0" Bohnny stresses the )ord /)ea-est./ " "'ne." Ri#- doesn/t li-e Bohnny/s style. He )o!ld ne*er stress s!#h tri*ialities. 4!t he m!st admit that it/s e((e#ti*e. Bohnny no) has e*erybody/s attention. "No)"" Bohnny says" in an in*igorating *oi#e" "no)" let/s see )hat that implies. 3o! are still the president in #harge o( the entire #hain. I/m still in #harge o( !st one department. 2in#e there is only one )ea-est lin-" let/s ta-e the more general #ase" the #ase )here I/m in #harge o( a department that is not the )ea-est lin-. AndA and on#e again yo! tell me to impro*e. To impro*e the strength this time. And on#e again I #ome ba#- and report to yo! that )ith ingen!ity and time and money I impro*ed. I strengthened my lin-. I made it three times stronger. Gi*e me a medal." He pa!ses and smiles. "Remember" yo! are not really interested in my lin-. 3o! are interested in the #hain. My lin- )asn/t the )ea-est. I( I made my lin- stronger" ho) m!#h did I impro*e the strength o( yo!r #hain0 Nothing. Absol!tely nothing." Bim loo-s at Ri#-. "I told yo!." Ri#- doesn/t respond. His mind is ra#ing. "$on/t yo! see )hat )e are (a#ing no)0" Bohnny starts to pa#e again. His strides are (!ll o( energy. "Most o( the lo#al impro*ements do not #ontrib!te to the global6" he almost sho!ts. "And )e do )ant the global" )e do )ant the organi=ation as a )hole to impro*e. No) )e -no) that sin#e any impro*ement re+!ires attention and time and money" the )ay to impro*e the total organi=ation is de(initely not thro!gh ind!#ing many lo#al impro*ements" the more the better. That/s not the )ay." "Interesting"" Bim says to himsel(. "2o )here do )e stand00n order to contro cost, managers must manage according to the cost wor d, whi e in order to protect throughput the! must manage according to the 1throughput wor d.1 Can they manage a##ording to both at the same time0" Nobody *ol!nteers e*en a spe#!lation. ".e try"" Bohnny sighs. ".e de(initely try. &or e,ample" are yo! (amiliar )ith the term" /the end o( the month syndrome/0" Many la!gh. Espe#ially the g!ests (rom ind!stry. "At the beginning o( the month"" Bohnny e,plains" ")e #ontrol #ost. Tight (ist on o*ertime. 4at#h si=es m!st be optimal. 4!t at the end o( the month" (orget it. $o e*erything to ship the damn goods o!t the door. E,pedite these three pie#es" go on o*ertime (or the entire )ee-end. 2hip6" Bohnny lo)ers his *oi#e. ".hat happens0 At the beginning o( the month these #ompanies are managed a##ording to the #ost )orld" at the end o( the month a##ording to the thro!ghp!t )orld. "&e)er and (e)er o( these #ompanies s!r*i*e today. .hy0 4e#a!se #ompromises that )ere a##eptable yesterday are intolerable today.And not be#a!se )e ha*e be#ome more (!ssy"b!t be#a!se o!r #lients ha*e.Ten years ago )e shipped eighty per#ent on time and e*erything )as o-ay. Today )e ship ninety1(i*e per#ent on time and they still dare to bit#h and moan. Ten years ago )e shipped the best +!ality )e #o!ld prod!#e. Today i( )e ship that same +!ality o!r #lients )ill ship it ba#-. %rote#ting thro!ghp!t has be#ome m!#h harder. The margins that enabled !s to li*e )ith #ompromises are no longer there. "4!t let me pro*e to yo! that there is no #ompromise bet)een the #ost )orld and the thro!ghp!t )orld. Not e*en theoreti#ally. $o yo! )ant to see the proo(0" "3es"" the a!ditori!m e#hoes. ?H

Bohnny ta-es a hand-er#hie( o!t o( his po#-et and )ipes his (orehead. "&or that" I (irst ha*e to dire#t yo!r attention to another topi#. That o( (o#!sing." Ri#- straightens in his #hair. Maybe he #an pi#- !p a #l!e that )ill help in his s!b e#t. ".e all -no) that (o#!sing is important." Bohnny spea-s so(tly. "A manager )ho does not -no) ho) to (o#!s )ill not s!##eed in #ontrolling #ost and )ill not prote#t thro!ghp!t. 4!t )hat is (o#!sing (or !s0 .e ha*e #ome to -no) it as the Pareto principle. 3ocus on so ving twent! percent o' the important prob ems, and !ou1 reap eight! percent o' the bene'its. *his is a statistica ru e. 4!t those )ho tea#h statisti#s -no) that the twent!(eight! ru e app ies on ! to s!stems composed o' independent variab es4 it applies only to the cost world where each link is managed individually. ".hat abo!t the throughput )orld0 2in#e in o!r organi=ations )e do ha*e many more than (i*e lin-s" it/s ob*io!s that impro*ing t)enty per#ent means that many o( these impro*ements )ill not #ontrib!te to impro*ing the per(orman#e o( the organi=ation as a )hole. ,inkages are important, the variab es are dependent. The Pareto principle is not applicable. "2o ho) #an )e (ind o!t on )hat to (o#!s0 .hat process? #an )e !se0" "Interesting"" Bim says again. This time Ri#- is in total agreement. ".ell" it/s simpler than e,pe#ted"" Bohnny #om(orts them. "B!st thin- abo!t the #hain and the (a#t that its strength is determined by its )ea-est lin-. I( yo! )ant to strengthen the #hain" )hat m!st yo!r (irst step be0 No /i(s"/ no /b!ts"/ no /)e are di((erent./ .hat m!st be the (irst step0" At this stage e*erybody has probably (ig!red it o!t. Bohnny gest!res to a *ol!nteer in the (irst ro) to say it o!t lo!d" "&irst thing is to (ind the )ea-est lin-." "Corre#t"" says Bohnny. And grasping a mar-er" he #omments" "In a#ademia )e m!st !se more respe#table )ords. 2o let me )rite the 'irst step as5 0DE6*03Y the s!stem1s constraint7s8. $on/t yo! agree that /identi(y/ so!nds m!#h more impressi*e than a simple /(ind/0 '( #o!rse these t)o )ords mean e,a#tly the same thing. &ine" )e identi(ied the #onstraint. No) )hat0" "2trengthen it"" the same" (irst1ro) person says. "Corre#t again"" Bohnny smiles at him. "4!t )ait. .e ha*e to be #are(!l )ith analogies. .hen )e mo*e ba#- to organi=ations )e #an easily see that there are two di''erent cases. *he 'irst one is the case where we identi'! the constraint as ph!sica , ike a bott eneck, a t!pe o' resource that does not have enough capacit! to meet the demand. 0n that case, strengthening the weakest ink wi mean to he p the bott eneck to do more. "4!t )e sho!ldn/t o*erloo- the other case. *he case where it turned out that the constraint we identi'ied is an erroneous po ic!. 0n that case, strengthening the weakest ink cannot be interpreted as he ping the erroneous po ic! to do more. We have to rep ace the po ic!. 4y the )ay" this (or- o( physi#al #onstraints and poli#y #onstraints #a!sed a lot o( #on(!sion abo!t T'C. All the early p!bli#ations #on#entrated on physi#al #onstraints. It/s no )onder that )hen arti#les and boo-s (irst appeared abo!t the appli#ations to poli#y #onstraints" it too- some time !ntil )e" at least in a#ademia" !nderstood the #onne#tion." "I didn/t" !ntil no)"" Ri#- admits. "Interesting"" is the only )ord Bim is )illing to say. Bohnny )aits (or the m!rm!r to +!iet do)n. "At this point I/ll sti#- to physi#al #onstraints. They are less important b!t easier to !nderstand. /2trengthen the )ea-est lin-"/ )e said. 4e(ore I )rite the se#ond step" I )o!ld li-e to highlight that there are two di''erent wa!s to strengthen a bott eneck. 'ne is to simply add more #apa#ity" by hiring more people or b!ying more ma#hines. 4!t there is another )ay. To s+!ee=e the ma,im!m (rom the #apa#ity )e already ha*e. Ma-e sense0" .hen he gets agreement" he #ontin!es" "2in#e T'C a##epts /#ontrolling #ost/ as an absol!te ne#essary #ondition" no )onder that it ele#ts the second step to be5 Decide how to E9#,-0* the s!stem1s constraint7s8. ".hat ne,t0 Let/s not (orget that in the thro!ghp!t )orld the lin-ages are as important as the lin-s. .hi#h means that i( )e de#ided to do something in one lin-" )e ha*e to e,amine the rami(i#ations on the other lin-s. 'n#e again" it/s +!ite easy. Our intuition is in the throughput world. Al)ays )as. Let me demonstrate it to yo!." He points to his "*ol!nteer" and tells him" "3o!/ll be the bottlene#-. $o yo! mind0 It means that yo! are most important" the thro!ghp!t o( the entire #ompany depends on yo!. It also means that yo! are in the hot seat." "I/m !sed to the hot seat." "&ine. No) let/s s!ppose that )hen yo! try" really try" yo! #an prod!#e ten !nits an ho!r. No more. '-ay0" Bohnny pi#-s another *i#tim. He pi#-s %!llman. "And s!ppose that yo! are a non1bottlene#-. 3o! #an easily do t)enty !nits an ho!r. 4!t )hate*er yo! do" be(ore )e #an sell it" it m!st be (!rther pro#essed by o!r bottlene#-. 'n an ongoing basis" ho) many !nits per ho!r sho!ld yo! prod!#e0" "Ten !nits"" %!llman says )itho!t hesitation. Bohnny repeats the des#ription o( the s#enario and as-s again" "E*erybody tell me. Ho) many !nits an ho!r sho!ld this gentleman prod!#e0 E*erybody6" "Ten"" #omes the roaring ans)er. ".hat yo! said is the third step." And )hile tal-ing" he )rites it do)n. " :tep three5 :;B-RD06A*E ever!thing e se to the above decision. I( )e #an s+!ee=e only ten !nits (rom the bottlene#- there is no point in doing more on the non1bottle1 @;

ne#-s. No)" i( this (irst gentleman is still a bottlene#- and )e do )ant more thro!ghp!t" )e m!st li(t some o( the load (rom his sho!lders. E*en i( it means b!ying more ma#hines or hiring more people." .hen e*erybody agrees" he )rites the 'ourth step5 E,E<A*E the s!stems1 constraint7s8. Ri#- #are(!lly #opies the steps. The logi# is impe##able. It m!st be appli#able (or pro e#t management as )ell. E,a#tly ho)0 It/s not #lear. He )ill ha*e to thin- abo!t it later. Bohnny p!ts do)n the mar-er and mo*es to the (ront o( the stage. "This is not the last step. And yo! all" int!iti*ely" -no) it. Here is o!r #hain." In the air Bohnny stret#hes an imaginary #hain bet)een his hands. "Here is the )ea-est lin-. I strengthen this lin-. The )hole #hain be#omes stronger. I strengthen it again" the #hain be#omes e*en stronger. I strengthen it again. Nothing happens. .hy0" Many people ans)er. Bohnny s!mmari=es" "It/s not the #onstraint anymore. 2o" 0 have to avoid inertia and go back to step one. Ha*e yo! noti#ed something (as#inating0" He pa!ses" b!t nobody *ol!nteers to read his mind. ".e ha*e (o!nd the pro#ess to (o#!s. This is the (o#!sing pro#ess o( the thro!ghp!t )orld. 4!t at the same time" do yo! agree )ith me that these steps are also the /pro#ess o( on1going impro*ement/0" &as#inating" isn/t it0 In the thro!ghp!t )orld" (o#!sing and pro#ess o( on1going impro*ement are not t)o di((erent things" they are one and the same." "Interesting"" Ri#- )hispers to Bim. "No" Ri#-" Bohnny is right. It/s (as#inating." "Let me remind yo!"" Bohnny ret!rns to the podi!m" "that I still o)e yo! something. I o)e yo! the proo( that there is no a##eptable #ompromise bet)een the #ost )orld and the thro!ghp!t )orld. Remember0 No) it/s easy. Really easy." He t!rns ba#- to his *ol!nteers. "3o! are still the bottlene#-. 3o! #an prod!#e ma,im!m ten !nits an ho!r. And yo! are still the non1bottlene#-" yo! #an easily do t)enty an ho!r" b!t )hate*er yo! do m!st pass thro!gh him. E*erybody" again" ho) m!#h sho!ld he prod!#e per ho!r0" 4y no) e*erybody li-es his dynami# style. "Ten"" they all roar. "Really0" He #o#-s his head slightly" still loo-ing at them. "$o yo! really mean it0" "3es." E*erybody is #on(ident. "And I tho!ght that yo! li-ed this gentleman." He t!rns dire#tly to %!llman. "Imagine that yo! are a )or-er in yo!r o)n #ompany. And yo! prod!#e only ten !nits per ho!r )hen yo! #an easily prod!#e t)enty. .hat )ill be yo!r re#orded ((i#ien#ies0" Fnderstanding starts to spread on %!llman/s (a#e. "Lo)"" he says. Then" #learing his throat" "My e((i#ien#y )ill be (i(ty per#ent." "And i( yo!r e((i#ien#ies are only (i(ty per#ent" )hat )ill happen to yo!r head0" And smiling" he mo*es his hand a#ross his ne#-. .hen the la!ghter +!iets some)hat" Bohnny #ontin!es" "And e*erybody here told yo! to prod!#e only ten. 3o!r (riends probably )ant to t!rn yo! into a -ami-a=e. 2ome (riends." Bohnny is smiling. The la!ghter rea#hes ne) heights. He )aits patiently. "$o yo! !nderstand )hat )e ha*e seen here0 Your intuition is in the throughput world and in this )orld the ans)er is /don/t dare to prod!#e more than ten./ But your systems are in the cost world . 3o!r systems )ant him to rea#h ma,im!m lo#al e((i#ien#y> they )ant him to prod!#e t)enty." He pa!ses. "And there is no #ompromise. I( this gentleman prod!#es (i(teen" both )orlds )ill -ill him." The message is serio!s" b!t e*erybody la!ghs. "2o )hat )ill he do0 He )ill slo) do)n. He )ill #laim that he #annot prod!#e more than" let/s say" t)el*e" )hi#h he )ill. .e (or#ed him to lie" be#a!se i( he doesn/t" his ob se#!rity is threatened." 2lo)ly Bohnny goes ba#- to the podi!m. He stands there a)hile be(ore res!ming his le#t!re. "E*erybody -no)s that the 'irst step in so ving a prob em is to de'ine it precise !=. The strange thing is that in spite o( this reali=ation" )e didn/t bother de(ining )hat )e mean by /de(ining a problem pre#isely./ " He noti#es that not e*erybody !nderstands" so he #lari(ies. ".hen do )e -no) that )e ha*e de(ined a problem pre#isely0 .hen )e ha*e already sol*ed it" and loo-ing ba#- )e agree that the stage )hen )e de(ined the problem pre#isely )as a ma or step (or)ard. 4!t ho) do )e -no) that )e de(ined the problem pre#isely be(ore )e sol*ed it0" "He has a point"" Ri#- says to Bim. +TOC adopts the definition accepted in the accurate sciences. A prob em is not precise ! de'ined unti it can be presented as a conflict between two necessary conditions.+ He pa!ses to let his peers digest. "That/s )hat )e ha*e done (or the last hal( an ho!r." He goes ba#- to the o*erhead pro e#tor and inserts a transparen#y.

@1

"The ob e#ti*e o( managers is to manage )ell. In order to manage )ell" one o( the ne#essary #onditions is to #ontrol #ost and the other is to prote#t thro!ghp!t. 4!t in order to #ontrol #ost" managers m!st manage a##ording to the #ost )orld" )hile in order to prote#t thro!ghp!t they m!st manage a##ording to the thro!ghp!t )orld" and as )e sa)" these t)o are in #on(li#t. ".hat do )e do0 .e try to (ind a #ompromise. And i( there isn/t one0 Li(e is a bit#h. "Is there any other )ay0 $o they do anything di((erently in the a##!rate s#ien#es0" E*erybody )aits (or Bohnny to s!pply the ans)er. "&or e,ample"" Bohnny tries to #lari(y his point" "s!ppose that they try to meas!re the height o( a b!ilding. Fsing one method they (ind that the height is ten yards" and !sing another the ans)er #omes o!t to be t)enty yards. A #on(li#t. $o yo! thinthat they )ill try to #ompromise0 That they )ill say that the height o( that b!ilding is (i(teen yards0" E*erybody is grinning. +0n the accurate sciences, what do the! do when the! 'ace a con' ict$ *heir reaction is ver! di''erent than ours. We tr! to 'ind an acceptab e compromise. *his thought never crosses their minds. *heir starting point wi never a ow it4 the! don1t accept that con' icts exist in rea it!. "No matter ho) )ell the t)o methods are a##epted" a s#ientist/s instin#ti*e #on#l!sion )ill be that there is a (a!lty ass!mption !nderlying one o( the methods !sed to meas!re the height o( the b!ilding. A their energ! wi be 'ocused on 'inding that 'au t! assumption and correcting it. "2ho!ld )e do the same0" He pa!ses" and then as-s" "Can )e do the same0" As he ret!rns to the podi!m he -eeps on as-ing" "Can )e" )ho deal )ith h!man1based systems" belie*e that #on(li#ts #annot e,ist0 "Ho) #an )e0 Con(li#ts are all aro!nd !s." In a #on*ersational tone he #ontin!es" "This is probably the most daring ass!mption o( T'C. 'ne o( its (o!ndations is that whenever we witness a conflict5, it is a clear indication that someone has made a faulty assumption, a faulty assumption that can be corrected, and by doing so the conflict removed. .hat do yo! thin- abo!t it0" "I don/t b!y it"" Ri#- )hispers to himsel(. "$o yo! belie*e in )in1)in sol!tions0" Bim as-s him. "I g!ess so." "2o yo! do a##ept )hat Bohnny !st said." Ri#- doesn/t see the #onne#tion #learly" b!t no) Bohnny #ontin!es. "Let/s !se o!r #on(li#t to demonstrate ho) po)er(!l this approach, called 'evaporating cloud> is." And he mo*es ba#- to the o*erhead pro e#tor. "Let/s e,pose some hidden ass!mptions"" he says. ".e #laim that in order to #ontrol #ost" managers m!st try to manage a##ording to the #ost )orld. .hy0 4e#a!se )e ass!me that the only )ay to a#hie*e good #ost per(orman#e is thro!gh good lo#al per(orman#e e*ery)here." As he spea-s he adds the ass!mption to his diagram. "And )hy do )e #laim that in order to prote#t thro!ghp!t managers m!st try to manage a##ording to the thro!ghp!t )orld0 4e#a!se )e ass!me that there is no )ay to a#hie*e good thro!ghp!t per(orman#e thro!gh good lo#al per(orman#e e*ery)here." .hen he (inishes adding it to the diagram" he pa!ses to gi*e e*eryone time to digest. @8

".here do )e stand0 We now have three a ternatives. We can cha enge the upper assumption, we can cha enge the ower one, or we can continue to ook 'or a compromise. .hat do yo! thin- )e sho!ld do0" %robably Bohnny regards his +!estion as rhetori#al" be#a!se he #ontin!es to as-" ".ho thin-s that the !pper ass!mption is )rong0 That the ass!mption that the only )ay to a#hie*e good #ost per(orman#e is thro!gh good lo#al per(orman#e e*ery)here" is )rong0 %lease raise yo!r hands." Abo!t (i*e people raise their hands. A(ter a moment" a do=en or so oin them. "$on/t be too hasty"" Bohnny )arns them. "Those )ho thin- this ass!mption is )rong" do yo! -no) )hat yo!/re #laiming0 3o! are a#t!ally #laiming that most organi=ations" sin#e the ind!strial re*ol!tion" )ere )rong. $o yo! still )ant to raise yo!r hand0" Almost e*eryone )ho raised their hand be(ore de(iantly raises it again. "3o!r prerogati*e"" Bohnny smiles. And then he #ontin!es" ".ho thin-s that the lo)er ass!mption is )rong0 That the ass!mption that there is no )ay to a#hie*e good thro!ghp!t per(orman#e thro!gh good lo#al per(orman#e e*ery)here" is )rong0 %lease raise yo!r hands." To Ri#-/s astonishment" nobody does. "The *ote is #lear"" Bohnny anno!n#es. "Fn(ort!nately" s!#h +!estions are not resol*ed by a demo#rati# *ote. .e ha*e to pro*e )hat )e #laim. Ho) #an )e pro*e that the !pper ass!mption is )rong0" "And no) )e are going to see some (an#y mathemati#al model"" Ri#- sighs. ".a-e me )hen it/s o*er." 4!t Bohnny doesn/t !se any mathemati#s. "3o! are still the bottlene#- and yo! are the non1bottlene#-." He points to his t)o *ol!nteers. "The same s#enario as be(ore. .e all agreed that the non1bottlene#- sho!ld prod!#e only ten !nits an ho!r. .hy0 Is it be#a!se )e )ant to prote#t the thro!ghp!t0 Thin- abo!t it. "I( the non1bottlene#- )ill prod!#e (i(teen or e*en t)enty" )ill it pre*ent the bottlene#- (rom prod!#ing his ten0 "2o )hy are )e so adamant abo!t restri#ting the non1bottlene#- to only ten !nits an ho!r0 Maybe the non1bottlene#- is )illing to ans)er0" "4e#a!se i( I prod!#e more"" %!llman #on(idently says" "the only res!lt )ill be the a##!m!lation o( !nneeded in*entory." "And i( in*entory goes !p" )hat happens to #ost0" "Goes !p." "3o! see"" Bohnny addresses the a!dien#e" ")e all as-ed the non1bottlene#- to prod!#e m!#h less than he #an" not in order to prote#t thro!ghp!t" b!t in order to #ontrol #ost. .e instr!#ted the non1bottlene#- to restri#t its lo#al e((i#ien#y to only (i(ty @?

per#ent" )hen it #o!ld a#hie*e one h!ndred" (or only one reason. To #ontrol #ost. .hat does that tell !s abo!t o!r !pper ass!mption0 "The only )ay to a#hie*e good #ost per(orman#e is thro!gh good lo#al per(orman#e e*ery)here. 4aloney6 2pea-ing slo)ly" stressing ea#h )ord" he #on#l!des" ".e are #hasing #ompromises" degrading o!r per(orman#e" ma-ing o!r li(e miserable" be#a!se o( an ass!mption that is apparently )rong." A(ter a short )hile he repeats" "the only )ay to a#hie*e good #ost per(orman#e is thro!gh good lo#al per(orman#e e*ery)here. The (a#t that so many managers and almost all o!r systems are based on this ass!mption is regarded by T'C as the #!rrent #ore problem o( o!r organi=ations." "I ha*e to thin- abo!t it"" Ri#- promises himsel(. "All the ne) management philosophies"" Bohnny is no) on a roll" "impli#itly re#ogni=ed it. They all try to stress the importan#e o( prote#ting thro!ghp!t" they all try to shy a)ay (rom lo#al optim!ms. "TDM and BIT are adamant abo!t thro!ghp!t e*en tho!gh they ha*en/t reali=ed that it mandates a m!#h sharper (o#!sing. Reengineering p!ts the emphasis on ree,amining basi# ass!mptions. A #ornerstone o( the learning organi=ation is to repla#e !nsatis(a#tory #ompromises )ith )in1)in sol!tions. Fsing the #larity pro*ided by T'C and systemati#ally !sing its analyti#al methods" all these philosophies" at last" merged into a #oherent )hole. "4!t yo! didn/t #ome here (or a theoreti#al le#t!re. 3o! )ant to see )hat #an be done )ith it. In reality. .hat res!lts #an be a#hie*ed0 In )hat time (rame0 And abo*e all" ho)0 ".hat I/m going to do no) is to share )ith yo! one o( the most (as#inating e,perien#es I had last year. Ho)" in FniCo" they t!rned aro!nd a losing #ompany they bo!ght. T!rned it into a gold mine in !st a little o*er three months. 4!t my (irst ho!r is o*er and I )as told to brea- (or #o((ee. I( yo! are still interested" be ba#- in t)enty min!tes."

@@

Chapter 18
I see that not all o( yo! are ba#-. '-ay" I/*e learned my lesson. No more o( that hea*y" boring st!((. Instead" I/ll tell yo! a story" e*erybody li-es stories" abo!t my most signi(i#ant personal e,perien#e at FniCo. 'ne day I )as #alled to the o((i#e o( $on %ederson. He is a *i#e1president" b!t not li-e the other *i#e1presidents. Nobody reports to him" e,#ept (or a (e) assistants. That doesn/t mean that he is not important. At least (or me he )as *ery important. He is the one )ho signed my grant. Any)ay" !ntil that day" my #onta#t )ith him had been only thro!gh memos. I li-ed his memos. They )ere polite" short" and ea#h one meant another trip. At that time I had been )ith FniCo (or abo!t si, months" and it )as the (irst time I )as to meet him in person. I didn/t ha*e any problem (inding his o((i#e> it/s right ne,t to the o((i#e o( the CE'" )hi#h is s!pposed to mean something. E,a#tly )hat" I ne*er (o!nd o!t. $on is a *ery pleasant and open person. 2!rprisingly yo!ng. I do!bt i( he is m!#h o*er thirty. 4!t this g!y ta!ght me a lesson I/ll ne*er (orget. .e had a lengthy #on*ersation abo!t the last pla#e to )hi#h I had been assigned. It )as a h!ge distrib!tion #enter" and I sho)ed him ho) they #o!ld optimi=e their tr!#- s#hed!les. A##ording to my #al#!lations" they #o!ld sa*e at least (i(ty tho!sand a year. He sho)ed a lot o( interest" as-ed a lot o( +!estions" and e*en loo-ed at my elegant sol!tion to a #omple, set o( e+!ations. I (elt good. Here I am" the -no)ledgeable pro(essor" tea#hing an e,e#!ti*e ho) they sho!ld s#ienti(i#ally r!n their b!siness. I/m embarrassed to thin- abo!t )hat he a#t!ally tho!ght o( me. A pro(essor )ho spent a (e) )ee-s in a distrib!tion #enter that t!rns more than hal( a billion dollars a year" and all he #an #ome !p )ith is a #on*ol!ted )ay to sa*e" maybe" (i(ty tho!sand b!#-s. 4!t $on )as polite. He said that it seemed they #o!ld !se my talents. Then he told me ho). They )ere abo!t to a#+!ire a ne) #ompany" a steel mill> they e,pe#ted to sign the do#!ments ne,t &riday. A month be(ore" $on had de*oted t)o days to do a brie( analysis o( that #ompany. He s!ggested I (ly there the ne,t day" do an in1depth analysis" and prepare my re#ommendations. I li-ed it. I -no) a lot abo!t the steel ind!stry. I ha*e p!blished (o!r arti#les abo!t it. I li-ed it a little less )hen he s!ggested he )o!ld meet me there the )ee-end a(ter the #ompany e,#hanged hands and )e )o!ld #ompare notes. I )as abo!t to tell him my do!bts" that a proper analysis #o!ldn/t be done in the ten days that )ere le(t" that yo! #an/t #ompare a ri((ra(( analysis to a pro(essional one" b!t I de#ided I/d better not. 2o I )ent. They )ere )aiting (or me do)n there. I )or-ed (ranti#ally. $!ring the day I inter*ie)ed people" and nights I read tons o( reports and tried to ma-e some sense o!t o( the piles o( data I )as a##!m!lating. At (irst I (elt dro)ned. 2lo)ly the pi#t!re started to !n(old. The #ompany" li-e many other steel mills" )as losing money" hand o*er (ist. 4!t that/s to be e,pe#ted )hen #ompetition is so (ier#e and steel pri#es are depressed. The #lients" )hen yo! dismiss their !s!al tenden#y to bit#h and moan abo!t their *endors" didn/t ha*e parti#!larly bad #omplaints. $eli*ery lead times and d!e1date per(orman#e )ere #omparable to the #ompetition. 2o )ere pri#es" o( #o!rse. D!ality )as slightly better" b!t not signi(i#antly. Te#hnology )as good. Most e+!ipment )as state o( the art. E,#ept (or the slitters" the ma#hines that #!t the plates to si=e. That e+!ipment )as bad" slo) and )aste(!l. It m!st be repla#ed. I did the #al#!lations. The payba#- )as not m!#h more than three years. In*entory )as a problem. Mo!ntains o( plates (illed the #ompany/s h!ge yards. And it )asn/t stored )ell> m!#h o( it )as r!sting. I spent a lot o( time trying to (ind o!t )hat #o!ld be done. It )asn/t easy be#a!se e*erybody )as blaming e*erybody else. &inally" I (o!nd o!t that )hat they !sed (or planning the )or- o( that #omple, operation )as an o!tdated #omp!ter 2ystem. Can yo! imagine0 They in*ested a (ort!ne in the (!rna#es" and another (ort!ne in the rolling and #oating departments" b!t they still !sed so(t)are )ritten in the se*enties. These steel people" I/ll ne*er !nderstand them. Ra) materials )ere also a problem. Not the materials themsel*es" b!t the pri#e they pay. They had to organi=e their p!r#hasing di((erently. I spent a lot o( time on it. I optimi=ed the system. I )as ready to sho) $on ho)" )ith three (e)er people in the p!r#hasing department" they #o!ld handle the same +!antities and sa*e a b!ndle. Minim!m a million dollars a year" maybe e*en a million and a hal(. 'n &riday they signed. I e,pe#ted $on to arri*e on 2at!rday morning. I )as ready (or him. 4!t he #alled and said he had to (inish something important and he )o!ld arri*e on 2!nday a(ternoon. I !sed the time to polish my #al#!lations. 2!nday" at se*en %.M." I )as still in the lobby pretending to ha*e tea" )hen he entered the hotel. He as-ed me to oin him in his s!ite. I )as eager to sho) $on my (indings" to sho) o((. 2o" I grabbed my papers (rom my room" de#ided that ten min!tes )as eno!gh (or him to (reshen !p" and -no#-ed on his door. He didn/t )ant to loo- at my papers. His (irst +!estion )as ".hat is the #onstraint o( the #ompany0" @C

I had spent eno!gh time at FniCo to e,pe#t s!#h a +!estion. Nat!rally" I )as ready. I handed him my list o( #onstraints. T)enty1si, o( them. He glan#ed thro!gh the list" these e,e#!ti*es read *ery (ast" sighed" and p!t it aside. I )asn/t s!rprised. .ith s!#h a long list o( problems" yo! )o!ld sigh too. Then he as-ed me ho) m!#h time" a##ording to my analysis" it )o!ld ta-e to bring this #ompany to pro(itability. I didn/t ha*e an ans)er. '!t o( desperation I ans)ered that it depended on )hat )o!ld happen to the pri#e o( steel in the mar-et. "Ass!me it stays at #!rrent pri#es"" he said. As (ar as I #o!ld tell" at #!rrent pri#es this #ompany )o!ld ne*er be pro(itable" b!t ho) #an yo! say s!#h a thing to someone )ho !st bo!ght it0 I remembered the o-e abo!t the person )ho #ommitted himsel( to tea#h a dog to read in three years. He hoped that in three years the dog )o!ld die or the o)ner )o!ld die. 7no)ing ho) (re+!ently steel pri#es os#illate" "In t)o years"" I #on(idently said. Than- God he didn/t as- me to !sti(y it. Rather" he as-ed ho) m!#h money I tho!ght had to be in*ested. &or this I had a detailed" a##!rate ans)er. 4!t on#e again he re(!sed to loo- at the papers" he !st )anted to -no) the bottom line. I hated it. 4!t he )as the one )ho signed my #he#-s" so I told him: t)enty1t)o million" three1h!ndred and (orty tho!sand dollars. Appro,imately. "I see"" )as his only #omment. And thenA And then he !st said that the limo )o!ld pi#- !s !p at se*en tomorro) morning" and a##ompanied me to the door. Ne,t morning they )ere )aiting (or !s in a big meeting room. All the top managers" abo!t t)enty o( them. .e shoo- hands and then $on too- o*er. He told them that he didn/t -no) m!#h abo!t the steel ind!stry" and e*en less abo!t their operation. And he as-ed them to help him to !nderstand better be#a!se the more he -ne)" the less li-ely he )o!ld be to impose st!pid de#isions on them. He didn/t lea*e any do!bt that he )as going to ma-e some de#isions. Then he said that he had read all their (inan#ial reports" b!t that these reports did not tell him a thing abo!t ho) they a#t!ally operate their #ompany. He -ne) that 'or a ong time +tons(per(hour+ has been the prime operationa measurement in the stee industr!. And he as-ed them i( they tho!ght they )ere doing a good ob monitoring tons1per1ho!r. They tho!ght they )ere. &or abo!t hal( an ho!r they e,plained" in detail" ho) they do it> on a )or-1#enter le*el" a departmental le*el and on a plant le*el. They e,plained ho) the data is gathered and pro#essed. They presented the res!lting reports and the graphs o( tons1per1ho!r per shi(t" per day" per )ee-" per month" per +!arter" per year. Thro!gho!t the e,planation $on )as *ery en#o!raging. .hen they )ere thro!gh" he agreed that there )as no do!bt that they )ere doing a thoro!gh ob monitoring tons1per1ho!r. He as-ed me (or my opinion. I said I )as impressed> that only no) did I reali=e the meaning o( a %rime meas!rement )ith a #apital %. $on )as +!iet (or a )hile. And so )as e*erybody else. At last he said that he )as #on*in#ed that they )ere doing a good ob monitoring tons1per1ho!r. .hat he )as +!estioning )as" sho!ld they0 &or them it )as heresy. In their )orld" the steel )orld" tons1per1ho!r is one o( the pillars o( their paradigm. It too- them some time to digest that they are allo)ed to +!estion it. $on )as (looded )ith reasons )hy they m!st monitor tons1per1ho!r. In my eyes" I m!st tell yo!" many o( the s!ggested reasons so!nded li-e ")e m!st monitor it be#a!se )e al)ays monitored it." $on listened intently. He didn/t inter(ere e*en )hen they started arg!ing among themsel*es. &inally" )hen they #almed do)n" he reminded them that the main reason for an operational measurement is to induce the departments to do what is good for the company as a whole. They had to agree. At that stage" Bohnny p!t !p a transparen#y. I -no) that it/s di((i#!lt to read (rom the s#reen" so I/ll read it" the same )ay that $on did.

@9

$on started (rom the bottom. In the steel ind!stry" ea#h department is !dged a##ording to ho) many tons they pro#ess per ho!r> the meas!rement o( tons1per1ho!r is the prime operational meas!rement" statement C;;. He then +!oted the (amo!s phrase" "Tell me ho) yo! meas!re me and I/ll tell yo! ho) I/ll beha*e." He didn/t ha*e any problem getting agreement that most people beha*e in a##ordan#e )ith the )ay they are meas!red" C1;. Then he rea#hed the #on#l!sion that in the steel ind!stry" )e are bo!nd to (ind that departments try to ma,imi=e their per(orman#e as meas!red by tons1per1ho!r" C1C. .itho!t hesitation" they #on(irmed it. @E

.hat does this lead to0 'n its o)n" it might ma-e sense" b!t not )hen #ombined )ith other (a#ts that e,ist in the ind!stry. Li-e the (a#t that in almost all departments some items re+!ire less time per ton than others" C8;. &or e,ample" in the rolling department" yo! s+!ee=e red1hot steel into plates to prod!#e ten tons o( t)o1in#h thi#- plates" )hi#h ta-es m!#h less time than to prod!#e ten tons o( one1hal(1in#h thi#- plates. The res!lt m!st be that in order to ma,imi=e their per(orman#e o( tons1 per1ho!r in a gi*en meas!rement period" departments tend to prod!#e the (ast items at the e,pense o( the slo) ones" C@;. 3o! #an imagine )hat this leads to. High in*entory o( the (ast items" )hile missing orders on the slo) items. They dis#!ssed it at length" debating the magnit!de o( the res!lting damage. 2ome tried to minimi=e its signi(i#an#e. $on didn/t arg!e. He didn/t ha*e to. The other managers did it (or him. They bro!ght !p hard n!mbers to pro*e it. The n!mbers )eren/t (!nny at all. E*erything )as in the many millions. A#t!ally" the a##ompanying ane#dotes )ere *ery (!nny" i( yo! ha*e a t)isted sense o( h!mor li-e I do. .hen that )as settled" $on mo*ed on to highlight that in the steel ind!stry" signi(i#ant set!p times e,ist in e*ery department. T)enty years ago a set!p o( t)enty1(o!r ho!rs )as #ommon. Today" d!e to ne) te#hnology" most set!ps are more in the range o( three to (i*e ho!rs. 2till signi(i#ant. E*erybody -no)s that set!p red!#es the tons1per1ho!r. .hile yo! are doing the set!p" yo! prod!#e nothing" C?;. $on as-ed them ho) long they )o!ld r!n a(ter a (o!r1ho!r set!p. Minim!m a )hole shi(t and !s!ally m!#h longer" )as the #onsens!s. And i( there are not eno!gh orders0 A(ter these +!estions nobody arg!ed )ith the #on#l!sion: to ma,imi=e their meas!rement o( tons1per1ho!r" departments tend to pro#ess orders ahead o( time and o!t o( se+!en#e in order to in#rease the bat#h si=e" CC;. 'n#e again they dis#!ssed and tried to +!anti(y the !na*oidable res!lts" the !nne#essarily high in*entories and !nreliable d!e1date per(orman#e. The )orst sit!ation (or a department is to be idle. Non1prod!#tion res!lts in =ero tons1per1ho!r" C8C. It/s no s!rprise that to ma,imi=e their tons1per1ho!r" departments tend to prod!#e (or sto#-" e*en )hen there is no mar-et re+!est on the short or medi!m hori=on" C@C. This de(initely doesn/t help the in*entories. At that stage I tho!ght I (inally !nderstood )hy they ha*e s!#h mo!ntains" and I mean mo!ntains" o( in*entory. And )hy e*en tho!gh they promise that they )ill deli*er a ne) order in se*en )ee-s" they s!##eed in only abo!t si,ty per#ent o( the #ases. 4!t I )as )rong. The real -iller )as abo!t to #ome. .hat typi(ies the base ind!stries" steel being one o( them" is that the nat!re o( their pro#ess is to ha*e di*ergen#e o( prod!#ts at ea#h stage o( prod!#tion. &or e,ample" in the rolling department" they prod!#e many di((erent plates (rom the same type o( steel. %lates di((erent in thi#-ness. 'n#e yo! prod!#e a t)o1in#h1thi#- plate" and later yo! #hange yo!r mind and )ant to t!rn it into a one1in#h plate" it/s too late" the steel is already #old. It/s the same in the slitting department" )here they slit the plates to si=e. I( yo! slit a plate to be se*enty in#hes )ide" yo! #annot later ma-e it eighty in#hes. In short" in the steel ind!stry" items are prod!#ed thro!gh a pro#ess ha*ing many di*ergent points" C9;. No) #ombine all this )ith ea#h o( the (a#ts o!tlined in C@;" C@C and CC;" and )hat do yo! get0 3o! get that to ma,imi=e their per(orman#e o( tons1per1ho!r" departments tend to ta-e a#tions that res!lt in "stealing." No" nobody s!spe#ts that a )or-er p!ts (i*e tons o( steel in his po#-et )hen he goes home. It/s m!#h )orse. &or e,ample" )e prepare a spe#i(i# plate (or only t)o near1term orders> ten tons (or si,ty1in#h1)ide plates and another ten tons (or se*enty1in#h1)ide plates. The set!p time in the slitting department is abo!t three ho!rs. To slit ten tons ta-es less. They try to r!n at least a (!ll shi(t on the same set!p. .hat happens0 They slit all the t)enty tons into one )idth and then s#ream hell that they )ere not gi*en the material (or the other order. 3o! #an imagine the res!lting (inger pointing" not to mention that on one hand )e ha*e a *ery !nsatis(ied #lient and on the other" plates )ith no demand. $on g!ided them in ma-ing estimates o( the res!lting negati*e e((e#ts. They estimated the impa#t on lost sales" e,#ess in*entory" )asted #ost" long deli*ery lead times" !nreliable d!e1date per(orman#e" and" not less important" time )asted in heated +!arrels bet)een departments. The n!mbers )ere staggering. Then" $on as-ed i( they had any other problems. In the ens!ing three ho!rs I got a lesson in ho) to handle #omplaints. $on didn/t dismiss anything they raised" e*en tho!gh some o( them loo-ed to me li-e piti(!l e,#!ses. .ith ea#h problem they raised" $on made them +!anti(y the negati*e impa#t. Then he g!ided a dis#!ssion o( ho) m!#h o( that impa#t is d!e to )hat )as already des#ribed on his diagram. He -ept on re(erring to it as their current reality tree9> the logi#al des#ription o( the e((e#ts stemming (rom the (a#t that they operate in the en*ironment #reated by the tons1per1ho!r meas!rement. It )as ama=ing. &or e,ample" they #omplained abo!t their *endors not al)ays deli*ering on time. $on made them reali=e that i( they did not prod!#e so m!#h e,#ess in*entory" they #o!ld hold m!#h bigger sto#-s o( ra) materials. 5endors not deli*ering on time )o!ld then be#ome a minor point. 'r" the problem that #lients sometimes #hange their minds at the last moment. A(ter in+!iring" /last moment/ t!rned o!t to be (o!r )ee-s be(ore deli*ery. I( lead times )ere m!#h shorter" this also )o!ld not be a problem" as they )o!ld ha*e deli*ered be(ore the #lient had a #han#e to #hange his mind.

@G

To ma-e a long story short" they be#ame #on*in#ed that all the other problems )ere either relati*ely insigni(i#ant or )ere signi(i#ant be#a!se o( the e,isting #haoti# en*ironment. There )as a real" tr!e #onsens!s that the core prob em, the constraint o' the compan!, was the 'act that their prime operationa measurement was tons(per(hour. $on pointed o!t to them that this )as a#t!ally *ery good ne)s. 3es" *ery good ne)s" be#a!se all their #ompetitors s!((ered (rom e,a#tly the same #ore problem. Corre#ting it )o!ld gi*e this #ompany a tremendo!s ad*antage. 3o!/re probably as-ing yo!rsel*es" li-e I did" ho) #ome the steel ind!stry !ses s!#h a de*astating meas!rement0 The ans)er is that their systems" li-e e*ery other ind!stry" are based on the #ost )orld. Remember the basi# ass!mption o( the #ost )orld0 The only )ay to a#hie*e good #ost per(orman#e is thro!gh good lo#al per(orman#e e*ery)here. I( yo! belie*e in that ass!mption yo!/ll be (or#ed to !se a meas!rement li-e tons1per1ho!r. 6ow !ou understand much better wh! TOC claims that current ! the core problem of our organi ations, the constraint, is the 'act that so man! o' our management s!stems are based on the be ie' that the assumptions of the cost world are va id. 3o! #an imagine ho) embarrassed I )as remembering the list o( t)enty1si, #onstraints I had handed to $on !st the pre*io!s e*ening. No) I -ne) )hy he hadn/t bothered to read it. 'n#e yo! !nderstand T'C yo! reali=e that there are no real1li(e systems )ith t)enty #onstraints. 2!#h systems )ill be #haoti# to the e,tent that reality )ill ha*e eliminated them a long time ago. Real1li(e systems ha*e one" ma,im!m t)o" #onstraints. I also !nderstood that I did not ha*e the tools needed to enable me to identi(y the #onstraint. No )onder. That )as the (irst time I/d e*er seen a proper analysis" that I/d seen a #!rrent1reality1tree. At the opening o( my tal- I said that in my eyes the most important #ontrib!tion o( T'C is the resear#h methods it introd!#es. No) yo! !nderstand )hy. The thin-ing pro#ess o( T'C" #alled the e*aporating #lo!d" #a!sed a re*ol!tion in my )or-. This method" or better still" this thin-ing pro#ess" is the antithesis o( )hat I )as !sed to doing. #resenting a prob em as a con' ict between two necessar! conditions makes a ot o' sense. 4!t I )as almost programmed to pro#eed to (ind a #ompromise. In a#ademia )e don/t #all it #ompromise" )e #all it optimi=e. Three1+!arters o( my arti#les are optimi=ation models o( some -ind. 3o! #an imagine ho) di((i#!lt it )as (or me to a##ept that a m!#h better sol!tion" or e*en sol!tions" emerge by re(!sing to attempt to (ind a #ompromise" and instead #on#entrating on e,posing the !nderlying ass!mptions. *he cause and e''ect thinking processes o' *-., one o' which is the current(rea it!(tree, 'orced me to go through another paradigm shi't. 4!t a(ter that e,perien#e )ith $on I )as not abo!t to #ontin!e (iddling )ith symptoms. I had spent ten days inter*ie)ing e*erybody" !st to rea#h the de#isi*e #on#l!sion that this operation )o!ld ne*er be pro(itable" !nless steel pri#es )ent !p s!bstantially. Along #omes $on" and in one month" yes" one month" he made them pro(itable. A month later he dealt )ith the ne,t #onstraint" their mar-eting poli#ies. And today this same #ompany has the same people" no )or-er )as laid1o((" no manager )as repla#ed. And has the same e+!ipment" not one pie#e o( e+!ipment )as bo!ght. This same steel #ompany is no) a gold mine. .ell" that/s my story. And the time is !p. 2o" i( yo! ha*e any +!estionsA They held him there (or another ho!r.

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Chapter 1?
Most o( the #lass is already sitting do)n" b!t to my s!rprise" there is almost nothing on my des-. I/m aggra*ated. These people are s!pposed to be serio!s. I ga*e them a home)or- assignment" they arg!ed to get more time" I ga*e them t)o more )ee-sA and no) only one report is s!bmitted0 2omething is )rong. 4e(ore I get all o*er them" I/d better (ind o!t )hy. "The s!b e#t (or today"" I say in a #alm *oi#e" "is the magnit!de o( the sa(ety people p!t into e*ery step o( a pro e#t. 3o! )ere s!pposed to inter*ie) people and (ind o!t ho) m!#h sa(ety they add. And then yo! )ere s!pposed to s!bmit yo!r (indings. Today." They loo- at ea#h other. They loo- at their des-s. They loo- o!t the )indo). Nobody loo-s at me. "It )as impossible to (ind anything"" Ted snaps. "Ho) #ome0" I/m gen!inely s!rprised. "4e#a!se people don/t li-e to tal- abo!t the sa(ety they p!t in." "$id yo! p!sh0" "3o! bet I did"" he says bitterly. "That )as my mista-e. All it did )as irritate some (oremen." .itho!t a smile he adds" "And belie*e me" those people yo! don/t )ant to irritate." "Anybody else ha*e better l!#-0" Nobody ans)ers. "Charlie" did yo! (ind o!t anything0" 2miling" Charlie replies" "I didn/t get any threats" i( that/s )hat yo! mean" b!t I didn/t get any real ans)ers" either. %eople don/t remember" or don/t )ant to remember. In any e*ent" nobody admits to p!tting sa(ety in their time estimates. .hen I mentioned sa(ety o( t)o h!ndred per#ent" they la!ghed in my (a#e." "'( #o!rse they )o!ld"" I say. "3o! t)o )ent abo!t it all )rong. .hat )as yo!r mista-e0" "I( I -ne)" I )o!ldn/t ha*e made it." Ted doesn/t ta-e #riti#ism )ell. And he is right. .hen I ga*e the assignment" I sho!ld ha*e been more spe#i(i#. "There is no point as-ing people ho) m!#h sa(ety they p!t in be#a!se people belie*e that they/ gi*e realisti# estimations"" I e,plain. "The problem is in )hat they #all realisti#. Remember Mar-/s rea#tion be(ore )e e,plained the probability distrib!tion0 Remember his astonishment )hen he reali=ed ho) big the di((eren#e is bet)een the median and eighty per#ent point0" "2o ho) )ere )e s!pposed to do it0" Ted is *ery snappy. %robably his +!estions to the (oremen stirred !p a hornet/s nest" and he still stings. "3o! sho!ld ha*e as-ed people (or their opinion abo!t the #han#e o( (inishing a tas- in the time they estimated"" I ans)er. "That/s all0" "3es. .e #an do the translation. .e -no) that an e*al!ation o( eighty per#ent #han#e means abo!t t)o h!ndred per#ent sa(ety. 2ometimes more. Remember )hat )e said abo!t the shape o( the probability distrib!tion: the higher the !n#ertainty" the higher the res!lting sa(ety." "I( that/s all yo! )anted"" Charlie says" "then I did (ind something." "Let/s hear it." "&rom my in+!iries" one thing #ame o!t *ery #learly." And he ma-es the (ollo)ing de#laration: "The time estimates are impa#ted" in a ma or )ay" by the last o*err!n the programmer had." E*erybody is la!ghing. They too are a)are o( this phenomenon. Then Charlie #ontin!es. "I don/t thin- that there is m!#h point in as-ing #omp!ter programmers to e*al!ate their #han#e o( (inishing on time. Comp!ter programmers )ill ne*er admit ninety per#ent #han#e" not e*en eighty" be#a!se a programmer )ho (inished on time has not yet been born. At the same time" let me tell yo!" there is nobody li-e an e,perien#ed programmer to pad himsel( )ith sa(ety." Not -no)ing m!#h abo!t programming" I as-" ".hy0" "It/s ob*io!s. 'ther)ise they )o!ldn/t ha*e the time to add all the bells and )histles that nobody needs. I( yo! don/t sit on a programmer" he )ill ne*er (inish" he al)ays has another something he m!st add." Than-s to Charlie" the #lass mood is #heer(!l again. E*en Ted is less gloomy. "I didn/t as- the right +!estions"" he says. "4!t (rom my e,perien#e I #an tell yo! )hat the ans)er )ill be." "3es0" "E*ery (oreman )ill say that i( e*erything is ready (or him" and that/s a big i(" then he )on/t ha*e m!#h di((i#!lty (inishing his share on time. They don/t tal- in terms o( probabilities" b!t they mean o*er ninety per#ent." C;

No) that e*erybody !nderstands )hat they )ere s!pposed to do" more share their e,perien#es. Their e,perien#es are am!sing" b!t not leading !s any)here. Not entirely happy" I as- the #lass" "$oes anyone ha*e anything more than !st general impressions0" "3es"" says Mar-. ".e did (or#e people to gi*e their e*al!ations. .e e*en prepared a +!estionnaire (or that. It/s in o!r report. As yo! #an see there" e,#ept (or one person )ho is -no)n to be paranoid" the *ast ma ority said they thin- that they ha*e better than an eighty per#ent #han#e o( (inishing on time." "There is a #a*eat to it"" R!th adds. "Almost e*erybody emphasi=ed that their ans)er is dependent on others not delaying them" and not being loaded )ith too many other things at the same time." "That/s reasonable"" I say. "2o" )here do yo! thin- )e stand0" And I ans)er my o)n +!estion. "I thin- that )e did #on(irm )hat )e said last time. .e e,pe#ted people to gi*e estimates that )o!ld gi*e a good #han#e o( (inishing their step on time" )ell o*er a (i(ty per#ent #han#e. And that/s )hat yo! (o!nd. At the same time" )e predi#ted that people )o!ld not reali=e ho) m!#h sa(ety this o*er (i(ty per#ent means" and yo! *eri(ied that as )ell. That basi#ally s!ms !p yo!r (indings." "That/s not all"" &red #almly says. "Mar-" R!th and I (o!nd something else. .e (o!nd that (i*e pl!s (i*e e+!als thirteen." ".hat0" "It/s *ery #ommon"" Mar- #omments. "It/s *ery #ommon that (i*e pl!s (i*e e+!als thirteen"" I repeat. ".hat -ind o( a o-e is that0" ".hene*er a step in a pro e#t is a #olle#tion o( se*eral tas-s" ea#h done by a di((erent person"" R!th e,plains" "the boss o( this pro e#t as-s ea#h person (or their o)n estimates" adds them !p and then adds his o)n sa(ety (a#tor on top." "2o" i( one estimates his tas- to ta-e (i*e days"" &red #ontin!es" "and the (ollo)ing tas- o( the same team is estimated to ta-e another (i*e days" the person in #harge )ill gi*e an estimation o( thirteen days." "I see." "That/s standard"" Ted #on(irms. "2ometimes"" 4rian inter e#ts" "there are se*eral management le*els in*ol*ed. Ea#h le*el adds sa(ety." This phenomenon is ne)s to me. Considering h!man nat!re" it ma-es sense" b!t it doesn/t appear in the te,tboo-s I ha*e read. "Is this the #ase at yo!r #ompanies as )ell0" I as- the #lass. Many #on(irm it. "There is something else"" &red adds. "In o!r en*ironment" top management is (re+!ently not happy )ith the (inal estimation o( )hen a pro e#t is e,pe#ted to be (inished. They )ant the res!lts sooner. 2o in hal( the #ases" )hen all the estimates are done" they demand the lead time o( the pro e#t be #!t by" say" t)enty per#ent. This global #!t is !s!ally translated into e*eryone" a#ross the board" ha*ing to #!t their times by t)enty per#ent. 4y no) e*erybody is !sed to it" so they in(late the (inal estimates by t)enty1(i*e per#ent to start )ith." Many nod. It m!st be happening not !st at &red/s #ompany" b!t at others as )ell. "Any more good ne)s0" There isn/t any. "Let/s see )here )e stand"" I say. "As (ar as )e #an tell" there are three di''erent mechanisms b! which sa'et! is inserted into the time estimates o' a most ever! step o' a pro)ectE. "*he 'irst one is that the time estimates are based on a pessimistic experience, the end o' the distribution curve. "*he second is that the arger the number o' management eve s invo ved, the higher the tota estimation, because each eve adds its own sa'et! 'actor. "And the third is that the estimators a so protect their estimations 'rom a g oba cut. ".hen yo! add it all !p" sa(ety m!st be the ma ority o( the estimated time (or a pro e#t." Then I as-" "$o yo! see something strange0" Charlie is +!i#- to pi#- it !p. "I( o!r estimations in#l!de so m!#h sa(ety" ho) #ome so many pro e#ts do not (inish on time0" "Let/s ta-e a spe#i(i# pro e#t" so )e #an really e,amine this +!estion"" I say. "Is anybody )illing to present a #ase )here a pro e#t )as *ery late0" "The $en*er airport." "I mean a pro e#t yo! )ere in*ol*ed )ith. 'ne )here yo! -no) )hat really )ent on." Ted raises his hand. Bo-ingly I say" "Ted" admitting that yo! had a late pro e#t is #ontrary to the image #onstr!#tion #ompanies try to promote." He la!ghs" ".e are among (riends here. And I ha*e a real #ase that sho)s that sometimes pro e#ts )ill be late and yo! #an/t do anything abo!t it. "A year ago" )e b!ilt a ne) mall. A big one. .e )ere late by t)o )hole months. .e blamed it on last1min!te #hanges" b!t the tr!th is that )e )ere str!#- by parti#!larly bad )eather. Also" yo! #an/t imagine ho) many things )e had to redo. There )as nothing )e #o!ld do."

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"Ho) m!#h time" in total" )as lost0" "Abo!t t)o months. That/s )hy )e )ere late." "Maybe"" I say. "4!t tell me" )hat )as the original estimate" (rom start to (inish o( the )hole pro e#t0" "&o!rteen months" I thin-." "Ted" don/t r!n a)ay (rom the dilemma )e are (a#ing. I( most o( the time estimates are a#t!ally sa(ety" yo!r sa(ety )as m!#h more than t)o months. 3o! sho!ldn/t ha*e been late." Ted does not agree. "The (a#t is )e )ere late. I thin- the reason is that )e b!ild sa(ety against reg!lar problems. 2omebody doesn/t sho) !p" a )indo) is damaged" a bad )eather day. That type o( thing. .e don/t plan on ma or #atastrophes." "I don/t b!y it"" 4rian arg!es )ith him. "I( I !nderstood the probability distrib!tion #orre#tly" )e do g!ard against big s!rprises. 'ther)ise" )hy do )e #laim that )e ta-e t)o h!ndred per#ent sa(ety0" "Then I don/t belie*e that )e ta-e so m!#h sa(ety. At least in o!r #ompany )e don/t." 4rian doesn/t let him get a)ay )ith s!#h a statement. "Ha6 3o! are di((erent. 4!t i( I/m not mista-en" yo! told !s that in yo!r #ompany" people !se estimates that p!t them in the range o( ninety per#ent probability o( (inishing ea#h step on time." The debate bet)een them might de*elop into something !nmanageable. Espe#ially )ith others trying to !mp in. I de#ide to #!t it short. ".ell"" I say" "is there something )rong in the logi# that leads !s to ass!me that so m!#h sa(ety e,ists0 'r is there something (!ndamentally )rong in the )ay )e are !sing that sa(ety0" There is nothing )rong in o!r logi#" and they -no) it. E*en Ted. 4!t that doesn/t help them to #ome !p )ith an ans)er. I t!rn to the board and dra) t)o bo,es. "2!ppose these bo,es represent t)o #onse#!ti*e steps in a pro e#t. The estimated time (or ea#h step is ten days. No) s!ppose that the (irst step too- t)el*e days. That means that the se#ond step )ill start t)o days later than planned. That/s ob*io!s. 4!t )hat )ill happen i( the (irst step (inishes in eight days0" "Is it a tri#- +!estion0" someone as-s. "I( the (irst step (inishes in eight days" )hen )ill the se#ond step start0" I repeat my +!estion. A light is #oming on in Ted/s eyes. "It )ill start )hen it )as originally planned to"" he #on(idently states" and smiles. L.hy0< "4e#a!se the team that (inished ahead o( time )ont report it. 3o! see" the )ay )e are set !p" there is no re)ard (or (inishing early" b!t there is" in (a#t" a big penalty." And he e,plains" "I( yo! (inish early yo! !st in*ite press!re (rom management to #!t the times. 3o!r (riends" in #harge o( other similar teams" )ill not li-e it" to say the least." "2o )hat )ill happen0" "They )ill (ind )ays to play )ith it. $on/t )orry" i( they don/t )ant yo! to (ind o!t that they (inished" yo! )on/t." As a se#ond tho!ght he adds" "4esides" e*en in the !nli-ely e*ent that they do report it" it doesn/t mean that the se#ond step )ill immediately start. That team is probably b!sy doing something else" they might e*en be at another site." "Another site" hmmA" Ted/s e,planation is tied too strongly to his spe#i(i# en*ironment" the #onstr!#tion ind!stry. I/m a(raid that my st!dents )on/t see ho) general these phenomena are. That/s )hy I as-" "$o )e (ind this type o( beha*ior in other ind!stries0" "$e(initely"" Charlie is (irm. "E*en tho!gh not e,a#tly (or the same reasons. A programmer is not a(raid o( his peer/s rea#tion" b!t as I already mentioned" it )ill not #ross his mind to say that he (inished ahead o( time. He or she )ill al)ays (ind something in the program that #an still be polished a little more." "And i( they report an early (inish0" I en#o!rage him to #ontin!e. "2till not m!#h )ill happen. The person )ho is s!pposed to do the ne,t step -no)s that there is s!((i#ient time" so )hat/s the r!sh0" "Let me see. .hat both o( yo! are telling !s is that it is li-ely that an early (inish )ill not be reported. And e*en i( it is" (re+!ently the time gained )ill not be ta-en ad*antage o( by the ne,t step> it )ill !st be )asted." I )rite on the board: "A delay in one step is passed" in (!ll" to the ne,t step. An ad*an#e made in one step is !s!ally )asted." There )ere many other #omments" b!t the #on#l!sions held. "3o! see )hat it means0" I try to dri*e home the message. "In se+!ential steps o!r de*iations do not a*erage o!t. $elays a##!m!late" )hile ad*an#es do not. This #an e,plain ho) so m!#h o( o!r sa(ety disappears." I let them thin- abo!t it a little" and then pro#eed. ".hat happens in the #ase o( parallel steps0" I dra) (o!r bo,es all leading to one. "2!ppose that in three o( these steps )e )ere early by (i*e days. And in one step )e )ere late by (i(teen days. 2tatisti#ally" i( )e a*erage o!t all (o!r bo,es" )e are on time."

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The #lass b!rsts o!t la!ghing. "In the #ase o( parallel steps" and in any pro e#t there are many o( them" the biggest delay is passed on to the ne,t step. All other early (inishes do not #o!nt at all." ".hat yo! are telling !s"" R!th is thin-ing hard" "is that most o( the sa(ety )e p!t in doesn/t help at all." "Corre#t." "I( )e #o!ld (ind a )ay to p!t the sa(ety only )here it/s neededA" Ted #an/t #ontrol his impatien#e. Mo#-ingly he says" "I( )e had a #rystal ball that )o!ld tell !s" in ad*an#e" e,a#tly )here the problems )o!ld o##!r" thenA Come on R!th" letOs be realisti#." R!th bl!shes a little" b!t she is not going to be b!llied. "2till" let/s (a#e )hat )e see here. The only thing that #o!nts is the per(orman#e o( the pro e#t as a )hole. At the end" it doesn/t matter ho) many steps )ere not #ompleted on time" as long as the pro e#t )as deli*ered )hen promised. And )hat do )e do0 .e try to prote#t the per(orman#e o( ea#h step. Most o( this prote#tion is )asted. 2o e*en tho!gh )e p!t in that m!#h sa(ety" the pro e#t as a )hole is e,posed." R!th/s )ords trigger a train o( tho!ght in my head. "We tr! to protect the per'ormance o' each step." That so!nds to me li-e a cost wor d menta it!. "*he on ! thing that counts is the per'ormance o' the pro)ect as a who e. " That so!nds m!#h more li-e the throughput wor d menta it!. Is it possible that )e are (a#ing here the #on(li#t that Bohnny &isher )as tal-ing abo!t0 Is it possible that bad per(orman#e is the res!lt o( a )rong ass!mption0 .hat ass!mptions ha*e )e made0 The #lass is silent (or a long )hile. I/m s!pposed to do my thin-ing o!tside #lass" here I/m s!pposed to tea#h. I brea- the silen#e. "Anybody )ant to #omment on )hat R!th said0" &red raises his hand. "There is something that bothers me (rom be(ore. &or the past hal( ho!r )e/*e been spea-ing as i( )e agreed that people p!t a lot o( sa(ety into ea#h step. I/m not s!re abo!t it. I/*e #he#-ed some n!mbers" and they don/t s!pport that #on#l!sion." That/s interesting" espe#ially #oming (rom &red. "2hare it )ith !s"" I say. "In o!r #ompany )e -eep re#ords o( )hen ea#h step started and )hen it )as #ompleted. I !sed the data to #omp!te the elapsed time o( the steps" and I #ompared it to the original estimates. $o yo! -no) )hat I (o!nd0" He )aits a se#ond or t)o" then tells !s. "I (o!nd some steps" *ery (e)" (or )hi#h the elapsed time )as shorter. No) I !nderstand that it might be a res!lt o( people/s rel!#tan#e to report an early (inish. It also sol*es another problem that I had" estimations that are too a##!rate. No) I !nderstand )hy almost hal( the steps )ere reported (inishing almost e,a#tly on the nose. ".hat bothers me is )hat I (o!nd (or almost a third o( the steps. &or this large gro!p I (o!nd that the elapsed time )as abo!t ten to t)enty per#ent longer than the original estimate. I( there is so m!#h sa(ety in the original time estimates o( ea#h step" ho) #an )e e,plain it0" C?

And he #ontin!es. "E*erything that I/*e heard so (ar #an" maybe" e,plain )hy the sa(ety does not prote#t the #ompletion time o( the pro e#t. *he sa'et! is wasted in the connection between one step and another. 4!t )hat I/m tal-ing abo!t here is that I ha*en/t (o!nd the sa(ety that is s!pposed to prote#t the per(orman#e o( ea#h step." "That/s important"" I say. "It means that i( )e don/t ha*e a mista-e in o!r logi#" it m!st be that )e are someho) )asting the sa(ety" not !st on the pro e#t le*el b!t on the step le*el as )ell. Anybody ha*e an idea0" A(ter a long )hile" Tom raises his hand. "Maybe )e !st )aste it0" I/m eager to en#o!rage more st!dents to spea- !p" so so(tly I say. "2o it seems. Can yo! gi*e an e,ample0" "'!r assignment (or today." I don/t see the #onne#tion. 4!t Charlie does. "Tom is absol!tely right." &or those )ho didn/t get it yet" and that in#l!des me" he e,plains. ".hen )e got the home)or- assignment )e all #laimed that t)o )ee-s )as not eno!gh time to do it. And )e s!##eeded in getting a postponement. No) ho) many o( !s" a(ter )e s#reamed that )e needed more time" )ent ba#- and immediately started )or-ing on the assignment0 I bet that no one did." Tom nods his head. "The st!dents/ syndrome"" 4rian says. "&irst (ight (or sa(ety time. .hen yo! get it" yo! ha*e eno!gh time" so )hy h!rry. .hen do yo! sit do)n to do it0 At the last min!te. That/s h!man nat!re." &red !mps on the band)agon. "'nly on#e )e start the )or- #an )e (ind o!t i( there is a problem or not. I( there is" )e start to )or- (ranti#ally. 4!t )e ha*e already )asted the sa(ety" so no) )e are going to be late. 3es. This #an e,plain )hy" in spite o( all the sa(ety" so many steps (inish a little late." "5ery good" Tom"" I say. "It seems that e*erybody agrees )ith yo!. 4ased on personal e,perien#e" me too." "I hate to spoil the party"" Mar- says in his deep *oi#e" "b!t I don/t agree. .hat Tom says e,ists" b!t not al)ays. And de(initely not )hen )e are !nder press!re." Then he adds" "I )ent o*er the steps &red #he#-ed. I #an tell yo! that in many #ases that he #he#-ed" people )ere )or-ing !nder press!re. &or e,ample" many o( the steps that too- longer than estimated )ere done in the digital pro#essing department. That department has been !nder #onstant press!re (or years. 4elie*e me" they don/t )aste time." I loo- at my )at#h. 'nly ten min!te le(t. I( I )ant to (inish this topi# I/ll ha*e to speed things !p. "Mar-"" I say" "this digital pro#essing department. Are they in*ol*ed in many pro e#ts0" "All pro e#ts. That/s o!r bottlene#-. .e #an/t a((ord to dedi#ate these people to one pro e#t at a time. And in ea#h pro e#t" there are many steps that they m!st be in*ol*ed in." "2o" i( I !nderstand yo! #orre#tly"" I say" "ea#h person is m!lti1tas-ing." "3o! !nderstood #orre#tly." "In that en*ironment" being !nder press!re means that many people are p!tting press!re on them to )or- on di((erent things0 I s!spe#t that the digital pro#essing people are in no position to really -no) )hi#h tas-s are more !rgent0" "Ho) #an they"" Mar- agrees. "I thin- that their priority system is a##ording to )ho sho!ts lo!dest. And e*ery pro e#t has se*eral people )ho -no) ho) to sho!t." "2o )hat do they do0" "The best they #an. B!mping (rom one pro e#t to the other" trying to satis(y e*erybody." "Typi#al multi!tasking"" I say. "$o yo! all reali=e )hat impa#t m!lti1tas-ing has on lead time0" They apparently don/t. "2!ppose that a person has three steps to do" A" 4 and C. These steps might belong to di((erent pro e#ts or the same pro e#t" it doesn/t matter. Ea#h step ta-es ten straight )or-ing days. I( o!r person )or-s se+!entially" the lead time o( ea#h step is ten days. Ten days a(ter he starts 4" (or e,ample" 4 is released (or somebody else to #ontin!e the )or-. 4!t o!r person is !nder press!re and he tries to satis(y e*erybody. As a res!lt" he )or-s on a step (or only (i*e days be(ore he mo*es to another step. 2!ppose that the res!lting se+!en#e is A" 4" C" A" 4" C. .hat is the lead time o( ea#h one o( the steps0" I dra) the diagrams" so it/s easier (or them to (ig!re o!t the ans)er.

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Mar- is the one )ho gi*es the ans)er. In astonishment he says" "The lead time o( ea#h step do!bles. I -ne) that m!ltitas-ing )as bad" b!t I didn/t imagine to )hat e,tent. And )e didn/t e*en #onsider the set!p time that is )asted." "Mu ti(tasking is probably the biggest ki er o' ead time"" I say. "And )e all s!((er (rom it. .a it meetings, ca it emergencies, ca it other )obs. The impa#t is the same. Lead time in(lates. I( yo! thin- abo!t it" )hene*er yo! gi*e a time estimate yo! -no) that the a#t!al time is !st a (ra#tion o( yo!r estimate" b!t yo! int!iti*ely (a#tor in the impa#t o( m!lti1 tas-ing." This mat#hes their e,perien#e" be#a!se they all agree. ".ait a min!te"" says Mar-. "There is something )rong here. In o!r #ompany" )e ha*e to #ome o!t )ith a ne) prod!#t e*ery si, months or so. There(ore" i( )e in#rease all the sa(ety times" )e in#rease the lead time o( all pro e#ts. That means that more pro e#ts )ill be going on at the same time." I don/t see his problem. "Corre#t" b!t )hat/s yo!r problem0" I as-. 2lo)ly" he #ontin!es. "More pro e#ts means m!lti1tas-ing. And a##ording to )hat )e said" it means that lead times )ill lengthen. 2o )hat yo! are telling !s is that i' we add more sa'et! time it won1t he p because the ead times wi become onger0" "2el(1(!l(illing prophesy"" R!th says. "3o! #laim that it )ill ta-e yo! longer" it )ill. And )e all -no) it. My problem is di((erent. Ho) #ome )e allo) m!lti1tas-ing0" "Isn/t it ob*io!s"" I ans)er. ".itho!t m!lti1tas-ing )e might r!n into times )here people don/t ha*e eno!gh )or-. E((i#ien#ies )ill go do)n." ".ho #ares abo!t lo#al e((i#ien#ies0" It/s the (irst time I/*e seen &red get e,#ited. "Isn/t the only important thing to g!arantee that the pro e#ts )ill be s!##ess(!l0" Mar- oins in. "And on the bottlene#-" )ith m!lti1tas-ing or )itho!t it" )e/ll ha*e eno!gh )or-." More oin in. I -no) )here it/s #oming (rom. Bohnny &isher is tea#hing them the #o!rse in prod!#tion. I/d better not step into that mine (ield. Not )itho!t preparation. I raise my hand to stop the atta#-. "Hold yo!r horses. .ait a min!te." .hen they +!iet do)n" I #ontin!e. "3o! are raising *ery interesting ideas. 4!t loo- at yo!r )at#hes. It )ill ha*e to )ait !ntil ne,t time." That stops them. "Let/s s!mmari=e )hat )e (o!nd today." They all start )riting. ".e (o!nd three me#hanisms to p!t sa(ety in. No) it seems that )e also (o!nd three me#hanisms to )aste that sa(ety. 'ne )e #alled the st!dent syndrome" there is no r!sh so start at the last min!te. The se#ond is m!lti1tas-ing. The third in*ol*es the dependen#ies bet)een steps> these dependen#ies #a!se delays to a##!m!late and ad*an#es to be )asted. ".hi#h brings !s to yo!r ne,t assignment. This time it/s simple" so I don/t e,pe#t any mis!nderstanding. I )ant yo! to s!bmit an e,ample (or ea#h o( the three me#hanisms that people !se to add sa(ety" and (or ea#h o( the three me#hanisms people !se to )aste the sa(ety. The e,amples sho!ld be ta-en (rom yo!r reality and m!st" I repeat" m!st be n!meri#al."

CC

Chapter 1@
I/m )aiting to go into the dean/s o((i#e. This meeting is a (ormality" and in general" I hate (ormalities" b!t not this one. This one too- me o*er nine years to rea#h. T)o )ee-s ago" the last #ommittee appro*ed me (or ten!re. &inally. No) the dean has to sign" and then the president. They are r!bber stamps. '!r dean has a #!stom o( meeting )ith e*ery appro*ed #andidate personally. To sho) interest" to gi*e a pep tal-" toA I don/t -no) )hat. 2o here I am" )ith my best tie on. I/m sho)n in. $ean Christopher %age II sha-es my hand and g!ides me to a #hair. It/s the (irst time I/*e been in this o((i#e" b!t I/*e heard a lot abo!t it. Thi#- #arpet" bea!ti(!lly (ramed paintings. Not e,a#tly my taste" b!t here they (it. Ni#e (!rnit!re. Not !st ni#e" #om(ortable. Then I noti#e that he isn/t smiling. That/s not li-e him. "I/m a(raid I ha*e bad ne)s (or yo!"" I hear him say. The rest #omes to me as i( thro!gh a (og. "The b!siness s#hool is not going to gi*e ten!re (or a )hileA Not to anybody" no e,#eptions." "3es" I -no) )hat a good tea#her yo! are." ".hat #an )e do0 It/s the global strategy." "Bim .ilson tal-ed to me" b!t yo! m!st !nderstand" it/s not in my hands." "2orry" b!t no. There )ill be no e,tensions. Not e*en (or one year." "The president is absol!tely (irm. I/m a(raid it/s (inal." "All I #an do is gi*e yo! a *ery good re(eren#e letter. 3o! deser*e it." Than-s a lot. I don/t see anybody as I go ba#- to my o((i#e. 2trange" b!t only one tho!ght -eeps booming in my head" ".ill B!dith lea*e me0" I lo#- my door" sit at my des-" and try to assess my sit!ation. I/m too !pset. T)o ho!rs later I rea#h (or the phone and #all %hil" an old b!ddy. .e st!died together. He has ten!re at a pri*ate #ollege" )here the pay is m!#h better. I m!st e,plore the alternati*es. "%hil" is there an opening at yo!r #ollege0" "2!re there is. 4!t Ri#-" yo! sho!ld ha*e applied (i*e years ago" )hen I begged yo! to." "&orget the past. .hat do I ha*e to do to apply no)0" "It )on/t help"" #omes the dis#o!raging ans)er. ".hat do yo! mean /it )on/t help/0 $o yo! ha*e an opening or not0" "'( #o!rse )e ha*e. The press!re here is immense. 4!t Ri#-" listen to me. They are not hiring people li-e yo! anymore. The mar-et is (!ll o( people )ho tea#h b!siness." "I/m a *ery good tea#her." "I -no)" b!t Ri#-" that/s not the point. Today they either hire (!ll pro(essors (or the image" or ad !n#t pro(essors. And (or those they only ta-e people )ith years o( (ield e,perien#e. 3o! don/t stand a #han#e." No" I don/t. Three more phone #alls" to (riends in state and #omm!nity #olleges" #lari(ies it (or me. I missed the train. I/m thro)n o!t o( a#ademia )ith no )ay ba#-. And (or )hat0 I still don/t !nderstand it. Maybe B!dith is right. Maybe it/s time (or me to ma-e some money" to go into the #ons!lting b!siness. Cons!lting (or me is almost e+!al to prostit!tion. 4!t maybe I/m !st a((e#ted by people )ho didn/t dare go o!t in the real )orld. %eople )ho pre(er prod!#ing )orthless arti#les to being !dged by tangible res!lts. I bring mysel( to (lip thro!gh my address boo- on#e again. "Hi" $aniel. $o yo! need more e,#ellent people0" "Li-e )hom0 Li-e me." "I/m (lattered. 2o )hat is my ne,t step0 .hen sho!ld I (ly to meet )ith the partner in #harge0" "2end a res!me" !h1h!hA highlighting my #ons!lting assignments0 4!t" $aniel" I ne*er #ons!lted." "I see. Grants that I soli#ited0 Listen" $aniel" I thin- that yo! ha*e it all )rong." &i*e min!tes later" smarter and (!rio!s" I p!t do)n the phone. The greedy bastards. 2in#e I/*e already started" I de#ide to go all the )ay. I #all smaller partnerships. Then small ones. It/s ridi#!lo!s. I/m s!pposed to get my o)n #lients. I/m s!pposed to do e*erything alone" and on top o( that to pay (i(teen h!ndred dollars a month (or o((i#e and a##o!nting ser*i#es. &orget #ons!lting" I tell mysel(" I/m not #!t o!t (or it any)ay. I #an/t sell mysel(. I don/t li-e to" and I don/t -no) ho). 4esides" tea#hing is my li(e. 2o )hat is the alternati*e0 A high s#hool tea#her. And )hat am I going to tea#h in high s#hool0 C9

&orget alternati*es" I say to mysel(. I/m not gi*ing !p on tea#hing st!dents. Thin-. There m!st be something that #an be done. They #an/t thro) me o!t li-e this. I/*e deli*ered on my end o( the bargain" there m!st be a )ay to (or#e them to honor their end. I stand !p and go to Bim. 'ne glan#e is eno!gh (or him. "2o yo! heard the ne)s. 2orry Ri#-. I )as trying to get ahold o( yo!. Le(t yo! messages e*ery)here." "I -no)"" I say" and drop into a #hair. "I tho!ght that yo! )ere loo-ing (or me (or the dra(t o( the ne,t arti#le." He doesn/t say a )ord. B!st loo-s at me sympatheti#ally. "Bim" I/m not going to lie do)n and let them do this to me." "3o! ne*er )ill" b!t )hat #an yo! do0" "I don/t -no). That/s )hat I #ame to as-. I/m determined to (ight. .hat are my options0" "'ptions0" he repeats. "There aren/t many. I )onder i( there are any." "There m!st be. 3o! -no) the system" yo! m!st -no) a )ay." He thin-s (or a )hile" then starts to tal-" "3o! don/t ha*e a problem )ith the b!siness s#hool" here )e are all (or yo!. 3o! passed all the #ommittees" and I didn/t hear e*en one bad #omment." "2o" )hat is the problem0" "It/s 4.B. That )hat ma-es it so to!gh. 3o! see" 4.B. de#ided to p!t a (ree=e on all ne) (inan#ial #ommitments o( the b!siness s#hool. '( #o!rse the (irst one is granting ten!re. I didn/t -no) abo!t it" b!t the dean has been (ighting )ith her (or months. It got to the point )here 4.B. threatened that i( the b!siness s#hool s!bmits any #andidates (or ten!re" she )ill not only re e#t them" b!t she )ill demand a big b!dget #!t." "2o yo! are telling me that I/m being sa#ri(i#ed (or some politi#al (ight0 That all I )or-ed (or is going do)n the t!be be#a!se o( someA some po)er str!ggle." He nods. "2o it seems." "2omeho) I ha*e to rea#h 4.B."" I say. "2he is the -ey." "That/s easy"" he s!rprises me. "A##ording to the !ni*ersity r!les" yo! #an demand a meeting" and she m!st see yo!. 4!t ho) #an it help0 E*erybody -no)s )hat a #old1blooded e((i#ien#y ma#hine she is. The only thing she #ares abo!t is the !ni*ersity." "I/m #o!nting on it. Than- yo!" Bim"" I say" and lea*e him a little p!==led. I -no) that I #ontrib!te" so there m!st be a )ay to sho) it to her. I !st ha*e to (ind that )ay. No)" only three days later" I/m in 4.B./s o((i#e. 2he has gi*en me a )hole spee#h abo!t the trends in the M4A mar-et. As i( I #are. I reali=e )hat a stone )all I really (a#e )hen she br!tally says" "2orry" b!t )hen yo! ma-e an omelet" eggs m!st be bro-en." 2o no) I/m an egg. And a bro-en egg" no less. &inally" I reali=e that there is no #han#e o( bringing her aro!nd to see it (rom my side. I ha*e to tal- her lang!age. ".hat happens i( I #an bring more st!dents into the e,e#!ti*e M4A program0" This stops her short. 2he thin-s abo!t it" and then" not parti#!larly interested" as-s" "Ho) do yo! plan to do it0" I don/t ha*e a plan yet" b!t I also don/t ha*e anything to lose. "I/m tea#hing the pro e#t management #o!rse. %ro e#ts are )here the big money is." 2he doesn/t respond. I ta-e it as a sign to #ontin!e. "It might #ome as a s!rprise to yo!" b!t the state o( -no)ledge in this (ield is appalling. Almost no pro e#t (inishes on time" or b!dget. And i( they do" it/s be#a!se the original s#ope has been #ompromised." 2he signals me to #ontin!e. ".e ha*e made ma or progress. Tea#hing ho) to s!bstantially better manage pro e#ts is o( tremendo!s *al!e to any ind!stry." "Any organi=ation"" she agrees. En#o!raged" I #harge on. "This -no)1ho) is so *al!able that I thin- I )ill be able to #on*in#e #ompanies to send managers to learn it." It de(initely has pi+!ed her interest. "Tell me more"" she says. 2o I tell her. I tell her abo!t the dilemma o( early start and late start" the dilemma that eopardi=es the ability to (o#!s. I tell her abo!t the progress meas!rement that eopardi=es real progress. Then I tell her abo!t the sa(ety )e so genero!sly insert into ea#h step and then so #arelessly )aste. I tal- (or almost an ho!r. 2he listens. 2he e*en as-s +!estions. I/m impressed )ith her ability to grasp these #on#epts so +!i#-ly. Then she says" "3o! tal-ed abo!t the problems. $o yo! ha*e sol!tions0"

CE

.hen she hears my response" her interest ta-es a nose di*e. I/m abo!t to lose it all. $esperately" I say" "I thin- I #an (ind the ans)ers. And I #an bring ten more people to the e,e#!ti*e M4A program." It doesn/t seem to )or-. I try to apply to her b!siness sense. "Their t!ition )ill more than #o*er my salary"" I say as #on*in#ingly as I #an. "%ro(essor 2il*er"" she so(tly says" "ten additional st!dents )ill not be eno!gh. Ten!re is (ore*er" and there is no g!arantee that yo! )ill be able to p!ll o(( s!#h a mira#le a se#ond time. That is" i( yo! #an p!ll it o(( at all." I try to ob e#t. 2he #!ts me o((. ".hat yo! told me is interesting. .e m!st pro*ide *al!able -no)ledge. I belie*e that other)ise there is no long1term (!t!re (or an M4A program. In my opinion" in the b!siness s#hool )e don/t #!rrently tea#h m!#h o( *al!e. I -eep hearing abo!t the (irst year sho#-" the sho#- o!r grad!ates get )hen they lea*e s#hool and start )or-" and then (ind o!t that almost e*erything )e ha*e ta!ght them simply doesn/t apply. "2o yo! don/t ha*e to pers!ade me that it/s important to tea#h a better )ay to manage pro e#ts. The +!estion is" are yo! the person to do it0" "Try me. I/ll deli*er." .here I got this #on(iden#e (rom" I don/t -no). Maybe it #ame o!t o( my desperation. 4.B. probably thin-s so as )ell" be#a!se she says" "2!#h things ta-e m!#h longer. And I ha*e a poli#y to (ollo)." "I #an do it." 2he gi*es me a long e*al!ating loo-. "Are yo! pra#ti#al eno!gh0 4e#a!se i( not" ho) #an yo! de*elop pra#ti#al sol!tions to s!#h problems0" I/m trying to (ind something to ans)er" )hen she says" "Tell yo! )hat. .ords are ni#e" b!t I need proo(. %ro*e that yo! are pra#ti#al by bringing ten more st!dents to the e,e#!ti*e M4A program" and I/ll e,tend yo! another year." I tried to arg!e" b!t it )as li-e tal-ing to the )all. I )ent o!t disg!sted )ith the !ni*ersity and )ith mysel(. In a#ademia one is s!pposed to be !dged by his ability to tea#h and his ability to resear#h" not his ability to sell the !ni*ersity to st!dents. I deser*e to get ten!re. That )as the *erdi#t o( the pro(essional #ommittees" and no) I/*e be#ome a salesman" and (or )hat0

CG

Chapter 1C
.e are gathered in a small #lassroom> Bim" Bohnny" Charlene and mysel(. It/s gray o!tside" and #old. Not !st o!tside" inside as )ell. My mind is not on this meeting. It/s not any)here else" either. &or the past (e) days I ha*en/t see any point in p!lling mysel( together. I !st go thro!gh the motions. I sho) !p e*ery morning" I tea#h" I stare at some a#ademi# o!rnals" and I go home. I don/t e*en ha*e the heart to brea- the de*astating ne)s to B!dith. It/s not right" b!t )hat/s the r!sh0 .hat #an she do abo!t it0 Ha*ing the satis(a#tion that she )as right all along is small #onsolation. I -no) I don/t ha*e the right to hide it (rom her. .e/ll ha*e to ret!rn the 4la=er. .e/ll ha*e to sell the ho!se. %robably )e/ll ha*e to mo*e. .here to0 $oesn/t matter. It/s gray o!tside" and #old. "In my systems layo!t #o!rse"" Bim says" e,plaining the p!rpose o( the meeting" "I started hearing *ery insight(!l #omments (rom the st!dents. 2ometimes so insight(!l that I didn/t -no) ho) to handle them. Charlene has been #omplaining (or a )hile that the st!dents ha*e been gi*ing her a hard time in her #ost a##o!nting #o!rse. No) Ri#- has started to en#o!nter the same thing in pro e#t management. At (irst )e didn/t -no) )here it )as #oming (rom" b!t a(ter yo!r #ollo+!i!m" Bohnny" )e don/t ha*e any do!bt." 2miling" Bohnny rea#ts" "2o yo! )ant me to stop tea#hing )hat I/m tea#hing0" "Not at all"" Charlene is +!i#- to respond. "I thin- )hat yo! tea#h is *ery good. E*ery pro(essional in a##o!nting has -no)n (or a long time that something )as )rong. Tr!e" yo!r st!dents irritate me a little )ith their ne) ability to point o!t the (alla#ies so #learly. 4!t I don/t ha*e a real problem )ith it. I !st )ant to -no) more abo!t it than they do. Is that too m!#h to as-0" "That/s basi#ally )hat )e all )ant." Bim p!ts his hand on Bohnny/s sho!lder. "3o!r #ollo+!i!m )as (as#inating" b!t it )asn/t eno!gh. .e )ant to -no) more abo!t )hat yo! tea#h in yo!r prod!#tion #o!rse." La!ghing" Charlene adds" "&irst" be#a!se )e do )ant to -no). 2e#ond" be#a!se )e #an/t a((ord not to -no)." I don/t say a )ord. I don/t agree. I" (or one" don/t )ant to -no). .hat does it help to -no)0 I/m thro!gh )ith st!((ing my head )ith all this garbage. It )on/t help -eep the ho!se (or B!dith. It )on/t help me -eep B!dith. 4esides" all this m!mbo !mbo abo!t lin-s in a #hain. The mista-e there is so ob*io!s" e*en a #hild #an spot it. 2o m!#h (!ss abo!t nothing. "I/d be delighted to"" Bohnny is all smiles. '( #o!rse he is delighted. .hy sho!ldn/t he be0 He is a #haired pro(essor. And I/m s!re that last year" on his sabbati#al" besides his ma esti# salary (rom the !ni*ersity" FniCo paid him another (ort!ne. "The production application of TOC"" Bohnny is all b!siness" "is a straight ded!#tion o( the (i*e (o#!sing steps." He stands !p and goes to the board. "The (irst step" as yo! may re#all" is identi(y the #onstraint." And in #apital letters he )rites / ". "#$%T"&'./ "2!ppose yo! identi(ied the #onstraint" the bottlene#-. Then the ne,tA" He is so (!ll o( himsel( I #an/t stand it any longer. I #!t him o((. "'-ay" let/s #!t the #rap and (or a #hange let/s be pra#ti#al"" I #hallenge him. "In pra#ti#e there is more than one #onstraint. And don/t tell me that one )or- #enter has to be loaded more than others. In mathemati#s it might be so" b!t in reality the di((eren#es are negligible." I ignore the s!rprised e,pressions on Bim/s and Charlene/s (a#es" and #harge on. "It/s #lear e*en in yo!r #hain analogy. Theoreti#ally one lin- is the )ea-est. 4!t pra#ti#ally0 In a real #hain" the ne,t )ea-est lin- is almost the same" it/s !st in(initesimally stronger. All yo!r arg!ments are based on nothing." I/*e sho)n them )hat I really thin- abo!t their theories. I/m not going to #ontin!e being the ni#e g!y. In the time I still ha*e le(t in a#ademia I/m going to spea- my mind. .hen something is garbage" I/m going to #all it garbage. The )ay Bohnny #ontin!es raises my blood press!re. .ith his best s#holasti# manners he has the ner*e to say" "This is a *ery interesting +!estion." Interesting" my ass. I nailed him" and he -no)s it. Not s!rprisingly" he immediately starts to #o*er !p" to #lo!d the iss!e )ith (an#y mathemati#s. I barely listen )hen he m!mbles something abo!t )hen yo! !se linear programming to sol*e the e+!ations" and then yo! !se sensiti*ity analysis" yo! see that a system ha*ing t)o #onstraints res!lts in only !nstable sol!tions. Bim starts to ta-e my side. "Bohnny" #an yo! ans)er Ri#-/s +!estion )itho!t !sing mathemati#s0" "2!re"" he says. Leaning (or)ard" I #hallenge him" "Let/s see." I/m not going to let him get a)ay )ith some empty #on*ol!ted senten#es. I/*e played this game long eno!gh. Eno!gh to -no) ho) to e,pose phonies. CH

'n the le(t1hand #orner o( the board Bohnny dra)s a line o( #ir#les. "These represent )or- #enters. The (lo) o( material is (rom le(t to right." Let it be. "Let/s s!ppose that )e )ant to !tili=e this )or- #enter to one h!ndred per#ent"" and he p!ts a big "P" on one o( the middle #ir#les. ".e #an/t do it !nless the pre*io!s )or- #enters #onstantly s!pply eno!gh material." "$on/t (orget that in pra#ti#e" ma#hines are not )or-ing smoothly"" I/m ma-ing s!re that he doesn/t t!rn it into one o( those arti(i#ial e,amples Bohnny li-es so m!#h to !se in his arti#les. "And don/t ass!me any neat pattern. A )or-er may slo) do)n" tools #an brea-" materials am. 3o! ne*er -no)> yo! only -no) that it happens." Bohnny smiles at me. "%re#isely." He beha*es as i( I/m trying to help him. "Fnder the realisti# #onditions that Ri#- so *i*idly des#ribed" ho) #an )e g!arantee that o!r. P ma#hine )ill al)ays ha*e eno!gh material so that it )ill be able to )or#onstantly0" "%!t eno!gh sto#- in (ront o( it"" Bim #ollaborates. "Good idea." And Bohnny dra)s" in (ront the #ir#le )ith the P" a h!mp that is s!pposed to represent a pile o( sto#-. "No)" as Ri#- told !s" M!rphy hits> one o( the )or- #enters !pstream has a problem. The (lo) o( material to the P ma#hine stops. 4!t not to )orry" d!e to Bim/s s!ggestion there/s a pile o( material ready. .e #an #ontin!e to !tili=e o!r P ma#hine to one h!ndred per#ent."

I li-e it. It/s simple. And Bohnny )ill soon admit that he is )rong. There is no problem ha*ing as many bottlene#-s as )e )ant" the only pri#e is some in*entory. I/m not going to let him gi*e a baloney spee#h on the #ost o( holding in*entory as an e,#!se (or ha*ing !st one bottlene#-. 'h" no. "2o (ar" so good"" he smiles. "4!t )hat" !na*oidably" happens d!ring this time0 The (lo) o( material to P stops and P #ontin!es to )or-" p!lling (rom its pile. The amo!nt o( in*entory in the pile m!st go do)n." Bohnny stops" t!rns to me and as-s" "2ho!ld )e agree that M!rphy does not stri-e only on#e0 That sooner or later one o( the (eeding ma#hines )ill" on#e again" stop0" E*en tho!gh I see )here he is leading" I m!st agree. "And i( so" (rom time to time" the pile )ill #ontin!e to be drained. Can )e a((ord to let the initial pile be drained to =ero0" I don/t ans)er. I don/t li-e people as-ing tri*ial +!estions. I hate it e*en more )hen they bother to ans)er their o)n tri*ial +!estions. .hi#h Bohnny does. "I( )e do" the ne,t time M!rphy hits one o( the (eeding ma#hines" o!r P ma#hine )ill be star*ed" it )on/t )or- (or one h!ndred per#ent o( its time. 2o" i( )e don/t )ant this initial pile to be drained to =ero" )hen the problem in the (eeding ma#hines )as #orre#ted and the (lo) res!med" )hat did )e ha*e to do0" "Reb!ild the pile in (ront o( P"" Bim plays Bohnny/s tri*ial +!estion and ans)er game. "4!t to do that"" Bohnny says tri!mphantly" "the (eeding ma#hines ha*e not only to s!pply the ongoing rate o( P" at the same time they also ha*e to reb!ild the sto#-. D!i#-ly" be(ore M!rphy hits again. .hi#h meansA" he loo-s dire#tly at me" ")hi#h means that ea#h one o( them m!st ha*e more #apa#ity than P." He goes ba#- to his seat. "Con#l!sion. I( )e )ant to !tili=e e*en one reso!r#e to one h!ndred per#ent" all its (eeding )or#enters ha*e to ha*e more #apa#ity. 2in#e M!rphy is not negligible" and the (eeding ma#hines ha*e limited time to reb!ild the sto#-" they m!st ha*e more than in(initesimal e,#ess #apa#ity. DE$." I stare at the board. Bohnny/s proo( is s!rprisingly elegant. I #an/t (ind any #ra#- in it. 4!t i( he is right on this point" I ha*e to a##ept the res!lting (i*e (o#!sing steps. 2o )hat0 .hat/s bad abo!t it0 In the ba#-gro!nd I hear Bim as-ing" "Ho) m!#h e,#ess #apa#ity do the (eeding )or- #enters need to ha*e0" And Bohnny ans)ers" "It depends on the magnit!de o( the brea-do)ns" not less on the (re+!en#y o( the brea-do)ns" and" o( #o!rse" the amo!nt o( the sto#- yo! allo) or )ant to b!ild in (ront o( P.< I -no) )hat/s bad abo!t it. 2in#e the min!te I heard it the (irst time" I -ne) that these (i*e (o#!sing steps are the -ey to sol*ing all the riddles o( pro e#t management" and I )anted to try and gi*e it a shot. 4!t no)" no) that 4.B. p!ts it as a #ondition to pro*e mysel( )orthy o( ten!re" I/m not )illing to degrade mysel( by playing her game. I/*e already pro*en mysel(" I passed all the pro(essional #ommittees. 9;

Bim and Bohnny are no) both at the board )riting some e+!ations. 4!t )hat i( I #an beat her at her o)n game0 Not a #han#e. .hy do I ta-e (or granted that it/s beyond me to sol*e the pro e#ts/ problems0 "Ri#-0" Charlene to!#hes my arm. "I need to -no) this st!((. $o yo! mind letting Bohnny #ontin!e0" I stare blan-ly at her. "In t)o ho!rs I ha*e a #lass to tea#h" and yo! are )asting o!r time no)." 2he is so sel(1#entered. I need to -no) this st!(( e*en more than she does. ".hy are yo! pi#-ing on me0" I say. 2he doesn/t ans)er. Instead she t!rns ba#- to them. "2o" the (irst step is /identi(y./ Bohnny" Bim" #an )e pro#eed0" "(nd the ne)t steps"" I say" "are /e)ploit/" then /subordinate/" then /elevate/ and /go back/. That/s simple. My +!estion is" ho) do I #on*ert it into a logisti#al sol!tion0 2omething pra#ti#al." Bim ret!rns to his seat. Bohnny )ipes their s#ribbles (rom the board and )rites the remaining (o!r steps. .hen he (inishes" he t!rns aro!nd" and hal( serio!sly" hal( sar#asti#ally he as-s me" "Can I !se an analogy0" ".hy not0" He t!rns ba#- to the board and adds legs and noses to the #ir#les. "No) they are a troop o( soldiers on a mar#h. $o yo! see the analogy to a plant0" .e don/t. "The (irst ro) o( soldiers is )al-ing on *irgin road" pro#essing ra) material. Ea#h ro) in t!rn pro#esses the same pie#e o( road !ntil the last ro) releases the (inished goods" the part o( the road the troop" as a )hole" has le(t behind."

"No) I see"" says Charlene. "It/s slightly #on(!sing at (irst be#a!se in a plant the ma#hines are (i,ed and material is mo*ing" here it/s the opposite. 4!t I agree" it doesn/t matter." "I( the (irst ro) #ons!mes ra) materials"" Bohnny #ontin!es" "and the last ro) releases (inished goods" the distan#e bet)een the (irst and last ro)s is )or-1in1pro#ess in*entory. In this analogy )e #an see the in*entory *is!ally." I/m not interested in in*entory" it/s not a (a#tor in pro e#ts. ".hat abo!t lead time0" I as-. "It/s the same." Bohnny ans)ers. "%rod!#tion lead time is the time elapsed (rom the min!te the (irst soldier stepped on a parti#!lar point !ntil the last soldier stepped on the same point. 2o" the bigger the distan#e bet)een the (irst ro) and the last ro)" the longer the lead time. .or-1in1pro#ess in*entory and lead time are t)in brothers." I don/t ha*e a problem )ith it" I !st )ant him to tal- in terms o( lead time rather than in*entory. ".hen the troop lea*es the #amp"" Bohnny #ontin!es to e,plain" "the soldiers are pa#-ed together. 4!t )hen )e loo- at the same troop t)o miles do)n the road" )hat do )e see0 They are spread all o*er the #o!ntryside." "Lead time has gone thro!gh the roo("" I #omment to mysel(. "The o((i#er )ill stop the troop" regro!p the soldiers and then they/ll #ontin!e. 2topping the troop means that thro!ghp!t has been lost. .e see that e*en in this simple /plant/ there are problems. 'n a*erage" lead time is too long" and (rom time to time thro!ghp!t is lost." I start to li-e Bohnny/s analogy. He t!rns to Charlene. ".hat happens i( )e !se e((i#ien#ies to !dge the per(orman#e o( ea#h soldier0" It/s an interesting +!estion. Ho) does one go abo!t ans)ering it0 Charlene goes abo!t it systemati#ally. 2lo)ly she says" "4eing e((i#ient means doing more in a gi*en time period. In o!r analogy" it translates into /)al- (aster./ " %i#-ing !p speed she #ontin!es" "That/s e,a#tly )hat )e )ant. .e )ant the soldiers to mo*e (aster. I do not see any problem." Neither do I. "$o )e )ant e*ery soldier to mo*e (aster0" Bohnny as-s her" "or do )e )ant the troop as a )hole to mo*e (aster0" ".hat/s the di((eren#e0" 91

"3o!/re (orgetting that )e ha*e a bottlene#-"" and he points to the soldier bearing the big P. "The rate at )hi#h the troop as a )hole mo*es is di#tated by the rate o( the bottlene#-. '!r P (ello) is not the (irst soldier. I( )e en#o!rage ea#h soldier to )al- as (ast as he #an" the troop )ill spread. Lead time )ill go !p.< 3es. .e all -ne) it" b!t it/s so easy to (all into the trap o( the #ost )orld. "It/s li-e )hat yo!/*e sho)n !s abo!t the steel mill"" Charlene remar-s" "meas!ring ea#h )or- #enter by tons1per1ho!r." "%re#isely"" Bohnny nods. "The +!estion is )hat to do instead0 Loo- at that analogy" it might gi*e yo! a #l!e." .e loo-. It doesn/t. "Ho) #an )e pre*ent the spreading0" Bohnny is not gi*ing !p on !s. 2till not -no)ing the ans)er" I try to o-e" ".e #an tie the soldiers to ea#h other" )ith #hains." "That/s the assembly line"" Bim !mps !p and starts to pa#e. "That/s the #on*eyor belts o( the assembly line." I thin- abo!t it (or a se#ond. "I don/t get it"" I admit. "Me neither"" says Bim" and sits do)n again. Bohnny dra)s #hains bet)een his (!nny soldiers. ".hat is the e((e#t o( p!tting #hains0 "Loo- at the soldier be(ore the bottlene#-. 4y de(inition that soldier is (aster than the bottlene#-. 2o the #hain bet)een them is tight. No) this soldier #an no longer mo*e at his o)n pa#e> d!e to the #hain" he is restri#ted to mo*ing at the pa#e o( the bottlene#-. 2preading is pre*ented. Bim is right" an assembly line is a #ase )here )e !se #hains. The limited spa#e o( the #on*eyor belt ser*es as a #hain. Loo- at it. +:uppose that in an assembly line one work center is 'aster than the work center downstream 'rom it. *he conve!er be t between them wi be 'u o' products, the chain is tight. 0' that conve!or be t is 'u , our 'ast work center cannot continue to produce at it1s own rate. 0t is 'orced to continue producing at the rate at which space becomes avai ab e on the conve!or be t. Which means, producing at the pace o' the downstream work center.+ +*he same is true 'or *ust!"n!Time,+ %im is sa!ing s ow !. +%0* doesn1t use conve!or be ts, it uses containers, o' which a imited number are a owed to accumu ate between work centers. 0t1s exact ! the same concept.+ "Corre#t"" Bohnny agrees. "And )e all -no) ho) e((e#ti*e assembly lines" or BIT are. Lead time !nder those methods is by (ar shorter than )hat )e see in #on*entional prod!#tion. "2o" )hat is the essen#e o( these methods0" He #ontin!es to as-" ".hy do they )or- so )ell0" And then ans)ers" "All they/*e done is to p!t a #ap on the amo!nt o( in*entory they allo) to a##!m!late bet)een ea#h t)o #enters. 'n#e the lo#al in*entory rea#hes its #ap" the )or- #enter generating it is not allo)ed to #ontin!e prod!#ing at one h!ndred per#ent o( its #apability." I !nderstand" b!t something doesn/t (it. "%lease )ait"" I as- him. "I/m trying to p!t my tho!ghts in order. 'ther)ise I don/t ha*e a #han#e o( trans(erring )hat yo! are sho)ing !s in prod!#tion to the pro e#t en*ironment. 4ear )ith me." "Ta-e yo!r time." "I/ll tell yo! )hat bothers me"" I say a(ter a short pa!se. "In yo!r #ollo+!i!m yo! presented )hat I #onsider to be a generi# pro#ess o( (i*e steps. I( I (ollo)ed yo! #orre#tly" yo! #laimed and pro*ed that (ollo)ing these steps is not only bene(i#ial" it/s mandatory." "Corre#t"" Bim ans)ers (or Bohnny. "In my *o#ab!lary" /mandatory/ means that i( yo! don/t do it" good res!lts )ill not o##!r." I/m st!#-. I #annot p!t my (inger on )hat bothers me. Bim #ontin!es (or me" "No) )e see methods" the assembly line and BIT" that do )or-. .hi#h means that either they (ollo) the (i*e steps or the (i*e steps are )rong." Than- yo!" Bim. No) I -no) ho) to #ontin!e. "It/s apparent that assembly lines and BIT do not (ollo) the (i*e steps. Not only don/t they start )ith identi(ying the bottlene#-" they are not e*en #onsidering the e,isten#e o( a bottlene#- at all. 2o )here is the mista-e in the (i*e steps0" Bohnny loo-s at !s" then at the board. Then he sits do)n. "I don/t (ollo) yo!"" Charlene says to Bim. "3o! tal- as i( it/s all or nothing. .hat happens i( BIT (ollo)s !st one step0 .on/t it yield better res!lts than a method that doesn/t (ollo) any0" "It )ill"" I agree. "4!t )hi#h o( the (i*e steps does BIT (ollo)0 It/s apparent that it doesn/t obey the (irst or se#ond." ".hat abo!t the third0" she as-s. "It (or#es )or- #enters to )or- at less than their ma,im!m lo#al e((i#ien#y. It does (or#e s!bordination." "3es" it does"" I on#e again agree )ith her. "4!t thenA" 2omething is still )rong. "4!t then"" Bohnny #ontin!es my trend o( tho!ghts" "then" i( )e (ollo) all (i*e steps" not !st one" )e are bo!nd to get a better method. And that/s e,a#tly )hat )e get." ".ait"" I stop them again. "This is important" so #an )e please ta-e it a little slo)er0 4e(ore yo! sho) !s a better method" )hi#h no) I/m #on*in#ed m!st e,ist" let/s see i( )e #an spot" in BIT or assembly line" something that is not satis(a#tory." 98

".hy is that important (or yo!0" Bim is #!rio!s. "He !st )ants to (ind o!t"" Bohnny e,plains (or me" "i(" )itho!t o!r -no)ledge o( the (i*e (o#!sing steps" )e #o!ld ha*e predi#ted that a better method e,ists." "A#t!ally"" I #lari(y" a little embarrassed" "I ha*en/t gone that (ar. I !st )ant to #he#- i( the problems that I/*e identi(ied in pro e#ts also e,ist in assembly lines." Charlene loo-s at her )at#h" b!t Bim and Bohnny en#o!rage me to gi*e it a try. I don/t -no) ho). I stand !p" go to the board and slo)ly pi#- !p the #hal-. I loo- at Bohnny/s soldiers" all tied together no) )ith #hains. "As )e said" the #hains a#t!ally symboli=e a restri#tion on the amo!nt o( in*entory allo)ed to be a##!m!lated lo#ally"" I say. Bohnny already dre) a h!mp o( in*entory in (ront o( the P soldier. Mindlessly I add h!mps bet)een ea#h t)o soldiers. "Bohnny"" Bim says" "#an/t )e regard these h!mps as +!e!es be(ore ma#hines0" "That/s e,a#tly )hat they are." "Let/s not tal- in*entory"" I impatiently say. "Let/s tal- time." "Go ahead." Bohnny is *ery patient. "I( this )or- #enter has a problem"" I point arbitrarily to one o( the soldiers" "then the h!mp represents the time that the ne,t soldier #an still )or- be(ore he )ill ha*e to stop. In a )ay"" I slo)ly say" "these h!mps represent the prote#tion a )or- #enter has. %rote#tion against problems o##!rring !pstream." "3o! #o!ld say so"" Bohnny agrees. "They represent sa(ety." "2a(ety. 2a(ety. 3o! are right. Here is the #onne#tion to pro e#ts" don/t yo! see0" 31E126 "I told yo! that )e ha*e to relate to in*entory as representing time. In prod!#tion )e prote#t a )or- #enter )ith in*entory" in pro e#ts )e prote#t a step )ith sa(ety time." "I see )hat yo! mean"" Bim #omments" "and I agree. 2till I thin- that there is a di((eren#e. In pro e#ts the sit!ation is )orse." L.hy0< "4e#a!se" i( there is a stoppage" in*entory does not disappear. In pro e#ts" time is gone" (ore*er." I/m still thin-ing abo!t it )hen Charlene #omes (rom le(t (ield )ith "I ha*e a problem )ith all o( that. .hy do )e do that0 .hy do )e try to prote#t the per(orman#e o( ea#h )or- #enter0 I tho!ght that )e already agreed that lo#al e((i#ien#ies don/t #o!nt." 2omeho) these senten#es so!nd (amiliar to me. Then I re#all that R!th/s #omplaint )as ".e try to prote#t the per(orman#e o( ea#h step." I also re#all )hat R!th said ne,t. ".e p!t in so m!#h sa(ety" and the pro e#t as a )hole is still e,posed." $oes it mean here that the per(orman#e o( the assembly line is e,posed0 '( #o!rse. "Than- yo!" Charlene." ".hat (or0" 2he is still irritated by my r!deness. "3o! sho)ed me the problem )ith the assembly line" or BIT. .e spread the prote#tion e*ery)here and it/s not eno!gh" the line as a )hole is e,posed. In an assembly line one )or- #enter goes do)n and *ery +!i#-ly it stops the )hole line." "'( #o!rse" she says. "The only pla#e that )e )ant one h!ndred per#ent e((i#ien#y" the only pla#e that needs prote#tion" is the bottlene#-. E,a#tly as Bohnny sho)ed !s at the beginning" that/s )here the pile o( in*entory sho!ld be" right be(ore the bottlene#-" no)here else." I agree" b!t I don/t see ho) to do it. .e ha*e to b!ild the prote#tion there" no)here else. 4!t at the same time )e m!st pre*ent the spreading. It seems #ontradi#tory. .e are all loo-ing at Bohnny. It ta-es some time be(ore he reali=es that )e are )aiting (or him to sho) !s the sol!tion" the better method. "4!t yo! sol*ed it"" he says" s!rprised. Bim spea-s (or all o( !s" "I( )e did" )e ha*en/t noti#ed." "3o! already said it all. The starting point is the bottlene#-. To e,ploit it )e m!st prote#t it against disr!ptions e*ery)here else in the pro#ess. That/s )hy )e m!st ma-e s!re that a pile o( in*entory )ill be b!ilt in (ront o( it. 4!t not a mo!ntain" that )ill #a!se in*entory" or lead time" to go too high. 2oA" He stops tal-ing" )aiting (or !s to #ontin!e. .e loo- at ea#h other. "2o" )e don/t -no) ho) to do it"" I say. "*ie the 'irst so dier with a rope to the s owest so dier, to the bott eneck. That/s all. .hat/s the point in tying all the soldiers to ea#h other0 It )ill only (or#e in*entory bet)een them rather than allo)ing the in*entory to (lo) to)ard the bottlene#- and a##!m!late there. '( #o!rse" the length o( the rope" )e #all it the buffer" )ill di#tate ho) m!#h in*entory in total yo! allo)." I/m trying to digest.

9?

Bim does the same" b!t alo!d. "I( )e tie the (irst soldier to the bottlene#-" then the (irst ro) )ill be (or#ed to )al- at the rate o( the bottlene#-. That/s good" spreading o( the troop is pre*ented. All the other soldiers" being (aster than the bottlene#-" )ill am pa#-" some behind the (irst ro)" the others behind the bottlene#-. 2o the troop )ill spread o*er a distan#e that )ill be almost e+!al to the length o( the rope )e #hoose. That/s neat. It )ill also g!arantee that there is a gap be(ore the bottlene#-" so i( one o( the !pstream soldiers stops" the bottlene#- #an still pro#eed. The in*entory" the sa(ety" a##!m!lates there. 5ery ni#e" Bohnny."

"In pra#ti#e"" Bohnny #ontin!es" ")hat )e do is the (ollo)ing. &irst yo! identi(y the bottlene#-. Then yo! #hoose the length o( the b!((er. Fs!ally a good r!le o( th!mb is to ta-e the #!rrent prod!#tion lead time and #!t it in hal(. Then" yo!A" 2o e*en in prod!#tion they meas!re the b!((er" the prote#tion" in terms o( time. .hat Bohnny is tal-ing abo!t no) is no too important (or me. In pro e#ts" not li-e in prod!#tion" the )or- is done only on#e. I )ill not be able to #opy the me#hanism (rom prod!#tion" b!t I #an trans(er the #on#epts and (ind the appropriate me#hanism. I ha*e the -ey" I !st ha*e to (ollo) the (i*e steps. I #an already see the main +!estions I/ll ha*e to (ig!re o!t the ans)ers (or. .hat is the bottlene#- in pro e#ts0 .e ha*e to tie the rope to something. Ho) does one #hoose the b!((er0 4!t I already see so many ans)ers. Tying the rope )ill gi*e the ans)er to the early start *ers!s late start dilemma. It )ill also restri#t the amo!nt o( )or- that is released" and there(ore the problem o( m!lti1tas-ing )ill be #onsiderably red!#ed. I/ll ha*e to thin- m!#h more abo!t it" b!t I (eel that the ans)ers are aro!nd the #orner. Charlene stands !p. "I/m sorry" b!t I ha*e a #lass to tea#h. Bohnny" there is something else I )ant to as- yo!. Lo#al e((i#ien#ies and *arian#es are )rong meas!rements. I (!lly a##ept. 4!t )hat are the alternati*es0 .hat sho!ld )e meas!re0 'r do yo! s!ggest not !sing any operational meas!rements0" "Not at all"" he is +!i#- to deny. "$o yo! )ant to s#hed!le another meeting to dis#!ss it0" .e all ta-e o!t o!r diaries.

9@

Chapter 19
"2o (ar" does it ma-e sense0" I as- them. I #an see ho) Mar-" R!th and e*en &red are ready to !mp do)n the throat o( anybody )ho does not agree. L!#-ily" there are no targets. The e,tent to )hi#h these three ha*e be#ome =ealots is s!rprising. Their t!rnaro!nd happened last session" )hen I g!ided the #lass to de*elop the sol!tion. Not that they )ere dragging their (eet be(ore" b!t no) it/s li-e they ha*e seen the light> they beha*e as i( all their (!t!re depends on implementing it. T!esday morning all three #ame to my o((i#e and stepped all o*er ea#h other trying to #on*in#e me to #ome to Genemodem and tal- to Mar-/s team. "The sol!tion is almost against h!man nat!re"" Mar- )as +!ite desperate. "I don/t -no) ho) to pers!ade people to strip a)ay their sa(ety." "And gro!p #onsens!s is *ital"" R!th added. &red #ontin!o!sly repeated" "I( the team doesn/t b!y in" res!lts )ill not (ollo)." They didn/t ha*e to press so hard> I )o!ld gi*e my le(t arm (or the opport!nity to try o!r ideas on a real pro e#t. No) it/s Th!rsday" and (or the last three ho!rs I/*e been tal-ing to the team assigned to the de*elopment o( the A889 modem. I don/t -no) a thing abo!t modems" ne*ertheless" I ha*e s!##eeded in #on*in#ing them that I do -no) a lot abo!t the pit(alls o( managing a pro e#t. It )asn/t easy" b!t I )as able to get a tr!e #onsens!s on the #!rrent sit!ation. It/s )ritten on the board. !" #e are accustomed to belie$ing that the only way to protect the whole is through protecting the completion date of each step" As a res!lt" %" #e pad each step with a lot of safety time" .hi#h" #onsidering h!man psy#hology and the nat!re o( dependen#ies bet)een steps" !na*oidably leads to &" #e are suffering from three mechanisms which' combined' waste most of the safety time (student syndrome' multi tas)ing' and delays accumulate and ad$ances do not*" .e also agreed" and that )as m!#h easier" on )hat does ma-e sense: the (i*e (o#!sing steps are also )ritten on the board. The real #hallenge is still ahead. Can I #on*in#e them to adopt the logi#al deri*ati*e o( all that/s )ritten on the board0 Can I lead them to de*elop the sol!tion0 I ta-e a deep breath and di*e in. "2o )hat is the #onstraint o( a pro e#t0 .hat sho!ld )e #hoose as the e+!i*alent to the bottlene#-0" No ans)er. 2in#e they are interested in the s!b e#t" s!#h silen#e #an mean only one thing. I as-ed a +!estion that demands too big a leap. I/ll ha*e to sli#e it into smaller #h!n-s. "'-ay. .hat I/m as-ing yo! no) is to ignore the pile o( problems that yo! #!rrently (a#e and imagine the (ollo)ing s#enario. 3o! de*eloped an e,#ellent prod!#t" the A889 has been released on time and mar-eting t!rned it into a big s!##ess. .here is the #onstraint o( the #ompany0" "In prod!#tion"" one ans)ers. "&or s!re"" another ba#-s him !p. ".ith o!r best prod!#ts" prod!#tion ne*er s!##eeds in ade+!ately s!pplying the initial mar-et demand." "2o in o!r (!t!risti# s#enario" there probably )ill be a bottlene#- in prod!#tion. .hat is a bottlene#-0" And I ans)er my o)n +!estion" "a bottlene#- is a reso!r#e )ith #apa#ity that is not s!((i#ient to prod!#e the +!antities that the mar-et demands. In this )ay the bottlene#- pre*ents the #ompany (rom ma-ing more money." They don/t ha*e a problem )ith that. "Let/s go ba#- to the sit!ation as it no) stands. The A889 is in yo!r #o!rt" in engineering. .hat no) pre*ents Genemodem (rom ma-ing more money (rom A8890" ".e ha*en/t (inished de*eloping it yet." "E,a#tly"" I say. "2o" in engineering" the desired per(orman#e is not +!antity b!t0..." "&inishing the de*elopment on time." They don/t ha*e any problem ans)ering. Mar- is not entirely happy. "'r be(ore time"" he m!st inter e#t. .e are in the team/s room> there m!st be a %ERT #hart o( their pro e#t some)here. I lo#ate it hanging on the opposite )all. It/s big and #olor(!l. I #ross the room and stand beside it.

9C

"Loo- on this #hart"" I as- them. "It represents all that has to be done to de*elop yo!r modem. .hat di#tates the lead time (rom start to (inish o( this pro e#t0" "The critical path"" they immediately ans)er. "2o )hat is the constraint o' a pro)ect0 .hat sho!ld )e #hoose as the e+!i*alent to the bottlene#-0" I repeat. "The #riti#al path." It is as simple as that. .hy did it ta-e me a )hole )ee- o( (lo!ndering !ntil I (o!nd the ans)er0 %robably be#a!se the ob*io!s is sometimes the last thing )e see. "&ine"" I say. ".e identi(ied the #onstraint. What do we have to do to exp oit it0" "$on/t )aste it." I (ooled mysel( long eno!gh on ans)ers that loo- good b!t are meaningless. .hat/s the meaning o( "don/t )aste the #riti#al path0" It doesn/t ha*e any meaning !ntil yo! e,press it in di((erent )ords" and that/s )hat I ha*e to s+!ee=e o!t o( them. I had a hard time doing !st that )ith my #lass> no) I/m m!#h better prepared. "$on/t )aste )hat0" I as-. .e go thro!gh the e,pe#ted +!estions and ans)ers. The ans)ers mo*e (rom "#riti#al path" to "time" and then" )hen )e on#e again #lari(y that the time is based on estimates and press!res" )e (inally arri*e at: "#on't waste the time allotted for the critical path." Any )aste here )ill delay the pro e#t. 2emanti#s0 Maybe. 4!t semanti#s are sometimes #r!#ial. No) I as- the big +!estion. "Ho) do )e" #!rrently" )aste the time allotted (or the #riti#al path0" 4ased on the last three ho!rs" they no) ha*e a lot o( ans)ers. Too many ans)ers. 4!t they seem to go o!t o( their )ay to a*oid the ob*io!s one. Nobody mentions the #ore problem" the (a#t that )e pad ea#h step )ith a lot o( sa(ety time. Maybe it/s be#a!se o( their (ear o( letting go o( their pre#io!s lo#al sa(eties" maybe they !st don/t see it. I don/t -no). I only -no) that I ha*e to spend +!ite a lot o( time relating ea#h ans)er ba#- to )hat is )ritten on the board. %ointing o!t" o*er and o*er again" that it )on/t help !s to deal )ith symptoms" )e m!st deal )ith the #ore problem. .e m!st bite the b!llet and deal )ith o!r tenden#y to pad ea#h step )ith a lot o( sa(ety time. Maybe it )as so di((i#!lt be#a!se o( the implied a#tion: "2o" yo! )ant !s to red!#e the time to one1third0" "I don/t )ant yo! to do a thing"" I #lari(y. "I !st point o!t the !na*oidable #on#l!sions stemming (rom )hat yo! said. $o yo! agree that )e sho!ldn/t prote#t ea#h indi*id!al step )ith sa(ety time0" "3es." "$o yo! agree that ea#h step has a minim!m t)o h!ndred per#ent sa(ety0" A(ter more beating aro!nd the b!sh" the ans)er is still" "3es." "'ne pl!s one is t)o." I had to repeat it" in one (orm or another" at least (i*e times. At last someone as-s" "4!t are )e going to p!t in some sa(ety0" "'( #o!rse"" I say. "M!rphy does e,ist. 4!t )e are going to p!t the sa(ety )here it/s going to help !s the most. .e are going to p!t it so it )ill prote#t the #onstraint. .hat is o!r #onstraint0" "The #riti#al path." "2o )e ha*e to protect the completion date of the critical path0 Corre#t0" "3es." ".e p!t all the sa(ety at the end o( the #riti#al path. 2tripping the time estimates o( ea#h step (rees !p s!((i#ient time to #reate a /pro e#t b!((er./ " I dra) t)o pi#t!res to #lari(y )hat I !st said. The original #riti#al path and the #riti#al path )ith the pro e#t b!((er. That helps.

They start to translate it into )hat it means (or their pro e#t. The A889 has to be ready si, months (rom no). There are many steps on the #riti#al path that are not done yet. Their #!rrent estimates lead them to belie*e that they )ill be late by t)o months" )hi#h in their en*ironment is *erging on a #rime. They already tal-ed abo!t sa*ing time by #ompromising on some o( the per(orman#e o( the modem" b!t Mar- hasn/t allo)ed it yet.

99

"I( )e ta-e the #!rrent estimates (or the remaining steps"" I help them" "it adds !p to eight months. I( )e do )hat )e !st said" )e #an #reate a pro e#t b!((er o( more than (i*e months6" Nobody li-es it. Not Mar-" )ho booms that a (i*e1month b!((er is m!#h too m!#h. And not his people" )ho #ategori#ally state that anyone )ho thin-s they #an (inish their indi*id!al tas-s in one third o( the time m!st be o!t o( their mind. &or a )hile" it/s a =oo. Mar- has to !se his *oi#e at (!ll *ol!me to +!iet them do)n. ".ith these trimmed estimates"" he tries to #alm them do)n" "I !nderstand that (or ea#h indi*id!al step" the #han#e o( (inishing is only (i(ty per#ent." There is rapid response. "&i(ty per#ent" ha6" "Less than ten per#ent." "Not a #han#e." It/s one thing to agree that theoreti#ally there is more than t)o h!ndred per#ent sa(ety. It/s another thing to #ommit to a trimmed estimate. Inertia. "I/m not going..." Mar-/s *oi#e booms abo*e e*erybody else. "I/m not going to p!t anyone to the )all i( he or she doesn/t (inish on time. All I )ant to see is that )e are )or-ing on it as (ast and as pr!dently as )e #an." It helps. Espe#ially )hen he repeats and repeats and #lari(ies )hat he means. 2ome #a!tion against #reating s!#h a b!((er. "Top management )ill immediately trim it." "Not a #han#e"" Mar- is #on(ident. "The pro e#t is )ell on its )ay. Top management is not going to mess )ith it no). .e !st ha*e to deli*er on" or be(ore" the original promised date." At last they settle on the (ollo)ing. The time allotted (or ea#h step )ill only be #!t by one1hal( JMar- s+!ee=es (rom them some lip ser*i#e that they )ill try to beat these timesK. 'n the other end" the pro e#t b!((er )ill not be e+!al to )hat they trimmed. It )ill be set to only hal( o( it. Mar- is adamant that t)o months is more than eno!gh. I s!spe#t that he insisted on it in order to p!t the pro e#t ba#- on the promised date. I add their *ersion to the diagrams on the board.

.hen all this is settled" Mar- passes the baton ba#- to me. "E,ploit the #onstraint"" I start. "$on/t lose any time on the #riti#al path. .e really #an/t do a good ob o( e,ploiting the #onstraint !ntil )e do the ne,t step" !ntil )e s!bordinate e*erything else to it." ".hy0" R!th as-s. ".itho!t s!bordination"" I ans)er" ")e are !nable to prote#t the #onstraint (rom losing time d!e to problems o##!rring else)here." 2he agrees. The others loo- p!==led. I e,plain. "2o (ar yo!/*e dealt )ith the steps o( the #riti#al path itsel(. That )ill s!rely help. 4!t tell me" hasn/t it already happened in this pro e#t that yo! s!((ered a delay on the #riti#al path be#a!se o( a problem that o##!rred o!tside the #riti#al path" in one o( the many (eeding paths0" They la!gh and start to bombard me )ith e,amples. I don/t !nderstand their argon" b!t I let them spea-. It/s important that they reali=e that most problems that impa#t the #riti#al path do not o##!r on the #riti#al path itsel(. That/s the only )ay they/ll reali=e that s!bordination is not a ni#ety" it/s a m!st. .hen they some)hat r!n o!t o( steam" I as-" "$o yo! agree that )e m!st do something abo!t it0 That someho) )e m!st prote#t the #onstraint (rom problems o##!rring at the non#onstraints0" They don/t ha*e any problem agreeing. Their problem is (ig!ring o!t ho) to do it. ".hat is done in prod!#tion0" I as-. "Ho) do they prote#t the bottlene#- (rom problems o##!rring at the nonbottlene#-s0" "They b!ild a b!((er o( in*entory be(ore the bottlene#-." ".e don/t tal- in terms o( in*entory"" I remind them. ".e tal- in terms o( time. 2o )hat do )e ha*e to do0" ".e ha*e to b!ild a b!((er o( time." 9E

".here do )e ha*e to b!ild these time b!((ers0" I go to the %ERT #hart hanging on the )all and p!t a r!ler on the #riti#al path. ".hat is the meaning o( /be(ore the bottlene#-/ in o!r en*ironment0" It doesn/t ta-e them long to #on#l!de that )e m!st insert a time b!((er at the points )here a (eeding path merges )ith the #riti#al path. ".here are )e going to ta-e the time (rom0" 4y no) they ha*e the (orm!la. &or ea#h (eeding path they de#ide to #!t the original time estimates o( the steps in hal( and !se hal( o( the trimmed lead time as a /feeding buffer./

In less than hal(1an1ho!r )e ha*e a ne) %ERT #hart. It/s ama=ing ho) m!#h the #omp!ter so(t)are a*ailable today simpli(ies #leri#al )or-. It/s also ama=ing to )hat e,tent this sophisti#ated so(t)are doesn/t help !s sol*e the real problems. They e,amine the res!lt. The sit!ation loo-s m!#h better than one might e,pe#t. 'nly in t)o (eeding paths ha*e delays already s)allo)ed the b!((er that )e !st #reated. "I told yo! that it )o!ldn/t )or-"" one s-inny g!y is +!i#- to #on#l!de. ".hat do )e do abo!t it0" Mar- as-s me. "Con#entrate on bringing them ba#- on tra#-"" I ans)er. "4!t I don/t see any reason (or alarm. In ea#h o( these t)o #ases the delay is abo!t t)o )ee-s. $on/t (orget" i( yo! really #an/t get it ba#- on tra#-" yo! still ha*e a pro e#t b!((er o( t)o months." That/s an angle they hadn/t tho!ght abo!t yet. The /feeding buffer/ prote#ts the #riti#al path (rom delays o##!rring in the #orresponding non#riti#al paths. 4!t )hen the problem #a!ses a delay bigger than the (eeding b!((er" the pro e#t #ompletion date is still prote#ted by the /pro e#t b!((er./ They li-e it. My attention is no) on something else. 'n ea#h o( the t)o paths that are *ery late" the step that they are )or-ing on no) is mar-ed in red. This red #olor probably indi#ates top priority. My problem is that there are many other steps that are red. I point to one red step )here" a##ording to their n!mbers" the b!((er it (eeds is still !nto!#hed. ".hat is the !rgen#y in (inishing this step0" I as-. Nobody ans)ers. Mar- mo*es #loser to e,amine )hat is )ritten on the red step. He t!rns to one o( his people. ".hy the !rgen#y0" "I don/t -no)"" this person ans)ers" and points to o!r s-inny g!y. "3o! see the ne,t step0" He has a mat#hing s+!ea-y *oi#e. "My people are s!pposed to do it." "2o0" "And they #an/t start be(ore that step is (inished." I still don/t get it. Mar- doesn/t either. "3o! -no) that they (inished e*erything else"" #omes the s+!ea-y e,planation. They are all o*er him. The e((i#ien#y syndrome is ali*e and -i#-ing" not !st in prod!#tion. I )onder ho) many o( their /emergen#ies/ are s!#h (alse alarms. They probably )onder the same be#a!se they #he#- e*ery red dot on their #hart. In the end" only (o!r remain. It/s m!#h better" b!t )e still ha*en/t (inished. "There is something else that might delay the #riti#al path"" I remind them. "2ometimes e*erything is ready (or a step on the #riti#al path e,#ept (or the appropriate resource" )hi#h is still b!sy doing something else." .e dis#!ss ho) to pre*ent s!#h delays. They in*ent the reso!r#e b!((er. That/s a #on#ept I ha*en/t yet #o*ered in #lass" and their debate tea#hes me a lot abo!t the pra#ti#al aspe#ts o( e,a#tly ho) to implement it. 4!t I #an/t stay any longer. It/s o!r theater night" and I/m not going to let B!dith do)n. I lea*e. They are deep in the details. 9G

Chapter 1E
"It/s m!#h easier to implement than )e hoped"" Mar- says" #on#l!ding his presentation to the #lass. "Any res!lts0" 4rian as-s. Mar- (idgets. "It/s only (o!r )ee-s sin#e )e learned in #lass )hat to do" and it/s three )ee-s sin#e )e a#t!ally implemented it. No)" yo! -no) that in a de*elopment pro e#t o( t)o years..." "Three )ee-s is nothing"" 4rian #ompletes Mar-/s senten#e. "I -no). 2till" #an yo! see any tangible res!lts0" ".hat do yo! mean by tangible res!lts0" R!th is slightly snappy. "$o yo! e,pe#t that in three )ee-s )e/ll #omplete the pro e#t0 I hope not. 4!t then" )hat else )o!ld yo! #all tangible0" "Hey" I/m not #riti#i=ing"" 4rian de(ends himsel(. "I thin- that )hat yo!/*e done is terri(i#. I !st )onder i( yo! ha*e any hard e*iden#e o( real progress. That/s all." &red p!ts his hand on R!th/s arm" and to 4rian" he says. "There are some n!mbers. 4!t (irst I ha*e to e,plain something. Remember the #riti#isms )e all had on the )ay )e meas!re the progress o( a pro e#t0" "3es. 5i*idly." ".ell" )e #hanged the )ay )e meas!re progress. %rogress (or !s is no) meas!red only on the #riti#al path> )hat per#ent o( the #riti#al path )e ha*e already #ompleted. That/s all )e #are abo!t." ".e are doing the same"" 4rian replies. "It does )or- m!#h better." 2o my st!dents are !sing )hat they learn here. That/s delight(!l ne)s to me. &red nods and #ontin!es" "A##ording to this meas!rement )e ha*e made a lot o( progress in the last three )ee-s. &or e,ample" in the pre*io!s three months..." "&orget the n!mbers"" Mar- interr!pts. "Let me tell yo! )hat progress )e made in m!#h more real terms. $o yo! -no) )hat happens )hen it/s #lear to e*erybody that )e are going to be late on deli*ering0 Really late0" In a bitter tone he ans)ers his o)n +!estion. "E*erybody is then on the pro e#t leader/s ba#- to #!t #orners. &irst to #ompromise on the +!ality #he#-s" then to trim targeted per(orman#e." "2ame thing in #omp!ter so(t)are"" Charlie is all smiles. "No di((eren#e." "A month ago"" Mar- is )a*ing his big hands" "e*eryone on my team had already #ome to me )ith s!ggestions o( )hi#h spe#i(i#ations to trim. They )ere all o*er me to start dis#!ssing it )ith my boss. Today" a(ter only three )ee-s" this press!re is o((. 4rian" do yo! !nderstand )hat this means0" "They/*e started to belie*e that they #an (inish on time. No) that/s impressi*e." "Too good to be tr!e"" Ted spea-s !p (or the (irst time. "I/*e listened #are(!lly to )hat yo!/*e done" and all I ha*e heard is that yo! mo*ed some n!mbers aro!nd. Ho) #an it ha*e s!#h an impa#t0" Not li-e Mar- and R!th" &red is smiling. "Mo*ing some n!mbers aro!nd may ha*e a big impa#t. Ted" s!ppose that some n!mbers are mo*ed (rom yo!r pay#he#- to somebody else/s. .ill it ha*e an impa#t0" Ted oins the la!ghter. Then he #lari(ies" "Mar-" I !nderstand all o( that" b!t there m!st be something more. .hat a#t!ally are yo! doing di((erently0" "Nothing." Then" as an a(tertho!ght" he adds" "4!t yo! ha*e to reali=e that the )hole attit!de has #hanged. As I already stressed" there are no more (alse alarms. %eople don/t p!t press!re on others !st be#a!se their people do not ha*e eno!gh to do." R!th steps (or)ard. "There is another big di((eren#e. .e don/t ha*e milestones anymore. It/s not li-e it )as be(ore" )hen yo! -ne) yo! )ere s!pposed to #omplete yo!r step in t)o )ee-s" so )hat/s the r!sh. No)" it/s di((erent. Either yo! don/t start a step" be#a!se it/s too early" or" i( a path is #lear to be )or-ed on" yo! )or- on it as (ast as yo! #an. 3o! see" )e trimmed the times to the e,tent that people are not s!re anymore that they #an (inish the step on time. They don/t dare pro#rastinate. I )o!ld say that the /st!dent syndrome/ basi#ally disappeared. $on/t yo! thin- so" Mar-0" "3es" o( #o!rse. 3o! see" Ted0 4e(ore" )hen )e !sed milestones" and yo! -ne) that yo! had t)o )ee-s to #omplete a step" the t)o )ee-s )ere yo!rs. I" as pro e#t leader" #o!ldn/t do m!#h to p!sh yo! to (inish earlier. Moreo*er" i( I #ame a(ter one )ee- and started to press" e*en in+!ired" yo! )o!ld ha*e rea#ted as i( I )ere o!t o( line. /There is still a )ee- to go" )hat do yo! )ant0/ "No) it/s di((erent. .e trimmed the times. No) people -no) that there is a (air #han#e that they )ill not (inish the step on time. They (!lly !nderstand )hy I/m #on#erned" )hy I #ame early to (ind o!t )here they stand." "That/s ma-es sense"" Ted #on#l!des. "That )ill ha*e an impa#t." Then he #on(esses" "I m!st say that only no) do I see the h!man beha*ior aspe#t. I !nderstood )hy )e sho!ld trim the time estimate (rom a ninety per#ent #han#e o( #ompleting on1 time to only a (i(ty per#ent #han#e" b!t only no) do I see the (!ll rami(i#ations. In retrospe#t" it/s ob*io!s." "I( yo! do )hat ma-es sense"" R!th #omments" "yo! (ind o!t that it ma-es sense (rom many other aspe#ts as )ell." 9H

Mar- is not ready yet to di*e into philosophi#al remar-s. "There is something else that sho!ld be mentioned. M!ltitas-ing. Eliminating the (alse alarm and a#t!ally shrin-ing the time it ta-es to per(orm a step #ontrib!ted a lot to the red!#tion o( m!lti1tas-ing. %eople do not !mp so (re+!ently (rom tas- to tas-. There is m!#h less ner*o!sness. Ho) m!#h does it #ontrib!te to the shrin-age o( the lead time0 I don/t -no)" b!t it m!st be s!bstantial." R!th t!rns to me. "%ro(essor 2il*er" yo! *isit !s e*ery )ee-. .hat is yo!r impression0" I #an only tal- abo!t )hat I ha*e seen" and yo! #an/t see m!#h in one1ho!r *isits. "I/m in no position to e*al!ate by ho) m!#h m!lti1tas-ing has de#lined. 'ne thing is #lear" tho!gh. %eople are more (o#!sed." "The pro e#t is m!#h more (o#!sed" that/s (or s!re"" Mar- #on(irms. "May I say something0" &red rhetori#ally as-s Mar-. "I thin- that one o( the ma or things )e did )as p!tting the reso!r#e b!((er in pla#e." "3es"" Mar- says. "%re*io!sly it )as *ery #ommon (or e*erything to be ready (or a step" b!t the people )o!ldn/t be. They )ere b!sy )or-ing on something else. .e de#ided that this )o!ld ne*er happen (or the steps on the #riti#al path. No)" on the #riti#al path" )hen e*erything else is ready )e m!st ma-e s!re" in ad*an#e" that the reso!r#es )ill be ready." "Ho) do yo! do that0" Ted is s!rprised. "This idea o( reso!r#e b!((er )as the only thing o!t o( )hat )e said that I tho!ght )as totally impra#ti#al. $o yo! a#t!ally (or#e a reso!r#e to do nothing one )ee- be(ore it/s s!pposed to )or- on the #riti#al path0 And people go along )ith it0" "No. .e don/t do it that )ay. A )ee- be(ore the e,pe#ted time )e !st remind people that their )or- on the #riti#al path is #oming. Then three days ahead )e gi*e another reminder. And then again" one day be(ore" )hen )e -no) (or s!re that e*erything else is going to be ready. The important thing is that people -no) that )hen the time #omes they m!st drop e*erything and )or- on the #riti#al path." "I ha*en/t heard anybody #omplaining"" R!th says. "'n the #ontrary" they appre#iate the early )arnings." "This is *ery important"" &red emphasi=es. ".itho!t it I/m s!re that most o( the ad*an#es )e ha*e made )o!ld ha*e been )asted. To sho) yo! ho) )ell )e are doing" let me gi*e yo! one n!mber. Three )ee-s ago" )hen )e started" the pro e#t b!((er )as nine )ee-s. No) it is still nine )ee-s." "In spite o( the (a#t"" Mar- adds" "that e*eryone tho!ght that the times )e le(t (or ea#h step )ere m!#h too short." "Than- yo!"" I say. The #lass appla!ds. As the three head ba#- to their seats" &red t!rns" "There is one thing I )anted to as-." "Go ahead." "I/m not happy )ith the )ay )e meas!re the progress." That stops Mar-. ".hat/s the problem0" "I am monitoring !st the #riti#al path" and so (ar e*erything is (ine. 4!t I/m a(raid that a problem might be bre)ing in a non#riti#al path" and by the time it rea#hes the stage that it delays the #riti#al path" it )ill be too late." "That/s a problem." Mar- is st!#- in the aisle. "2it do)n"" I say. "There is no problem. 3o! are monitoring #orre#tly." I/m #on(ident. In the last meeting )e had )ith Bohnny to dis#!ss operational meas!rements )e #o*ered b!((er management in detail. I/m #on*in#ed that )hat they are doing is o-ay. "&red"" I say" "yo! are monitoring the pro e#t b!((er" #orre#t0" "3es." "Ho)0" "It/s *ery simple"" &red says. "I( a step on the #riti#al path is #ompleted" (or e,ample" t)o days earlier than estimated" I enlarge the pro e#t b!((er by t)o days. I( it/s late" I red!#e the b!((er. A#t!ally I don/t )ait (or a step to be #ompleted. E*ery day the people )ho )or- on the #riti#al path gi*e me their estimates." "Estimates o( the per#ent o( the )or- they (inished0" "No" I/m not interested in that. They gi*e me their estimate o( ho) many days !ntil they are going to pass the hot potato to the ne,t step. I m!st say that sometimes it loo-s (!nny. &or e,ample" last )ee- the report (rom day to day )as (o!r days to pass the potato> three days> si, days" they ran into a problem and they pani#-ed. Then" ne,t morning" it/s do)n to one day. 4y sol*ing the problem" they (o!nd a good short#!t." "I( yo! are a(raid o( a problem bre)ing in one o( the non#riti#al paths" )hy don/t yo! do the same thing there0" He loo-s p!==led. "$on/t )e do it0" R!th loo-s #on(!sed. "Mar-" ho) do yo! determine i( yo! ha*e an emergen#y on a non#riti#al path0 $on/t yo! #al#!late the same (or ea#h o( the (eeding b!((ers0" "Come to thin- abo!t it" basi#ally )e do. 4!t not (ormally. &red" #an yo! monitor all the b!((ers" not !st the pro e#t b!((er0" "No problem. I/ll gi*e yo! a daily report." &red is *ery #ollaborati*e. "Ho) sho!ld they arrange s!#h a report0" I as- the #lass.

E;

"A##ording to importan#e"" one person ans)ers. "$e(ine importan#e." It doesn/t ta-e long (or the #lass to #reate the priority list. Highest in importan#e are steps that red!#e the pro e#t b!((er" either be#a!se they are some)hat late and are on the #riti#al path" or be#a!se altho!gh they are not on the #riti#al path they are late to the e,tent that they ha*e already s)allo)ed the #orresponding (eeding b!((er and then some. Then they debate ho) to arrange the se#ond #ategory1the steps that are not yet a((e#ting the pro e#t b!((er b!t are #ons!ming part o( the #orresponding (eeding b!((er. There are se*eral s!ggestions. 2ome #laim that the only thing that ma-es sense is the a##!m!lated delay" or in other )ords" the n!mber o( days already #ons!med (rom the #orresponding b!((er. 'thers say that this n!mber doesn/t tell !s m!#h !nless it is #ompared to the original length o( the b!((er. Ten days o!t o( a b!((er o( thirty days" they #laim" is m!#h less o( a problem than #ons!ming (i*e days o!t o( a b!((er o( si,. This gro!p ad*o#ates per#entage" the per#ent #!rrently #ons!med o( the #orresponding b!((er. A third gro!p" led by Ted and there(ore *ery *o#al" #laims that none o( the abo*e is really important. The only thing that matters is ho) many days are still le(t in the b!((er. %ersonally" I don/t thin- that it ma-es m!#h di((eren#e. As long as they #ontin!o!sly monitor all the b!((ers" they )ill be (o#!sed. Arranging it in one )ay or another is not so important in my eyes. In any #ase" the list is relati*ely short. It doesn/t #ontain the steps that are not yet s!pposed to be )or-ed on" or the steps that ha*e already passed the baton. 4!t it/s a li*ely debate. E*erybody is in*ol*ed" e*en st!dents )ho hadn/t yet opened their mo!ths. 2o I let it go (or a )hile. A long )hile. Almost to the end o( the session. It )as in*igorating !ntil... !ntil Roger spoiled it (or me. I tho!ght that this person #ame to #lass !st be#a!se he (inds sleeping in a #hair more #om(ortable than his bed. %robably the heated debate )o-e him !p. .hen I (inally s!mmari=ed the three options on the board" he #ommented" "It )ill ne*er )or-. No one )ill #ollaborate." I had to really lean on him to #lari(y his statement. "In my #ompany"" he pompo!sly said" "I/m in #harge o( negotiations )ith the s!b#ontra#tors. They )ill ne*er agree to #!t their lead time. They )ill ne*er agree to report" de(initely not on a daily basis. 3o! -no)" yo! get something )hen yo! get it. E*ery predi#tion they gi*e yo!" they themsel*es don/t belie*e in. Li-e e*erything else that )e st!dy here" it/s good in #lass" b!t reality is *ery di((erent." I started to arg!e )ith him" b!t he #!t me o((. "I( yo! )ant" #ome )ith me to one o( my s!b#ontra#tors and tal- to him." I )as (!rio!s eno!gh to a##ept the #hallenge. I -no) that it/s nonsense. He )ill ne*er arrange (or s!#h a meeting. 4!t it/s a pity that this e,#ellent session (inished on s!#h a lo!sy note. I/m gathering my papers )hen 4rian approa#hes me. "I/*e already tal-ed )ith the plant manager and the pro e#t leader. They are *ery interested in )hat )e are learning here. 3o! see" o!r pro e#t to e,pand the plant is in tro!ble." He )ants me to #ome to their plant. .e tal- some more. I gladly agree to spend a day )ith their team. Lately my mood resembles a roller #oaster. %!((ing" I stop in (ront o( the arri*als monitor and #he#- (or B!dith/s (light. I/m trying to #at#h my breath. .here is it0 Than- God" it/s late. It )ill not land (or another t)enty1(i*e min!tes. I -ne) there )as no need to r!sh. A little bit o( sno) and (lights (rom Chi#ago are late. Gate 18. Near the gate" there are no empty seats. It/s am1pa#-ed )ith passengers )aiting to depart. I go to a nearby gate and sit do)n. I #an hear the anno!n#ement (rom here as )ell. And i( not" B!dith -no)s to loo- aro!nd (or me. It )on/t be the (irst time that I (orgot mysel( in a boo-. The problem is that I don/t ha*e a boo-. I loo- aro!nd" somebody m!st ha*e le(t a ne)spaper. 'nly the arts se#tion. 'h" )ell. Three aisles a)ay a tall )oman !nloads her garment bag onto a #hair. Good (ig!re. 2he t!rns aro!nd to sit. It/s 4.B. My (irst in#lination is to #o*er mysel( )ith the ne)spaper. Too #hildish. Too late. 2he re#ogni=es me. I smile" stand !p and )al- o*er to her. I #an almost see the Rolode, (lipping in her head. "Good e*ening" Ri#hard." 2he sha-es my hand. "Any progress on bringing ten more st!dents to o!r E,e#!ti*e M4A program0" I )as )rong. It/s not a Rolode," it/s a )hole database. I try hard to ignore the sar#asm I thin- I heard in her so(t *oi#e. "3es" plenty"" I hear mysel( ans)er. .hy do I ha*e to e,aggerate0 .hy do I (eel #ompelled to sho) o((0 4!t I did ma-e progress. %lenty. "I thin- I (o!nd a good sol!tion and )e are already testing it. 'n an important pro e#t." "Ho) ni#e." 2he sits do)n.

E1

2he is not )hat one might #all e,#ited. I sense that she doesn/t belie*e me. No )onder. A month ago I had a pa#- o( riddles. No)" I #laim I ha*e sol*ed them all. It is !nbelie*able. Can I e,plain that it/s all be#a!se I )as l!#-y to be handed s!#h a )onder(!l (o!ndation (rom Bohnny0 No. That )o!ld so!nd e*en more (ar(et#hed. I/m still standing. 2he doesn/t en#o!rage me to sit. I ha*e to tal- her lang!age. It )or-ed be(ore. "I ha*e a good #han#e to try it in more pla#es. 'n#e I get res!lts"" I promise her" "I/ll start to tal- )ith management abo!t sending more o( their people." "And )hen )ill that be0" "T)o" three months (rom no). I hope." "Good l!#-." And she opens her brie(#ase and ta-es o!t a boo-. "3o! don/t thin- I stand a #han#e" do yo!0" 2he gi*es me a long loo-. "%ro(essor 2il*er. $o yo! -no) )hat it ta-es to pers!ade a #ompany to send a person to o!r program0" 2in#e I don/t -no)" I )ait (or her to tell me. "The person m!st press (or it" and the #ompany m!st be interested in him or her" interested eno!gh to yield to this press!re. 3o! are going abo!t it all )rong. It/s not the #ompany that yo! ha*e to pers!ade. Companies rarely initiate sending st!dents. It/s the people" the mid1le*el managers" that yo! ha*e to enti#e." "2o yo! thin- that nothing )ill #ome o!t o( my )or- )ith ind!stry0 I sho!ld drop it0" I/m desperate" b!t not hal( as m!#h as I am )hen I hear her ans)er. "Not at all. The !ni*ersity al)ays en#o!rages #omm!nity ser*i#e." Comm!nity ser*i#e6 I/m so pro*o-ed that I (orget mysel(" and bitterly say" "And I tho!ght yo! meant it )hen yo! said that yo! are interested in !s gi*ing *al!able -no)1ho) to b!siness6" "3es" I am." And she opens her boo-. "Then e,tend my term (or one more year." 2he loo-s ba#- at me and #oldly" so #oldly" she ans)ers" "I ha*e a poli#y" and )e ha*e a deal." "Ri#-6 Hey" honey." I loo- aro!nd. B!dith )a*es at me. "I ha*e to go"" I say. "3es. 3o! ha*e to go"" she (irmly replies.

E8

Chapter 1G
I enter the #lassroom. Charlene is still there" arranging her papers and tal-ing to &red. I sometimes )onder i( gi*ing my #o!rse a(ter an a##o!nting #lass is a pl!s or a min!s. It/s a min!s be#a!se in the beginning the st!dents ha*e a glassy loo- and it ta-es time to get them going. 'n the other hand" I thin- it/s a big pl!s be#a!se )hate*er yo! do" the st!dents are going to gi*e yo! good re*ie)s. Charlene noti#es that I/m there. "Can I ha*e a )ord )ith yo!0" 2he grabs my arm and drags me o!tside. "3es" s!re"" I pointlessly say. ".ill it be o-ay i( I sit in on yo!r #lass0" T)o months ago I )as in no position to disagree> Charlene sits on the s#hool #ommittee (or ten!re. No) I don/t ha*e to be the ni#e g!y anymore" b!t )hat/s the point in being r!de0 "4e my g!est"" I say" still )ondering )hy she )ants to do it. "Than- yo!." And then she e,plains. "I/m still trying to digest )hat )e heard (rom Bohnny. I mean the Q#ost )orld/ and the /thro!ghp!t )orld./ Neither are ne) to management a##o!nting" b!t... b!t in the e,isting -no)1ho) it/s someho) #on*ol!ted." "I don/t mind yo! sitting in on my #o!rse" b!t ho) is it going to help yo!0" "Management a##o!nting deals )ith de#isions and #ontrol. 3o!" Bim and Bohnny" in yo!r #o!rses" are dealing )ith the same iss!es" b!t (rom di((erent aspe#ts. 2o" I de#ided that in order to straighten o!t my #on(!sion" I m!st in*est the time" sit in on all yo!r #o!rses" and deepen my !nderstanding." I )ant to as- some more +!estions b!t I ha*e a #lass to tea#h. .e go ba#- in. Nothing is on my table. No )onder. Last time I )as so irritated I (orgot to gi*e them a home)or- assignment. No) I don/t ha*e a smooth entry into today/s topi#. No big deal" I/ll !st !mp into it. "There are t)o types o( pro e#ts"" I start to tal-. They start to )rite. "A pro e#t that is done by *endors and s!b#ontra#tors" li-e the plant e,pansion pro e#t that 4rian is in*ol*ed )ith" and a pro e#t that is done mainly by reso!r#es o( the #ompany itsel(" li-e the prod!#t de*elopment pro e#t that Mar- is leading. ".e heard (rom Mar- ho) they implemented o!r ideas in their en*ironment. Con#ept!ally they ha*e made many #hanges. %ra#ti#ally it boils do)n to three. I( yo! re#all" the main #hanges )ere: 'ne. %ers!ading the *ario!s reso!r#es to #!t their lead time estimates> T)o. Eliminating milestones or" in other )ords" eliminating #ompletion d!e dates (or indi*id!al steps" and Three. &re+!ent reporting o( e,pe#ted #ompletion times." They )rite as (ast as they #an" b!t I )as tal-ing too (ast" and they as- me to repeat the three #hanges. I do" and then #ontin!e. "As )e heard" it )as s!rprisingly easy to implement these #hanges..." ".hoa6" Mar- booms. R!th ba#-s him !p" "I( it )eren/t (or yo!" e,plaining e*erything to o!r people" pers!ading them to #ollaborateA I don/t thinthat s!#h a paradigm shi(t #an be imposed." "I (!lly agree"" &red s!pports his team members. "Than- yo!"" I say. "%ers!ading people to #ollaborate is al)ays ne#essary. The time )hen yo! #o!ld di#tate is o*er. I( yo! )ant people to thin-" to ta-e initiati*e" yo! #annot di#tate." They all nod. "4!t the (a#t is that yo! did implement it in abo!t one )ee-. Mar-0" "Abo!t." "My +!estion is" ho) #an )e do it in the other type o( pro e#t en*ironment" )here most o( the reso!r#es are *endors and s!b#ontra#tors0 Roger" )hose ob is dealing )ith them" told !s it/s impossible. That they )ill ne*er #ollaborate. Roger do yo! still thin- so0" "3es." And being Roger" he m!st add" "And )hate*er yo! say )ill not #hange it." He p!ts his head in his palm and sh!ts his eyes. I ignore him. "Are s!b#ontra#tors and *endors a problem0 $id yo! e*er see a pro e#t that )as signi(i#antly delayed be#a!se a *endor or s!b#ontra#tor )as late0" I( there e*er )as a rhetori#al +!estion" that/s it. "It is also a problem (or !s"" Mar- #omments. ".e are less dependent on s!b#ontra#tors" b!t delays (rom o!r *endors are a ma or problem." I nod to him and #ontin!e. "2o" the lead times o( o!r s!b#ontra#tors and *endors sho!ld be o( tremendo!s importan#e (or o!r pro e#ts. Ne*ertheless" ho) do )e #hoose them0"

E?

"They #an tell yo! )hate*er they )ant"" Ted is almost sho!ting. "4!t the tr!th is" it/s pri#e. My #ompany is a s!b#ontra#tor. 2o I -no). They may tal- abo!t reliability and +!ality" b!t )hen they #ome to sign" it/s pri#e." Ted doesn/t ha*e to sho!t. E*erybody agrees. "%ri#e is important"" I say. "4!t lead time is not less important. 2ometimes more. That/s )here the #hange sho!ld start. .e m!st !nderstand the (inan#ial impa#t o( a delay. .e m!st !nderstand that a three months/ delay sometimes #osts !s more than gi*ing another ten per#ent to all o!r *endors." 2ome are nodding" most loo- s-epti#al. 4rian doesn/t seem to agree" and he is not the only one. I ha*e to demonstrate my #laim. 'ther)ise they/ll thin- that I/m !st e,aggerating in order to ma-e a point. "4rian" t)o )ee-s ago yo! in*ited me to spend a day )ith the team responsible (or the e,pansion pro e#t o( yo!r plant. The plant manager )as there" the pro e#t leader and all his -ey people. They are all #on#erned that the pro e#t )ill not be (inished on time. Can yo! tell the #lass a little bit abo!t this pro e#t0" "2!re." T!rning to the #lass" he says" "It/s a si,1million1dollar e,pansion pro e#t. &or !s it is big. And it loo-s li-e it )ill be at least (o!r months late. I( )e are late" let me tell yo!" some people )ill be bent o!t o( shape. That/s (or s!re. 2o" yes" e*erybody is *ery #on#erned. .o!ldn/t yo! be0" I -eep on as-ing" "$o yo! thin- that they -no) the penalty o( not (inishing this pro e#t on time0 I mean the damage to the #ompany0" 4e(ore he has a #han#e to dig himsel( a hole" I #ontin!e" "3o! are a ma or player on this team. $o yo! -no) the damage0" "2!re"" he says. Then" e,pe#ting I )ill as- (or the ans)er" he #orre#ts himsel(. "I( yo! mean the dollar and #ents impa#t" no I don/t." ".hat data do )e need in order to ans)er this +!estion0" I as- the #lass. &or a )hile nobody ans)ers. Then 4rian himsel( hesitantly says" "E,pe#ted sales0" "Is this an ans)er or a +!estion0" "More o( a +!estion"" he admits. "4!t yo! do -no) the ans)er. Let me g!ide yo!. .e in*est in a pro e#t in order to get something that )ill bring !s bene(its." "'( #o!rse." "There(ore" it m!st be that the penalty o( not (inishing on time is related to the delay in getting the e,pe#ted bene(its." E*erybody nods. "4rian" let/s go ba#- to yo!r spe#i(i# #ase. .hy is yo!r #ompany in*esting" ho) m!#h did yo! say" si, million" to e,pand the plant0 .hat bene(its do they e,pe#t0" ".e need the #apa#ity." Responding to my signal to pro#eed" 4rian adds" ".e ha*e a *ery ni#e prod!#t line" o( )hi#h )e #annot s!pply eno!gh to the mar-et. I see no). The damage to the #ompany )ill be the delay in getting the additional sales." ".e )ant to +!anti(y it"" I remind him. "No)" a min!te ago yo! )ere not s!re i( )e need to -no) /e,pe#ted sales./ $o )e need it0" ".itho!t a do!bt." I smile. "I told yo! that yo! -no) the ans)er. B!st thin- #learly" that/s all." They la!gh. "No) that )e/*e agreed that )e need to -no) e,pe#ted sales" #an yo! tell it to !s0 Ho) m!#h more )ill yo!r #ompany sell d!e to the additional #apa#ity0" "The (ore#ast is t)o million per month. A *ery #onser*ati*e (ore#ast. The #onsens!s is that on#e )e are !p and r!nning )e )ill s!rpass it." "&ine"" I say. "Can )e no) ans)er /)hat is the penalty o( a delay0/ 'r do )e need more data0" ".hat are the margins on this prod!#t line0" &red as-s. 4e(ore 4rian #an ans)er" I step in. "&red" )hy do yo! )ant to -no)0" "4e#a!se other)ise ho) #an I #al#!late the impa#t on the bottom line0" Remembering )hat I/*e learned (rom Bohnny" I inter e#t" "Margins are a lo!sy )ay o( determining it" b!t (or establishing order o( magnit!de it )ill s!((i#e"" and I gest!re to 4rian to ans)er &red/s +!estion. "It/s a *ery good prod!#t"" 4rian e,plains. "The net margins are o*er thirty1(i*e per#ent." No) that there are more (a#ts on the table" I repeat my +!estion. ".hat is the penalty (or the #ompany o( a one1month delay in #ompleting the e,pansion pro e#t0 4rian0" He doesn/t ans)er. "T)o million dollars sales per month times thirty1(i*e per#ent net margin..." I (eed it to him )ith a spoon. "2e*en h!ndred tho!sand dollars a month. I -no) ho) to m!ltiply. 4!t I don/t b!y it. This money )ill not be lost" it )ill !st be postponed. Ah" I need to -no) the interest rate." "&orget the interest6" &red tries to help. "$id yo! e*er hear abo!t #ash (lo)0"

E@

"Cash (lo) is *ery important"" I agree. "4!t in this #ase" also net pro(it is lost. 4rian" )hy do yo! #laim that money is not lost" only postponed0 4e#a!se yo! ass!me that sales )ill be there also in the (!t!re. .hat other pie#e o( data do )e need in order to e,amine yo!r ass!mption0" "I don/t -no)." Nor does anybody else. I try to help. "4rian" ho) long do yo! thin- yo!r #ompany )ill be able to #ommand s!#h he(ty margins on this prod!#t line0" "Nobody -no)s. Maybe t)o years" maybe three. I see yo!r point. It/s not !st money delayed" a ma or portion o( it is money gone (ore*er." He s)allo)s hard. ".e are tal-ing abo!t h!ndreds o( tho!sands per month. That/s h!ge." No) I #an ret!rn to my original +!estion. "$o yo! thin- that the pro e#t team has a #lear idea o( the damage the #ompany )ill s!((er i( the pro e#t is not (inished on time0" "No" they don/t"" he #on(idently ans)ers. "Not reali=ing the dollar impa#t o( a one1month delay s!rely has an impa#t on the )ay yo!r pro e#t team deals )ith yo!r s!b#ontra#tors0" .hile he thin-s abo!t it I t!rn to the #lass. "It is s!rprising" b!t !n(ort!nately this is the #ase e*ery)here. Most people in*ol*ed in a pro e#t don/t e,pli#itly re#ogni=e the penalties asso#iated )ith ea#h month that the pro e#t is delayed." "4e(ore )e start to dis#!ss ho) )e sho!ld negotiate )ith o!r *endors" I )ant e*ery one o( yo! to reali=e the magnit!de o( this phenomenon. 2o" ta-e yo!r time and thin- abo!t the pro e#ts yo! are in*ol*ed in. No) that yo! -no) more" try to (ig!re o!t the a#t!al damage asso#iated )ith a delay." ".e don/t ha*e to thin- abo!t it"" Mar- responds immediately. "In o!r #ase the penalty is mammoth." And he e,plains to the #lass his #ompany/s sit!ation: a high1te#h #ompany #apt!red in a (ranti# ra#e" (or#ed to release a ne) generation o( prod!#ts e*ery si, months or so. A (e) months/ delay in their #ase means a s!bstantial drop in mar-et share. I interr!pt to highlight an important point. "In Mar-/s #ase the damage is m!#h more se*ere than in 4rian/s #ase. Mar-/s #ompany is not going to lose !st additional sales" they are also going to lose e,isting mar-et share." "It/s e*en )orse than that"" Mar- #ontin!es. 2in#e o!r sto#- *al!e is based on e,pe#tations" a drop in mar-et share means mammoth damage to o!r shareholders. And there(ore to o!r ob se#!rity." "Is e*erybody in*ol*ed in de*eloping ne) prod!#ts as a)are o( this as yo! are0" I as-" s!rprised. "I don/t thin- so"" R!th ans)ers. "&e) see the (!ll rami(i#ations." I thin- Mar- disagrees )ith her )hen he says" "E*ery pro e#t manager -no)s that it/s important not to be late." 4!t then he #ontin!es" "They -no) it be#a!se the press!re to (inish on time is immense. 4!t" as a pro e#t leader" I #an tell yo!" they don/t really -no) )hy. Fntil o!r e,e#!ti*e *i#e1president e,plained it to the three o( !s" )e didn/t -no). Maybe &red did" b!t I didn/t." "Me" neither. I )as not a)are o( the impa#t on the shareholders and the impa#t on the (!t!re o( the #ompany"" &red #on(irms. "This is generally the sit!ation"" I #on#l!de (or the #lass. "Most people in*ol*ed in the pro e#t" o(ten in#l!ding the pro e#t leaders" are not (!lly a)are o( the magnit!de o( damage asso#iated )ith a delay. No )onder that )hen )e negotiate )ith *endors or s!b#ontra#tors )e do not pay eno!gh attention to their lead time." "3o! may be right"" Roger #omments" "b!t it/s too late. .e ha*e already #onditioned the *endors to #ompete on pri#e." At (irst I/m s!rprised that Roger is bothering to parti#ipate. Then I reali=e that" at last" )e are dealing )ith his s!b e#t. I thinI !nderstand )hat he meant" ne*ertheless I #he#-. ".hat do yo! mean by /#onditioned to #ompete on pri#e/0" He doesn/t bother to e,plain. He !st states" "Competing on lead time6 It/s beyond them." Noti#ing my s-epti#ism" he #ontin!es" "I don/t belie*e that it is possible to e,plain to them that lead time is *ery important (or !s. 2ometimes more important than pri#e." ".hat )ill happen"" I s!ggest" "i( in yo!r re+!est (or proposals yo! )rite a senten#e li-e /abo*e P pri#e don/t s!bmit" abo*e 3 lead time don/t s!bmit a proposal./ $on/t yo! thin- that )ill dri*e the message home0" "To p!t a pri#e in my re+!est (or a proposal0" He is astonished. "Not a pri#e. A #ap on the pri#e." He doesn/t ans)er. He thin-s. 2o he is not as thi#- as I tho!ght. An atta#- #omes (rom a dire#tion I least e,pe#ted. "2till" many *endors are #onditioned to #ompete only on pri#e"" R!th de#lares. ".hy do yo! say that0" It/s my t!rn to be astonished. "3o! -no) ho) many times I/*e tried to s+!ee=e shorter lead times (rom a printing ho!se0 E*ery time )e r!n into an emergen#y )ith o!r promotional material. .hi#h means" *ery (re+!ently. I try to o((er more money" I beg" I plead. It doesn/t help. They beha*e as i( their lead times are #ast in iron."

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I str!ggle )ith it. It/s hard (or me to belie*e that/s the #ase. 4!t R!th is *ery reliable. I as- some more +!estions. R!th (!lly #ooperates. 2he )ill not t)ist aro!nd the (a#ts" b!t she str!ggles )ith me. 'thers #ontrib!te. R!th is not the only one )ho has to deal )ith printers. &inally the pi#t!re emerges. 3o! go to a printer and as- (or a +!ote (or a bro#h!re. They tell yo! (o!r )ee-s. 3o! #ome )ith all the needed (inal material in yo!r hands" and yo! are )illing to pay more" and they agree to do it in (o!r days. They simply ha*e had *ery bad e,perien#es )ith #lients )asting so m!#h time ma-ing !p their minds on all the details. "2o there is a )ay to trade lead time (or money"" I #on#l!de. "The -ey is to !nderstand the tr!e impa#t (or !s" other)ise )e )ill not be )illing to pay (or shorter lead times." ".e also ha*e to !nderstand the *endors/ #on#erns"" R!th reminds me. "'ther)ise" e*en i( )e are )illing to pay" they )ill not be )illing to #ommit." I (!lly agree. No) that this iss!e is #leared !p" I #an raise the other problem. ".e heard (rom Mar- ho) important it is not to tell a #ompletion date to the person doing the )or-." "3o! do it"" Mar- emphasi=es" "and yo! almost (or#e the /st!dent syndrome/> then lead times #annot be shortened." "4!t )hat do )e do )ith *endors0" I #ontin!e. ".e (or#e them to #ommit to a deli*ery date. E,a#tly the opposite o( )hat )e sho!ld do." "3o!/re telling !s not to as- (or #ommitment to a deli*ery date0" Roger is ba#- in the ring." / "That/s e,a#tly )hat I said." "Ho) are yo! going to #on*in#e a *endor to lea*e so m!#h !p in the air0" he sar#asti#ally as-s. I don/t ha*e an ans)er. "4y tal-ing his lang!age"" I say. He narro)s his eyes. "Last time yo! agreed to #ome )ith me to a meeting )ith a *endor. Is yo!r o((er still open0" 2mir-ing" he loo-s aro!nd. I nod. Any other ans)er and I/ll lose all #redibility. Ne,t time I/ll be more #are(!l d!#-ing +!estions. ".ednesday morning o-ay0" "3es"" I +!a#-. "It )ill be interesting to see yo! tal- the lang!age o( my *endor." Roger doesn/t miss the opport!nity to t!rn the dagger. They all la!gh. I gi*e them a pile o( home)or-. .hen they/*e all le(t" Charlene approa#hes me. 'h" no. 2he sa) it all. "It )as *ery interesting"" she says. "I learned a lot." I gi*e her a dirty loo-. "A(ter this #lass" I ha*e to rethin- the )hole s!b e#t o( net1present1*al!e. 2omething is terribly )rong there." I don/t -no) )hat she is tal-ing abo!t. 4!t at least somebody is satis(ied )ith this #lass. "2i, )ee-s0 Can/t yo! do it (aster0" "Impossible." He is in his early (i(ties. 4ig m!sta#he" all gray. And he tal-s #on(idently. Clearly he -no)s his b!siness. .hat he (orgot abo!t spe#ial #oating is more than I e*er -ne). .hat am I tal-ing abo!t0 I -no) diddly abo!t it. Roger might -no) m!#h more" b!t he is playing the d!mmy. I #annot e,pe#t any help (rom his side. He/s !st sitting there grinning to himsel(. It/s !n(air. To tal- the *endor/s lang!age yo! ha*e to -no) something abo!t the *endor. And I -no) nothing. I (lip thro!gh the proposal again. Most o( it is meaningless to me. E*ery se#ond )ord is te#hni#al argon. 4!t I do -no) ho) to read n!mbers" and the n!mbers are telling me that something is (ishy. This proposal is (or #oating three di((erent molds. Ea#h one ta-es a di((erent n!mber o( ho!rs to do" ne*ertheless" they are ea#h +!oted to be deli*ered in si, )ee-s. I s!spe#t that the lead time is not based on anything more than a general r!le o( th!mb /This type o( a ob" +!ote si, )ee-s/ type o( r!le. The rel!#tan#e o( the salesman to dis#!ss it strengthens my opinion. 4!t ho) #an I pro*e it0 Moreo*er" ho) #an I pers!ade him that this /si, )ee-s/ is not holy0 I don/t say a )ord. 2alespeople don/t li-e silen#e. "I #o!ld ha*e told yo!" li-e some o( o!r #ompetitors might" that )e #o!ld deli*er in (i*e )ee-s. 4!t )e ha*e a rep!tation to prote#t. Roger #an tell yo! ho) reliable )e are." "Reliable0" Roger almost #ho-es. ".hat abo!t..." Then he re#onsiders. "3o!/re as reliable as the others." "That/s !n(air"" the salesman protests. ".ell" slightly more reliable." He #an/t stop himsel( (rom adding" ".hi#h is not a big deal." ".hen )e say si, )ee-s"" the salesman is (irm" ")e deli*er in si, )ee-s. And al)ays (irst1#lass +!ality. .e don/t #ompromise on +!ality" li-e others sometimes do." And he gi*es !s a )hole story abo!t #oatings that peel" not theirs" God (orbid. E9

.hen he (inishes" I/m ready to start. "Let/s ta-e the big mold. 3o! are #harging (or se*enty1(o!r point t)o ho!rs. Remar-able a##!ra#y. 4y the )ay" yo! m!st be #omp!teri=ed." "2!re"" he says pro!dly. ".e !se only the *ery best and latest te#hnology." "$o yo! )or- one shi(t0" I as-. "No. In t)o o( o!r pro#esses )e ha*e t)o shi(ts." And he gi*es a long e,planation. Listening to him yo! get the impression they in*ented e((i#ient #oating. I let him (inish and then say" "2e*enty1(o!r ho!rs" e*en i( all the )or- is done se+!entially" does not ma-e !p si, )ee-s. Fsing t)o shi(ts" it/s #loser to one )ee-." "3o! ha*e to add #!ring time and drying time. It all adds !p.< "Ho) long #an it ta-e0 C!ring and drying are t)enty1(o!r ho!rs a day." And I ma-e a )ild" totally !n(o!nded spe#!lation" "2o another t)o days. .here do yo! get the si, )ee-s (rom0" "Closer to (o!r days. This is a three1layer ob." Then reali=ing that he/s still (ar (rom !sti(ying si, )ee-s" he adds" "And there are other obs in the shop. .e are a big pla#e." "Ele*en people"" Roger m!rm!rs. "2o i( yo! ga*e this ob top priority"" I #harge on" "yo! #o!ld (inish it in less than t)o )ee-s." ".e #annot gi*e it top priority"" he protests. "E*ery #lient )ants his ob r!shed." His (a#e reddens. "I( )e gi*e e*erything top priority" o!r pla#e )ill be#ome a =oo. It/s o!t o( the +!estion. I/ll ne*er allo) it." The )ay he tal-s one might thin- that he )as the o)ner" not !st a salesman. Then I reali=e" )ith ele*en people in total" maybe he is the o)ner. It/s not )ise to p!sh a person into a #orner" so (or no) I drop this topi#. "Can )e go o*er the #ost #al#!lation0" I s!ggest. He rela,es. Here is a pla#e he #an tell me )hate*er he )ants" and there is no )ay I #an e,pose him. Ta-ing his time" he e,plains all the details. It/s important to him to sho) me ho) #ost e((i#ient they are. I let him pers!ade me that he ma-es only si,1per#ent pro(it on these obs. Roger is ya)ning. "There isn/t m!#h pro(it in this b!siness"" I say. Roger )ants to protest" b!t o!r #oating man doesn/t gi*e him a #han#e. He immediately starts )ith another lengthy story that is s!pposed to demonstrate ho) #are(!l they are )ith their +!otes. 'ne might get the impression that their mission in li(e is to sa*e money (or their #!stomers. Maybe he is the salesman a(ter all. .hen the (lood stops" I say" "3o! need more net pro(it. Roger/s #ompany needs shorter deli*ery times. I s!ggest yo! p!t it in yo!r proposal." "%!t )hat0" He/s #on(!sed. "I/m not as-ing yo! to gi*e anyone (irst priority"" I #lari(y. "4!t" I thin- yo! sho!ld add some options. 'ptions that trade pri#e )ith lead time." He still doesn/t !nderstand. "2omething li-e li*ery." "Three )ee-s is o!t o( the +!estion6" He rea#ts immediately. I don/t -no) )hat else to say" )hen he #ontin!es" "4!t maybe )e #an do it in (o!r )ee-s." "It might )or-"" I say. "2o s!ppose they gi*e yo! the molds in" let/s say" Mar#h..." I loo- at Roger. "There abo!t"" Roger #on(irms. "2!ppose they gi*e them to yo! sometime in Mar#h..." "I need the molds"" the #oating man says. "And I need #lear dra)ings. &rom the min!te e*erything is in my hands yo! #an #o!nt (o!r )ee-s and the molds" per(e#tly #oated" )ill be deli*ered. 4!t then I/m paid si, per#ent more. That/s the deal0" ".hat date are )e tal-ing abo!t0" Roger inter(eres. "It doesn/t matter"" #omes the gr!mpy ans)er. "I deli*er (o!r )ee-s a(ter I get e*erything I need. All the pie#es o( the mold" not one missing" and all the dra)ings. 'nly then the #lo#- starts." He stresses it so m!#h" it/s apparent that here is )here he !s!ally loses the time. It/s similar to )hat I learned (rom R!th regarding printing ho!ses. The same phenomenon. "There is another thing"" I say. "The smaller mold" is it possible" (or that ob only" that )hen it arri*es" yo! drop e*erything else and )or- on it." "No )ay"" he says (latly. I )ant to demonstrate to Roger that it is possible to b!ild a reso!r#e1b!((er e*en )hen dealing )ith a s!b#ontra#tor" so I try again. "Ho) m!#h more money do yo! )ant (or it0" I( this mold )ere on the #riti#al path" it )o!ld pay !s to pay more. "I told yo!" no )ay. I #an/t r!n my shop (rom one day to the ne,t. That/s not the )ay to r!n a pla#e." Remembering )hat Mar- is doing in his pro e#t" I try the same. "I/m not tal-ing abo!t that. Ten days be(ore yo! get all the pie#es o( that mold and all the dra)ings" yo! )ill be noti(ied." He thin-s abo!t it" and then de#lines. "A lot #an happen in ten days." EE

"2!ppose they gi*e yo! noti#e ten days be(ore they plan to ship it. Then" three days be(ore. And then a day be(ore. That )ay yo! #o!ld #om(ortably plan yo!r )or-." "I don/t -no)"" he says. ".hat abo!t another si, per#ent (or this ser*i#e. It )o!ld triple yo!r pro(it on this ob. .hy )on/t yo! add this option to yo!r proposal0 'ne o( the ma or #riteria to #hoose a )inner is *endor responsi*eness. 4e more responsi*e" (or a pri#e o( #o!rse." "&ine" I/ll add it." He t!rns to Roger. ".hen do yo! )ant the modi(ied proposal0" ".ait"" I interr!pt. "There is one more thing." ".hat is it0" he manages not to snarl. "3o! )ant to -no)" in ad*an#e" )hat is #oming yo!r )ay." ".itho!t it" (orget it." "&orget )hat0" Roger aggressi*ely as-s. "I( yo! don/t gi*e me the noti#es" as )e dis#!ssed" (orget it. I/m not going to gi*e (irst priority to the small mold. No matter ho) m!#h yo! )ant to pay." 4e(ore Roger has the opport!nity to mess it all !p" I step in. "3o! are right"" I pa#i(y the #oat1man. To r!n yo!r b!siness properly" yo! m!st ha*e a #lear idea o( )hat/s #oming yo!r )ay. 2o does Roger." ".hat do yo! mean0" ".hen yo! deli*er the #oated molds"" I e,plain" "that/s not the end o( the story. There is a lot o( )or- that depends on them. Roger/s #ompany needs to get ad*an#e noti#e (rom yo! )hen to e,pe#t ea#h mold ba#-." "&o!r )ee-s. I told yo!." "A lot #an happen in (o!r )ee-s"" I (latly repeat his phrase. "4esides" on the small mold" )e do e,pe#t to get it in less than (o!r )ee-s." "I see." He thin-s it o*er. "'n#e a )ee-. That/s all I #an do. I/m not going to t!rn my pla#e into a paper nightmare. 'n#e a )ee- is all I #an do." He t!rns ba#- to Roger. ".hen do yo! )ant the modi(ied proposal0" "I don/t )ant it"" Roger (latly says. ".hy )aste my time. Let/s (inali=e this deal no)." Less than ten min!tes later" a happy salesman )al-s o!t. "I( I hadn/t seen it )ith my o)n eyes" I )o!ldn/t belie*e it"" Roger says. "A *endor )ho doesn/t insist on dates0 .hat a d!mmy." A tea#her is s!pposed to li-e his st!dents. 4!t )ith some st!dents it/s mission impossible. ".hy #all him a d!mmy0" I/m impatient )ith him. "$o yo! thin- that he sho!ld #are" no)" in Ban!ary" i( the )or- )ill be at the beginning o( Mar#h or at the end0" Then I add" "At this stage" negotiation is on lead time. Not on date. That/s al)ays the #ase. 3o!r problem is that on#e yo! agree on lead time" in those rare #ases yo! bother to arg!e abo!t it" then yo! yo!rsel( (or#e the date. It/s not the *endor" it/s yo!.< I #annot stop mysel( (rom adding" "And as yo! noti#ed" i( yo! tal- the *endor/s lang!age" there is no problem. The *endor is )illing to #ommit to m!#h shorter lead times" (or money." "'ne s)allo) doesn/t yet mean it/s spring"" he plays it do)n. Then he grins. "4!t I m!st admit" !st (or yo! I pi#-ed the most #onser*ati*e *endor I -no)." I #ontrol my desire to p!n#h him and instead remar-" "He #an/t be so #onser*ati*e i( they !se the latest te#hnology." "They don/t. 4!t they ha*e some real e,perts" some real meisters. I )ant to lea*e" b!t I ha*e a problem. I -no) Roger !st )anted to h!miliate me" to sho) that I/m (!ll o( hot air. I )on" b!t Roger )ill ne*er admit it to the #lass. That/s )hy )e agreed that i( I s!##eeded in mo*ing the *endor to modi(y his proposal" I )o!ld get #opies o( the original and modi(ied proposals. That )ay I #o!ld sho) the #lass a real #ase demonstrating that a *endor #an be pers!aded to trade lead time (or money" and that a *endor does not insist on e,a#t starting times" and de(initely not on a deli*ery date. 4!t no) there )ill be no modi(ied proposal. "Tell me" Roger" ho) #ome yo! a#t!ally agreed to pay more0 .here are yo! going to get the additional b!dget0" He shr!gs. "I/*e been in this b!siness (or a long time. I ha*e my #!shions." "And top management0 .ill they agree0" I try to p!n#h a hole in his greasy sel(1ass!ran#e. "I s!spe#t that paying (or shorter lead times is against some #ost1sa*ing poli#ies." It doesn/t )or-. "I too- #are o( it." "May I as- ho)0" "&irst" I had a meeting )ith my boss" the 5% o( (inan#e. Then he dragged me )ith him to tell it to the president. I e,plained the bottom line impa#t o( shortening o!r pro e#t lead time. That tri*ial st!(( yo! tal-ed abo!t. They too- to it li-e (ish to )ater. No problem."

EG

I #an/t belie*e my ears. 2!#h a thing #oming (rom Roger0 It/s hard (or me to grasp. I #onsidered Roger my most nasty" bit#hy" #yni#al st!dent" and the last one I e,pe#ted to ta-e initiati*e. Nasty and bit#hy he is" b!t he s!re #an mo*e. "4y the )ay"" I hear him say" "ne,t )ee- I ha*e important meetings )ith three more *endors. Is it possible (or yo! to oin in0 2o(ten them !p a little (or me" yo! -no)0" I/m )ondering ho) to ans)er" )hen he #ontin!es. "'( #o!rse" I #an/t as- yo! to do it (or (ree. .ill (i*e h!ndred dollars a meeting do0" "'nly i( yo! prepare a presentation (or the #lass on ho) to negotiate shorter lead times )ith *endors." At last I rea#hed him. He ma-es (a#es" b!t I/m (irm. In the #ar" it da)ns on me. That/s (i(teen h!ndred dollars. B!dith )ill lo*e another )ee-end in the 4ig Apple.

EH

Chapter 1H
Mar-" R!th and &red !pdate Isaa# Le*y. He )ants to go o*er the details. It doesn/t ta-e long> the pro e#t is not (ar (rom #ompletion. The pro e#t b!((er is still nine )ee-s. The remaining (eeding b!((ers also loo- healthy. "Loo-ing good"" Isaa# says )hen they (inish. "Almost too good to be tr!e. I m!st say that at the beginning I )as +!ite s-epti#al" b!t yo! #an/t arg!e )ith the res!lts." ".e are going to deli*er t)o months ahead o( time and )itho!t #ompromising on any o( the original spe#s"" Mar- is #on(ident. Le*y smiles. "As (ar as I/m #on#erned" it/s a )orld re#ord"" Mar- #on#l!des. 2till smiling" Isaa# as-s" ".hat is the #han#e o( a pie#e o( bread (alling )ith the b!tter1side do)n0" "&i(ty per#ent"" &red ans)ers. "In this pla#e it/s #loser to one h!ndred"" Mar- #orre#ts him. "3o! are too optimisti#"" Isaa# says. "The #han#e o( a pie#e o( bread (alling )ith the b!tter (a#ing do)nA proportional to the pri#e o( the #arpet." They are all in a good mood" so it ta-es some time be(ore they stop la!ghing. "3o! ha*en/t (inished yet"" Le*y reminds them. "The (inal tests on the modem !st started. Anything #an still happen." "2o I sho!ldn/t ha*e started the )heels rolling in mar-eting0" R!th is not s!re anymore. Le*y thin-s abo!t it. ".e #an/t a((ord to s!rprise them"" R!th tries to pers!ade him. "I( )e do" all the gain )e ma-e here )ill be )asted there." "3o! are right"" Le*y says. "2o )hat do yo! thin-0" Mar- p!shes Le*y. "2!ppose that the (inal tests do not re*eal anything #atastrophi#" do yo! thin)e made it0" Isaa# loo-s at the three o( them. They are +!iet" )aiting (or his *erdi#t. "Let/s straighten things !p"" he says. "E*en i( the (inal tests re*eal some bad ne)s" it has nothing to do )ith )hat yo! three ha*e done. .e )ere loo-ing (or a )ay to signi(i#antly shrin- the de*elopment time and yo! pointed o!t s!#h a )ay. 4!t..." He pa!ses (or (e) se#onds to organi=e his tho!ghts. The three do not dare to e*en blin-. "4!t" there is still a lot to do !ntil the )ay is #lear. Right no) I ha*e more +!estions than yo! ha*e ans)ers. .e are only at the beginning." He tries to gi*e them an e,ample o( )hat he means. ".hen yo! started to implement this radi#al method" the A889 )as in the (inal stages. Not that I/m trying to p!t do)n )hat yo! did" yo! ha*e done a )onder(!l ob. 4!t I )o!ld li-e to see ho) yo!r method )or-s on a (!ll pro e#t. &rom start to (inish." "I don/t see m!#h di((eren#e"" Mar-s arg!es. "3o! may be right" b!t !ntil )e try it" )e don/t -no). 4esides"" Isaa# adds" "don/t yo! thin- it )o!ld be interesting to (ind o!t by ho) m!#h yo!r method #an shorten the de*elopment time0" They do not ans)er. "There is another thing that tro!bles me"" he says. "I see ho) yo! made it )or- )ith one pro e#t" b!t I don/t #learly see ho) it )ill )or- )ith many. '!r pro e#ts intera#t )ith ea#h other" yo! -no)." "I -no)"" Mar- m!rm!rs. Then" gathering his #o!rage" he loo-s into Isaa#/s eyes and says" "There )ill al)ays be some loose ends." .hen Isaa# doesn/t ans)er" R!th adds" ".hen are )e going ba#- to o!r reg!lar obs0" Isaa# t!rns to &red" "$o yo! ha*e a +!estion as )ell0" "3es"" he says. ".e )ere promised that i( )e s!##eeded )e )o!ld get ten tho!sand shares ea#h. .hat are the #riteria (or o!r s!##ess0" "Ten tho!sand shares ea#h is a lot o( money"" Isaa# ans)ers. "$o yo! thin- that yo! earned it0" They don/t ans)er. He #ontin!es. "Are yo! )illing to gamble that yo!r method )or-s0 Al)ays0 In ho) many #ases ha*e )e #he#-ed it0 &rom start to (inish" not e*en on#e. I( yo! )ere de*eloping" a modem" )o!ld yo! a##ept it as a (inal prod!#t0 At the stage that )e are no) it/s only a promising prototype. $on/t as- me )hat the #riteria are. 3o! -no). 3o! -no) )hen something #an be de#lared good eno!gh." "I thin- )e )o!ld li-e to ha*e a more tangible target"" R!th says +!ietly. "I -no) I )o!ld." "I #annot #ommit to any n!mbers" b!t I #an tell yo! that )hen it/s #lear that yo!r method is going to be#ome the norm in o!r #ompany" yo! ha*e de(initely deli*ered. Is that good eno!gh (or yo!0" "It/s good eno!gh"" Mar- says (irmly. He loo-s at the others. They nod. G;

"3o! said there are no b!dget limitations"" &red reminds Isaa#. "Can )e hire the help o( o!r pro(essor0 I don/t thin- it/s (air to #ontin!e to !se %ro(essor 2il*er/s -indness" and )e need more o( his time." "2!re" good idea. '((er him the standard #ons!lting (ee" a tho!sand dollars per day. $oes three days a month so!nd abo!t right0" ".ill do"" Mar- ans)ers (or the three o( them. "Anything else yo! need" thin- tan-0 &ine. 7eep !p the good ob and #ontin!e to -eep me posted." Mar-/s phone #all has me (eeling giddy. La!ghing" I head do)nto)n. I/ll (ind B!dith a real 5alentine/s $ay present in the e)elry store. Tonight" (or on#e" my )i(e )ill get a gi(t she deser*es. &inally. .ell" easier said than done. I don/t -no) m!#h abo!t e)elry" and the sales)oman in the store isn/t m!#h help" altho!gh she tries. 2he e*en models the e)elry (or me. 4!t B!dith has thi#- golden hair" high #hee-bones and a bea!ti(!l long ne#-" and this lady... I thin- I/*e seen e*ery pie#e o( e)elry in the store at least (o!r times. &inally" still hesitant" I ma-e my de#ision. B!st to be on the sa(e side" I also go and b!y a bo, o( the (an#iest #ho#olates I #an (ind. A(ter B!dith and I (inish dinner" )e go into the li*ing room. That/s )hen I gi*e her present to her. Not the #ho#olate" the earrings. 2he doesn/t ha*e to tell me ho) m!#h she li-es them. Her bl!e eyes tell it all. They glitter no)" li-e the a+!amarines that dangle (rom her ears. 2he tr!ly lo*es them. .hen )e sit do)n" I start to tell her abo!t the #ons!lting ob )ith Genemodem. "Another three tho!sand dollars a month"" B!dith !mps to her (eet. "$arling" that/s a (ort!ne." My ears pre*ent my smile (rom be#oming e*en broader. "I told yo! that yo!/ll manage." B!dith starts to dan#e aro!nd. "I told yo! that i( the !ni*ersity doesn/t ha*e the sense to appre#iate yo!" others )ill." I sin- deeper into the #o!#h. "3es" yo! did"" I admit. "Ho) m!#h do yo! ma-e no) (rom #ons!lting0 More than (rom tea#hing0" 2he #loses her eyes and starts to slo)ly t!rn aro!nd and aro!nd )ith her arms spread o!t. "And ne,t year" )hen more #ompanies (ind o!t abo!t my brilliant h!sband" )e/ll ha*e nothing to )orry abo!t." I )ish she )ere right. 2he ta-es one loo- at me and stops spinning. "$arling" I/m sorry. I -no) ho) m!#h yo! lo*e tea#hing" b!t only last month yo! told me that #ons!lting is a (orm o( tea#hing. Isn/t it0" "$epends on ho) one does it." "The )ay yo! do0" "I thin- I #an be happy )ith this type o( )or-" b!t..." 2he sits do)n ne,t to me. ".hat/s the problem" darling0" "Ne,t year I/ll be o!t o( the !ni*ersity"" I start to e,plain. "I )on/t ha*e #orporate managers as st!dents. And on my o)n" I/ll ne*er s!##eed in getting any #ons!lting #ontra#ts. %lease B!dith" let/s not (ool o!rsel*es" I don/t ha*e )hat it ta-es to sell mysel(. I #an try" b!t" let/s (a#e it" )hat/s happening no) is not the beginning o( a s!##ess(!l #ons!lting b!siness." 2he ta-es both my hands. ".e/ll see. I ha*e more (aith in yo! than yo! ha*e." Then she adds" "In the meantime )e are ri#h." "I )o!ldn/t say that"" I la!gh. "4!t" I agree" an additional three tho!sand dollars a month #an ma-e a h!ge di((eren#e in o!r li(e. It )ill ma-e a real dent in o!r pile o( debts." "And that )ill ma-e a h!ge di((eren#e in o!r li(e0" B!dith as-s so(tly. It ta-es me a)hile to reali=e ho) insight(!l her +!estion is. 2he is right. It )on/t really ma-e any di((eren#e. I -no) I )ill (ind something (or ne,t year. Nothing spe#ta#!lar" b!t I/ll ma-e a li*ing. Red!#ing o!r debts )o!ld be ni#e" b!t it )on/t ma-e a h!ge di((eren#e. Certainly not h!ge> maybe not e*en signi(i#ant. ".hat are yo! s!ggesting )e do0" I as-. "Ho) long )ill yo!r )or- )ith Genemodem last0" "&o!r months" maybe si,. 4y then they )on/t need me anymore"" I ans)er" gi*ing her my best e*al!ation. 2he ta-es her time" #hoosing her )ords #are(!lly. "Ri#-" (or the last thirteen years )e ha*e had to #o!nt e*ery penny." ".e sho!ld ha*e"" I tease her. "Maybe" (or the rest o( o!r li*es )e/ll ha*e to do the same." "I/m a(raid so"" I say bitterly. "There is no point in dreaming abo!t an a#ademi# #hair. Not anymore."

G1

"It/s o-ay" darling." 2he loo-s deeply into my eyes. "I mean it." A(ter a pa!se" she #ontin!es" "Ri#-" #an/t )e" (or on#e in o!r li*es" (eel that )e ha*e eno!gh0 &or si, months0 E*en (or (o!r months." I try to digest )hat she is saying. 2he )ants !s to spend it all. It/s #ra=y. It/s #ra=y" b!t it ma-es sense. "Thin- abo!t it as an in*estment"" she says. ".e )ill in*est the money in )hat is most *al!able. Good memories. Good" lasting memories." I thin- abo!t it. B!dith doesn/t press me. 2he !st sits there" staring at the (irepla#e. The more I thin- abo!t it" the more sense it ma-es. &inally" I agree. "As the money #omes" it )ill go." 2he smiles at me. %ro!dly. And I -no) I ha*e made the right de#ision. ".e are going to ha*e the best )inter and spring o( o!r li*es"" I promise her. "Easter in the 4ahamas. No" a #r!ise." 2he starts la!ghing. "4etter still"" I say" "I/ll lea*e it !p to yo!. 3o! do the planning." Miriam is not at her des-. I po-e my head into Bim/s o((i#e. "Bim" I/m st!#- and I need yo!r help." ".hat is it0" I interpret that as an in*itation and )al- in" #losing the door behind me. He p!ts his pen do)n and leans ba#- in his #hair. "There is one bad thing abo!t tea#hing. 3o! ha*e to go o*er the home)orassignments yo! gi*e them." "Gi*e it to yo!r %h.$. st!dents. .hy lean on them less than yo! !sed to lean on me0" "I )ish I #o!ld"" he sighs. "4!t yo! see" be#a!se o( Bohnny/s ideas" I #hanged so m!#h o( my systems #o!rse that my %h.$. st!dents are as ne) to this material as the !ndergrads. 4!t" eno!gh #rying on yo!r sho!lders. .hat do yo! )ant0" "To #ry on yo!r sho!lders"" I smile. And then" more serio!sly" "I ha*e a problem. I don/t -no) )hat to do in a #ase )here se*eral pro e#ts are done by the same pool o( people and one o( the s-ills is a bottlene#-." "Ri#-" sin#e )hen are yo! interested in s!#h theoreti#al #ases0" "That/s the problem"" I sigh. "It isn/t theoreti#al. That/s )hat I/m a#t!ally (a#ing in Genemodem. 2e*eral pro e#ts" and digital pro#essing" )hi#h is in*ol*ed in all o( them" is a bottlene#-." "2o" )hy don/t yo! go abo!t it systemati#ally0 &irst step: /Identi(y the #onstraint./ Is there a problem (inding the bottlene#- in yo!r #ase0" "2!ppose not. 4!t )hy do yo! de#ide that the bottlene#- is the #onstraint0" Bim !ses the )ords /#onstraint/ and /bottlene#-/ synonymo!sly. No )onder his response is" "I don/t get yo!." ".e are tal-ing abo!t pro e#ts. In a pro e#t the #onstraint is the #riti#al path." "Hmm. The bottlene#- is a #onstraint (or s!re" b!t yo!/re right" so is the #riti#al path. .hat are )e s!pposed to do in the #ase o( t)o #onstraints0" "More than t)o"" I say. "Ea#h one o( the pro e#ts has its o)n #riti#al path." I #an almost hear the )heels t!rning in Bim/s head. Many #onstraints... Can )e deal )ith ea#h pro e#t in isolation0 No. 4e#a!se i( )e do that" )e/ll be (or#ed to ignore the bottlene#-" and that/s )rong. "Ri#-" I don/t -no). I don/t -no) e*en )here to start thin-ing abo!t s!#h a problem." "Me" neither" and I ha*en/t been thin-ing abo!t it (or (i*e min!tes" b!t (or (i*e days." "Bohnny might help." Bim pi#-s !p the phone. A (e) min!tes later Bohnny enters. Hal( o( his shirt is o!t and his hair is a mess" #lear signs that )e interr!pted him in one o( his brainstormings. I (eel g!ilty. He heads dire#tly to the #o!#h. "Than- yo! (or sa*ing me (rom my misery. I )o-e !p )ith some st!pid problem" and sin#e then I/*e been #hasing it in #ir#les. Tell me that yo! ha*e a simple" elegant problem (or me" something I #an sol*e in (i*e min!tes and (eel good abo!t." ".e ha*e"" Bim promises him. I start to e,plain. Bohnny listens and then says" "I don/t -no) eno!gh abo!t pro e#ts." "And )e don/t -no) m!#h abo!t #onstraints. 2o #an yo! help me0" "The blind leading the blind"" he sighs. "&ine" let/s p!t o!r heads together. 4!t (irst" Bim" I need #o((ee." "Miriam6"

G8

Chapter 8;
I/m in my o((i#e going o*er home)or- assignments. I tea#h (o!r #o!rses" and I/m a (irm belie*er in home)or-. Fnli-e Bohnny" I li-e reading it. It/s time #ons!ming" b!t it/s the only )ay to get real (eedba#-> )hat I ta!ght )ell" )here )as I too +!i#-" )hat I mista-enly too- (or granted. 2o I/m not bored. 4esides" some o( the mista-es the st!dents ma-e are hilario!s. A -no#- on the door. "3es0" Ted sti#-s his red head in. "Can I interr!pt (or a moment0" he as-s politely. "2!re thing. Ha*e a seat." It/s not time (or st!dent ho!rs" b!t i( it/s important eno!gh (or him to #ome d!ring the )ee-" I ha*e the time. "I don/t -no) ho) to do my home)or- assignment"" he sighs. "2in#e )hen are st!dents #on#erned abo!t s!#h things0" He la!ghs ner*o!sly. "This time it/s important. 3o! see" I -no) that )e sho!ld shorten o!r lead time. And no)" a(ter )hat yo! ta!ght !s and )hat the Genemodem team ha*e done" I/m beginning to thin- that maybe it/s possible. 4!t..." "4!t )hat0" I en#o!rage him to #ontin!e. "Loo-. The home)or- assignment )as to #al#!late the damage to o!r #ompany" the damage res!lting (rom delaying the #ompletion o( a pro e#t." "Corre#t. 2o. Ted" )hat/s the problem0" "I #an/t (ind any damages" I #an only (ind ad*antages. 4!t that #an/t be tr!e." $esperately" he adds. "I )anted to implement it in o!r #ompany. I e*en spo-e )ith my boss" and he is open. 4!t no) I don/t -no) any more. I( shortening pro e#t lead times doesn/t bene(it my #ompany" )hy sho!ld )e bother doing it0" "Hold yo!r horses. $on/t !mp to hasty #on#l!sions." "That/s )hy I/m here"" he says (latly. "Good. Let/s ta-e it slo)ly. Ha*e yo! tried to (ollo) 4rian and Mar-/s e,amples0" He sha-es his head. "They are not rele*ant (or me." L.hy0< "They o)n their pro e#ts"" he ans)ers. ".e are !st s!b#ontra#tors. In o!r #ase the o)ner o( the pro e#t is the de*eloper" not !s. I see )hat he means. The o)ner o( the pro e#t is the one )ho reaps the bene(its (rom the #ompleted pro e#t. No )onder the damage o( not #ompleting the pro e#t on time a((e#ts mainly the o)ner. 4!t there m!st be reper#!ssions on e*erybody in*ol*ed. "Let me !nderstand it a little better"" I say. "&or yo!r #ompany" )hat is the penalty o( (inishing a #onstr!#tion site three months late0 3es" I -no)" yo! are ne*er that late. 2o let/s say that d!e to #hanges re+!ested by yo!r #lient yo! (inish three months later than the original date. $oes that happen0" "All the time. &orget )hat I said in #lass. 4et)een these (o!r )alls" I don/t remember one pro e#t that )e (inished on time" in spite o( all the sa(ety )e p!t in. E*erything that )e #o*ered in #lass" all the problems" )e ha*e them. 4!t )hen yo! as- the real +!estion" /)hy sho!ld )e #are0/ the ans)er is that )e sho!ldn/t. There is no penalty (or o!r #ompany being late. 'n the #ontrary" it helps !s." "Ho) #ome0" Aggressi*ely" he ans)ers. "Let me tell yo! the (!ll story. At the time )e sign the #ontra#t" o!r pri#es are *ery lo). Competition is so (ier#e that )e don/t ha*e any #hoi#e. 3o! #an )in or lose a bid on a three per#ent di((eren#e in pri#e. E*erybody is #!tting e*erybody else/s throat. .here do )e ma-e o!r money0" He pa!ses (or a se#ond as i( )aiting (or me to ans)er. I don/t -no) the ans)er. "'n the #hanges6" And then he elaborates. "'!r motto is" the #lient is al)ays right. They )ant #hanges" )e )on/t arg!e" )e/ll gladly do them" the more the better. 4!t at this stage )e are not a(raid that o!r dear #lient )ill t!rn to o!r #ompetitor" so they pay. Handsomely." Ted loo-s as i( he has !st re*ealed the se#ret o( his trade. B!dith !st (inished ma or repairs on o!r ho!se" so I -no) ho) m!#h they #harge (or things that are not spelled o!t in the #ontra#t. I s!spe#t that i( B!dith hadn/t initiated #hanges" the #ontra#tors )o!ld ha*e their )ays o( ind!#ing her to as- (or them. Come to thin- o( it" they probably did. .ho needs eight in#hes o( ins!lation in the roo(0 Ted is right. &or his #ompany" )hat/s the point o( (inishing ahead o( time0 Getting paid earlier0 Can/t be a ma or #onsideration" they get progress payments. 4e(ore I gi*e !p" I try to !nderstand more abo!t his b!siness en*ironment. "Aside (rom the money yo! o*er#harge (or the #hanges" )hat is the damage to yo!r #lient o( ha*ing the b!ildings ready three months late0" "I don/t -no)" b!t isn/t that his problem0" G?

"Maybe. 4!t let/s thin- abo!t it. Three months/ delay. .hat might be the damage (or him0" "&or the de*eloper0" Ted thin-s a little. "He )ill sell the apartments three months later than he e,pe#ted." I -eep as-ing" "Is that a big deal (or the de*eloper0 It m!st impa#t his #ash (lo)." "That might be a problem"" he agrees. Then" slo)ly" he adds" "It might be a big problem." L.hy0< "Most de*elopers don/t ha*e eno!gh #apital> the in*estments are (ar too big. They borro) money. I don/t thin- I -no) any de*eloper )ho is not mortgaged to the hilt. Cash (lo) is their ma or #on#ern. "A#t!ally" I #an gi*e yo! more than one e,ample )here a three1month delay ban-r!pted a de*eloper." 2miling" he adds" "Than- God it/s not o!r problem. .e get paid one )ay or another... I thin-." A(ter a moment o( silen#e" he says" "3o! might ha*e a point. I/d better #he#- ho) m!#h money )e lost be#a!se de*elopers )ent ban-r!pt. As a matter o( (a#t" their tight #ash (lo) a((e#ts !s all the time. They delay their payments to !s. .hi#h is a problem." He stands !p. "Than- yo!." He sha-es my hand" and )ith a )arm smile" he is gone. "2ee yo! ne,t )ee-end"" I say to the #losed door" and ret!rn to my )or-. Not (or long. Another -no#- on my door. I didn/t -no) they t!rned my o((i#e into a train station. "Come in." This time it/s Bohnny. I stand !p to )el#ome him. "I ha*en/t made any progress on bottlene#-s in pro e#ts"" I )arn him. "Neither did I"" he smiles. "I #ame (or something else. Charlene told me abo!t something interesting she pi#-ed !p in yo!r #lass." "I( yo! mean /net1present1*al!e"/ I don/t tea#h it" and in spite o( all Charlene/s e((orts" I don/t e*en !nderstand it. I -no) she #laims the opposite" b!t..." And I lea*e the senten#e open. "I/m s!re yo! tea#h many interesting things" b!t the one I/m parti#!larly interested in is ho) to negotiate )ith *endors. The shorter lead time aspe#t." I li-e this s!b e#t. I started to really li-e it a(ter Roger ga*e his brilliant presentation. He des#ribed all (o!r meetings" !sing s!#h sharp and dry h!mor I almost started to li-e him. ".hat do yo! )ant to -no) abo!t it0" "E*erything." And then he e,plains. "3o! -no) that I/m #onne#ted to FniCo. 3o! also -no) that FniCo is p!tting a large operation here." '( #o!rse I -no)" )ho doesn/t0 "4!t isn/t it )ell on its )ay0" "3es" it is. 2o m!#h on its )ay that they started to get ner*o!s that they are going to be late. I got a #all to loo- into it> something has to be done to speed !p the #ontra#tors. 2o here I am ready to learn anything yo! #are to tea#h me abo!t it." It doesn/t ta-e as long as I e,pe#t. Bohnny absorbs in less than hal( an ho!r )hat too- me almost t)o sessions in #lass. This g!y is li-e a sponge. .hen )e (inish" I s!mmari=e" "Remember" yo! ha*e to o((er money (or lead time. 'n their o)n" #onstr!#tion #ompanies )ill ne*er do it. 2hrin-ing lead times is against their interest." That s!rprises him. I tell him )hat I learned today (rom Ted. Bohnny listens. Intently. 4!t then he says" "I don/t b!y it." L.hy0< "I don/t -no)." That/s not an ans)er. .hen Bohnny noti#es my e,pression he h!rries to add" "There m!st be something )rong here" e*en tho!gh I #an/t p!t my (inger on it." And I tho!ght that Bohnny )as all (a#ts and logi#. No) I start to s!spe#t that he is as s!perstitio!s as the rest o( !s. ".hat possibly #an be )rong0" I e,press my disappointment. "3o! des#ribe a sit!ation )here a )in (or the s!b#ontra#tor is de(initely a loss (or the de*eloper. According to the Theory of Constraints that is an impossibility. #in lose situations do not e+ist,." .hat an arg!ment. "2o here goes yo!r theory"" I (latly say. "No" Ri#-" e*ery time it seems li-e a )in1lose e,ists" it/s only be#a!se )e are loo-ing at the problem too narro)ly." I don/t respond. I/m not going to arg!e abo!t ideology and I don/t )ant to o((end Bohnny. He leans his elbo)s on my table and #o*ers his (a#e. I -eep +!iet. It/s embarrassing. .hat is he doing0 Constr!#ting #lo!d diagrams in his head0 E,posing ass!mptions0 A(ter )hat seems a long time" probably three min!tes or so" he raises his head" and smiling" he says" "Here it is." ".hat0"

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"3o! tal-ed abo!t the impa#t delays ha*e on the de*eloper/s #ash (lo). Ri#-" #an )e sa(ely ass!me that (inishing be(ore time also impa#ts his #ash (lo)0" "Nat!rally." "And !s!ally #ash (lo) is *ery important to a de*eloper0" "3es." "3o! also told me that Ted/s mar-et is *ery pri#e sensiti*e. A three1per#ent pri#e di((eren#e )ill de#ide )hi#h #ontra#tor )ins the bid." "3!p." "Ho) do yo! re#on#ile these #ontradi#tory (a#ts0" I/m p!==led. "I don/t !nderstand. .hat #ontradi#ts )hat0" "I( a month/s di((eren#e in deli*ery is so important to the de*eloper"" Bohnny starts to e,plain" "then promised lead time sho!ld be a ma or #onsideration in #hoosing a #ontra#tor. 4!t yo! said that/s not the #ase" that pri#e is the o*er)helmingly de#isi*e (a#tor." "3es" it is"" I say" still not (!lly grasping )here he/s leading. Bohnny tries to e,plain it in a di((erent )ay. "Ri#-" do yo! agree that shorter lead time is important to a de*eloper0" "No do!bt." "2o the de*eloper sho!ld press the #ontra#tor to shorten the lead time." "Ho) #an they0" "'ne )ay to /en#o!rage/ a #ontra#tor to red!#e lead time is to atta#h big bon!ses to early #ompletion and big penalties to delays." He raises his hand to pre*ent me (rom #ommenting. He )ants to better e,plain this point. "Let/s not (orget"" Bohnny #ontin!es" "that most o( the de*eloper/s in*estment is tied !p to)ard the end o( the pro e#t" so a three1month early (inish #an easily do!ble the de*eloper/s ret!rn on in*estment. .hy sho!ldn/t he o((er the #ontra#tor a big bon!s (or that0 "'n the other hand" i( a delay #an p!t a de*eloper into ban-r!pt#y" he sho!ld try to p!t an enormo!s penalty into the #ontra#t )ith the #ontra#tor. As (ar as yo! -no)" are s!#h big bon!ses o((ered and h!ge penalties demanded0" There are some bids that ha*e small bon!ses" b!t nothing li-e )hat Bohnny is tal-ing abo!t. 4!t the bon!ses are not the problem> penalties are. "2ho) me a #ontra#tor"" I say" ")ho )o!ld agree to penalties" e*en small ones. Their margins #an/t s!pport it. .hat do yo! )ant0 That they/ll go b!st0" "Not at all. 4!t Ri#-" imagine a #ontra#tor )ho -no)s he #an deli*er three months (aster than anybody else." "There isn/t one." "I( they )ill bother to implement )hat yo! are tea#hing" there )ill be"" he presses. "I( yo! insist. 4!t I don/t see the point." "$on/t yo! see that s!#h a #ontra#tor )on/t ha*e to #ompete on pri#e0" "I don/t get it." I/m not st!bborn. I really don/t get it. "Loo-" #ontra#tors -no) abo!t (!t!re pro e#ts )ell ahead o( time. They ha*e their #onne#tions" and !pdated lists periodi#ally appear in their pro(essional maga=ines. .hat a (ast #ontra#tor has to do is get in to!#h )ith a de*eloper be(ore a (ormal re+!est (or proposal is o!t. Contra#tors !s!ally ha*e good #onne#tions )ith se*eral de*elopers" so it sho!ldn/t be a big problem. And then" all o!r (ast #ontra#tor has to do is pers!ade the de*eloper to p!t" in the re+!est (or proposal" a demand (or relati*ely short lead times and he(ty penalties." "He(ty bon!ses" yo! mean." "No. %enalties." To pers!ade the de*eloper to p!t in he(ty penalties0 It doesn/t ma-e any sense. Then it da)ns on me. It ma-es per(e#t sense. "I see yo!r point. I( the re+!est (or proposal spe#i(ies relati*ely short lead times #o!pled )ith penalties" no other #ontra#tors )ill dare to bid. The de*eloper )ill get a m!#h higher ret!rn on his in*estment )ith m!#h less ris-" and the (ast #ontra#tor )ill ma-e m!#h more pro(it." I smile at Bohnny. "3o! are right a(ter all. .hat #ontra#tors ha*e no) is not a )in1lose" it/s a lose1lose. The de*elopers s!((er (rom long and !nreliable lead times" and the #ontra#tors s!((er (rom a throat1#!tting" pri#e1 sensiti*e mar-et." "And the #ontra#tor )ho reali=es it #an ha*e a tremendo!s #ompetiti*e edge"" Bohnny #ontin!es my tho!ghts. "2!#h a #ontra#tor #o!ld ta-e the mar-et )hile #ommanding good pri#es. The problem is that" li-e e*erybody else in pro e#ts" #ontra#tors thin- that they #annot do a thing to #!t their lead times. The (irst ones to )a-e !p )ill ma-e a -illing." .hen Bohnny lea*es" I start my sear#h (or Ted/s phone n!mber.

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Chapter 81
A pin- note is on top o( the pile in my mailbo,. "%lease #all Mr. 4rad Ne)bolt." And a telephone n!mber. .ho is Mr. 4rad Ne)bolt0 %robably a salesman o( some -ind trying to interest me in something. I p!t it aside. There are more pressing things to do. Bim is all o*er me to #omplete o!r third arti#le in the series. Not that it matters no)" b!t I don/t li-e to let Bim do)n. I/m deeply into it )hen the telephone rings. "%ro(essor Ri#hard 2il*er0" .hen I respond" the *oi#e says" "I ha*e Mr. Ne)bolt (or yo!." ".ait"" I say. .hat gi*es salespeople the g!ts to thin- that they are allo)ed to #ommand other people/s time0 Interr!pting )hene*er they )ant. ".ho is Mr. Ne)bolt0" I demand to -no). A deep baritone ans)ers" "I/m the president o( D.E.C." I g!lp. Charlie )or-s (or them. "I/*e )anted to #all yo! (or some time"" he #ontin!es. "I/m *ery impressed )ith yo!r )or-. .e are !sing it" and it )or-s *ery )ell." "Than- yo!"" I say. 2o Charlie also implemented it. He didn/t say a )ord abo!t it. $id he0 "Can I in*ite yo! to gi*e !s a le#t!re0 I mean" to the 3%'." 3... %... '... 0 I try to de#ipher the a#ronym. I don/t ha*e to. "3%' is the 3o!ng %resident/s 'rgani=ation"" he e,plains. ".e get together e*ery month (or dinner" a small gro!p. 'nly presidents o( #ompanies. %!llman (rom Genemodem is in o!r gro!p. .e !s!ally ha*e a g!est spea-er" and )e share e,perien#es. I dis#!ssed it )ith the others" and )e )o!ld all li-e" *ery m!#h" to hear yo!r ideas on pro e#ts." I/m (labbergasted. "I/d be delighted"" I politely say. %!llman0 &rom Genemodem0 "Ne,t .ednesday all right0 A dinner tal-." "2!re." I try to -eep my head (rom s)elling. Ne,t .ednesday. 2o soon. %robably their originally s#hed!led" respe#ted g!est spea-er #an#eled on them at the last min!te. I/m !st the (ill1in. 2till... "I/ll (a, yo! all the details. It )as a pleas!re spea-ing )ith yo!" %ro(essor 2il*er. .e/ll see yo! ne,t .ednesday." 4e(ore I lose my #o!rage" I )rite a memo to 4.B. A short memo" !st saying that I/m still trying to get st!dents to the E,e#!ti*e M4A program. That I/m gi*ing a dinner tal- to the 3%'. And I don/t (orget to mention that %!llman (rom Genemodem )ill be there. It )on/t help. Ho) #an it0 4!t I don/t see ho) it #an h!rt" and I/m in a really #heer(!l mood. The meeting is in a pri*ate room at the 2heraton. The (irst person I see as I enter is 4.B. Good thing I don/t ha*e #astanets atta#hed to my -nees. It/s not (i*e min!tes be(ore she s!##eeds in mane!*ering me into a #orner. "3o! #an/t imagine ho) many strings I had to p!ll in order to be here. I almost had to promise that I/d oin the 3%'." 2he tal-s as i( I/m the one to be blamed. 4lamed (or )hat0 "I/m #o!nting on yo! to gi*e an e,#ellent presentation"" she -eeps on pressing. "4e pra#ti#al. $on/t tal- !st theory." ".hat else #an I tal- abo!t0" "'( #o!rse yo! ha*e to tal- abo!t the !ni+!e -no)1ho) the E,e#!ti*e M4A st!dents learn in o!r program. 4!t be pra#ti#al. 2tress ho) m!#h money this -no)1ho) sa*es (or their #ompanies." "4!t I don/t -no) ho) m!#h." "Then tal- abo!t ho) m!#h it #an sa*e them." I )as ner*o!s be(ore I #ame here. I )as e*en more ner*o!s )hen I sa) 4.B. 4!t only no) do I !nderstand )hat real ner*o!sness means. Than- God she lea*es me. 4e(ore anybody else has a #han#e to #orner me" I grab a )aiter. No" I don/t )ant a drin-. I )ant to -no) )here the toilets are. A min!te a(ter I start my presentation" I/m #ool as a #!#!mber. My transparen#ies are good. Con#ise and to the point. They also loo- good. .ho )o!ld belie*e that I only printed the latest *ersion at noon0 Anyone )ho/s )or-ed )ith today/s so(t)are. They almost don/t interr!pt me. 5ery (e) +!estions. 4!t they nod in the right pla#es. They let me (eel that I/m ma-ing sense" that they are )ith me. .hen I (inish" they #lap. More than !st politely. 'r maybe I (ool mysel(0 'nly )hen I sit do)n do I reali=e I didn/t do )hat 4.B. )anted. It )asn/t on my transparen#ies.

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Ne)bolt goes to the (ront. He (ormally than-s me" and then" to my s!rprise" he adds" "This st!(( does )or-. .e e,perien#ed it. A pro e#t that )as hopelessly late is no) ba#- on tra#-. .e are no) starting to manage e*ery ma or pro e#t this )ay." "2ame here." %!llman says. "$id yo! test it at Genemodem0" 4.B. as-s. There is no tra#e o( s!rprise in her *oi#e. "3es" )e did. .e are la!n#hing o!r ne) line t)o months ahead o( the #ompetition." "That m!st be )orth millions to yo!r #ompany"" 4.B. so(tly remar-s. "It helps." $inner is ser*ed. 4e(ore #o((ee" 4.B. ta-es o*er the dis#!ssion. 2omeho) she s!##eeds in #a!sing them to (eel g!ilty that they don/t pro*ide eno!gh s!pport (or the !ni*ersity. It goes )ell !ntil she starts pressing them to send more managers to the E,e#!ti*e M4A program. Then it starts to ba#-(ire. They rea#t by mo#-ing the *al!e o( the general -no)ledge ta!ght in !ni*ersities. They tal- abo!t the "(irst year sho#-" and abo!t the (a#t that they ha*e to spend so m!#h money training their already "ed!#ated" managers abo!t )hat really #o!nts. 4.B. (ights ba#-. 'ne president tal-s abo!t the (a#t that they do s!pport the E,e#!ti*e M4A program. They pay se*enty1(i*e per#ent o( the in(lated t!ition the #ollege #harges. Another president as-s )hy the t!ition (or an E,e#!ti*e M4A is three times the t!ition (or the reg!lar program. 2he d!#-s it. Instead she #laims" and pro*es" that they don/t s!pport their managers eno!gh. "The t)o )ee-s they ta-e #lasses in the s!mmer they ha*e to !se their *a#ation time. .hy0 $on/t yo! thin- that it helps yo!r #ompany (or them to learn0 'r maybe yo! thin- that these people" these hard)or-ing managers )ho sa#ri(i#e their )ee-ends to learn" )ho ha*e to do their home)or- at night a(ter )or-" don/t need a *a#ation0" They say they )o!ld do more i( )hat )as ta!ght )as more in line )ith things li-e they heard tonight. That/s all 4.B. needs to hear. Master(!lly she mane!*ers them to agree to serio!sly e*al!ate a spe#ial tra#- (or E,e#!ti*e M4As tailored to their needs. 2he s+!ee=es the appointment o( a #ommittee o( three presidents" or their delegates. .hen )e lea*e" she ta-es my arm. "A##ompany me to my #ar. Ri#hard" I/m a(raid I grossly !nderestimated yo!. 3o! did #reate a *al!able pie#e o( -no)1ho)." It/s dar- o!tside" so she #an/t see me bl!shing. "I #o!ldn/t ha*e done it alone"" I e,plain. "I( it )eren/t (or %ro(essor &isher/s ne) -no)ledge and %ro(essor .ilson..." "2o yo! are a team. E*en better." .e rea#h her 2e*ille 2T2. 'ne o( these days I" too" )ill ha*e a Cadilla#. ".hat do yo! thin-0 Is it possible to #reate a (!ll" t)o1year program that )ill bring real *al!e0 2omething o( the #aliber they heard (rom yo! tonight0" "I thin- so"" I ans)er. I/m not !st telling her )hat she )ants to hear. 4ased on )hat I hear (rom Bim" Bohnny and parti#!larly (rom Charlene" I really thin- so. "Good"" she slides into her #ar. "I/ll !pdate Christopher. I/m #o!nting on yo! to !pdate the head o( the E,e#!ti*e M4A program." 2he ta-es o((. I stroll to my #ar. The s-y is (!ll o( stars.

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Chapter 88
It/s 2at!rday morning and I/m st!#-. .hat am I going to tea#h them today0 'riginally I/d planned to raise the topi# o( se*eral pro e#ts done by #ommon reso!r#es o( )hi#h one is a bottlene#-" the topi# I #all "pro e#ts/1bottlene#-." No do!bt it )o!ld lead to a li*ely dis#!ssion. Maybe I #o!ld ha*e gotten a #l!e or t)o o!t o( it. 4!t no) it/s too dangero!s. Bim )ill be sitting in my #lass. He de#ided to e,pand his systems #o!rse to also #o*er pro e#ts" and he "needs to get an impression o( the st!dents/ le*el o( -no)ledge." .hat #o!ld I tell him0 $on/t #ome0 I/m going o*er the o!tline I prepared (or the #o!rse d!ring the s!mmer. E,#ept (or the (irst (e) lessons" there isn/t m!#h in #ommon )ith )hat I ha*e a#t!ally ta!ght. There are many topi#s I/*e s-ipped" b!t (or a *ery good reason. They are )hat some )o!ld #all a#ademi#1reso!r#e optimi=ation" se+!en#e optimi=ation" in*estment optimi=ation. I #all them irrele*ant. 2o )hat am I going to do0 Maybe Bim )ill be si#-0 .o!ldn/t help m!#h. 4e(ore the end o( the year there are still (o!r" t)o1ho!r sessions that I ha*e to tea#h. I go o*er the o!tline again. Nothing. .hat am I loo-ing (or0 A topi# that is rele*ant> that e,#l!des all optimi=ations" that I -no) )ell. That e,#l!des almost e*erything else" de(initely pro e#ts/1bottlene#-. $on/t e*en thin- abo!t it. And the topi# m!st be one that )e ha*en/t yet #o*ered in depth. .hat/s le(t0 Maybe I/ll go o*er the b!((ers again0 The #on#ept!al di((eren#e bet)een a pro e#t1b!((er" (eeding1b!((er and a reso!r#eb!((er. Ho) many o( my st!dents !nderstand that reso!r#e1b!((ers don/t #hange the elapsed time o( the pro e#t0 Not many" i( any. Good s!b e#t" b!t ho) m!#h time #an )e spend on it0 Hal( an ho!r0 Relying on my st!dents/ ability to (lo!nder and the (a#t that I don/t ha*e any other ideas" I de#ide that it/s good eno!gh. "Good morning" #lass." "Good morning." "Good morning" g!ests." "Good morning"" Charlene and Bim ans)er. Ten se#onds gone. $idn/t help m!#h. I/d better start. "No) that almost all o( yo! ha*e a#t!al e,perien#e"" I start" "e,perien#e implementing )hat )e ha*e learned" I )o!ld li-e to go ba#- and e,amine the #on#epts." They li-e it. 4e(ore I #an #ontin!e" R!th raises her hand. "I ha*e a problem )ith the #on#epts." .hat a statement. It doesn/t so!nd good #oming (rom R!th. I (or#e mysel( not to loo- at Bim. Trying to so!nd non#halant" I as-" ".hat/s the problem0" "2!ppose that on one o( the non#riti#al paths )e are so late that )e ha*e already e,ha!sted the entire (eeding b!((er" and )e ha*e started to penetrate into the pro e#t b!((er. 'n the #riti#al path itsel( )e are o-ay." "Might happen"" I agree. "3o! might r!n into a serio!s problem in one o( the (eeding paths. 4!t )hat is yo!r #on#ept!al problem0" "In the sit!ation R!th !st des#ribed" isn/t it tr!e that the #riti#al path has #hanged0" &red ans)ers. "That no) the #riti#al path starts at the operation )here )e ha*e the problem0" I thin- abo!t it. 4e(ore I rea#h any #on#l!sion" Mar- tries to #lari(y. ".e de(ined the #riti#al path as the longest #hain o( dependent steps" longest in time." "Corre#t." "R!th is tal-ing abo!t a sit!ation )here )e are )or-ing on a step" #all it step N" )hi#h is on a path )e #onsidered non#riti#al. Ne*ertheless" right no) step N is delayed to the e,tent that it is #a!sing the biggest penetration into the pro e#t1 b!((er. $oesn/t this mean that right no)" the longest #hain o( steps" longest in time" is starting at step N0" ".hat are yo! saying0" Ted !mps in. "That mid)ay thro!gh the pro e#t" )e/ll #hange the #riti#al path0 That/s #ra=y." ".hy0" I as-. I -no) )hy. I also see )hy it is ne#essary. 4!t I ha*e to gain time to thin- it o*er. Ted seems st!#-. His int!ition is e,#ellent" his *erbali=ation lags behind. &red ans)ers (or him> it/s apparent to me that the thin- tan- really tho!ght it o*er. ".e p!t (eeding b!((ers only )here a non#riti#al path merges into the #riti#al path. Changing the #riti#al path )ill ne#essitate #hanging the lo#ation o( many (eeding b!((ers." "And that"" Ted #on#l!des" ")ill mess !p the )hole pro e#t. .e #an/t do that."

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"Agreed"" R!th says #almly. "4!t on the other hand" don/t yo! see )hat )ill happen i( )e don/t do it0" "No6" Ted responds too hastily. The tho!ght o( rearranging e*erything e*ery time )e (a#e a serio!s delay on a non#riti#al path s#ares him. It s#ares me too. "I( )e don/t do it"" R!th #ontin!es" ")e/re ignoring reality. Let/s (a#e it" )hether or not )e li-e it" right no) the #riti#al path does start at step N. And this path is not prote#ted (rom disr!ptions in other paths by (eeding b!((ers. It is also not prote#ted by reso!r#e b!((ers. 2o the #han#e o( re#o*ery is red!#ed. 'n the #ontrary" there is a good #han#e that the delay )ill intensi(y. $on/t yo! reali=e that )e m!st rearrange the pro e#t0" ".e/re doomed i( )e do" doomed i( )e don/t"" Ted #on#l!des. "That/s o!r #on#ept!al problem"" R!th says. I #ontrol the )a*e o( pani# starting to b!ild in me. Con#ept!al problem0 Con#ept!al problem6 .hat an !nderstatement. It may r!in e*erything )e ha*e done6 .hy ha*en/t )e seen it in reality0 &o!r pro e#ts did (inish m!#h earlier than e,pe#ted" so o!r method does )or-. Maybe it/s be#a!se all these pro e#ts )ere already )ell along their )ay )hen )e started. 4!t in all #ases )e had (eeding b!((ers that )ere e,ha!sted> )e had the sit!ation R!th des#ribed" so the problem #annot be as big as it seems. .here is the erroneo!s ass!mption the thin- tan- is ma-ing0 I don/t ha*e a #l!e. I also don/t ha*e time. The #lass is )aiting. Not !st the #lass" Bim as )ell. I t!rn to the board and start to )rite the #lo!d. The ob e#ti*e is to (inish the pro e#t on time. 'ne ne#essary #ondition is )hat Ted said. .e #annot a((ord to rearrange e*erything. .hi#h means don/t (ormally #hange the #riti#al path. The other ne#essary #ondition is R!th/s point" )e #annot a((ord to lea*e the tr!e #riti#al path e,posed" )hi#h means )e m!st (ormally #hange the #riti#al path.

I !se the tri#- Bohnny ta!ght me1#on#entrate on the arro) yo! disli-e the most. Li-e Ted" I don/t li-e rearranging the pro e#t mid)ay> I don/t )ant to (ormally #hange the #riti#al path. It r!ins the )hole elegan#e o( the sol!tion" and )ill ma-e it impra#ti#al. Moreo*er" )e didn/t ha*e to do it in the pro e#ts )e )or-ed on. 2o )hat is the ass!mption there0 In order to not lea*e the tr!e #riti#al path e,posed" )e m!st (ormally #hange the #riti#al path. .hy0 4e#a!se i( )e don/t do it" the #riti#al path )ill not be prote#ted. Is it really the #ase0 No) I see it. Con(idently" I as- the #lass" ".hat ass!mption do )e ma-e )hen )e #laim that i( )e don/t (ormally #hange the #riti#al path it )ill be e,posed0" They don/t ans)er" so I as- again" "Are the original #riti#al path and the tr!e #riti#al path *ery di((erent (rom ea#h other0" "No"" R!th ans)ers. "As a matter o( (a#t" (rom the point )here the t)o merge !ntil the end o( the pro e#t" they are the same. I see. 2o the only e,pos!re is (rom step N !p to" b!t not in#l!ding" the step )here they merge. In most #ases there )ill be no additional (eeding b!((ers in*ol*ed" b!t )hat abo!t the reso!r#e b!((ers )e need (or those intermediate steps0" "That/s not a problem"" Mar- says. "The original (eeding b!((er is e,ha!sted. All my attention is on those steps anyho)." "&alse alarm"" R!th apologi=es. "I don/t thin- so"" Charlie says. "I don/t thin- this is a (alse alarm." ".hy0" as-s Mar-. "4e#a!se" at least in my #ase" the #riti#al path has started to !mp all o*er. E*ery (e) days I ha*e this problem. &ran-ly" I am abo!t to gi*e !p." "This is a *ery )ell1-no)n phenomenon"" Roger says. "E*ery pro e#t leader )ill tell yo! that the #riti#al path #hanges d!ring the pro e#t." GH

This is serio!s. I ignore Roger and #on#entrate on Charlie. He is not tal-ing abo!t a /)o!ld be/ problem or some generali=ation> he is tal-ing abo!t an e,isting problem. Charlie" espe#ially a(ter his president being so happy abo!t )hat he has a#hie*ed" )o!ld not ma-e s!#h a statement !nless the sit!ation )as really o!t o( hand. "Charlie" )o!ld yo! des#ribe to !s" in detail" )hat is a#t!ally happening0" "It/s (ranti#. Non#riti#al paths" )here e*erything )as (ine" )here the (eeding b!((ers had not been to!#hed" are starting to" all o( a s!dden" be a problem." "A se*ere atta#- by M!rphy"" I try to be sympatheti#. "That/s the )eird thing"" Charlie responds" "no spe#ial problems" no s!rprises" still" )e are starting to (all behind." No) I/m #on(!sed. And so is e*erybody else. "Charlie" let/s ta-e it slo)ly. 3o! are )or-ing on step N o( a non#riti#al path" and... No)" tell !s )hat happens." "It/s e*en )eirder than that"" he says. "I ha*en/t started )or-ing on step N on the non#riti#al path" and this non#riti#al path be#omes a real problem. .itho!t doing a thing" I/*e e,ha!sted the (eeding b!((er." ".hat are yo! tal-ing abo!t"" Ted spea-s (or all o( !s. "E,a#tly )hat I said. I/m s!pposed to start on a #ertain step on a non#riti#al path" b!t the reso!r#e is not a*ailable." ".here is the reso!r#e0" Ted as-s impatiently. ".or-ing on another non#riti#al path." "2o mo*e it." "I #an/t. The non#riti#al path it/s )or-ing on is also late." "Mira#le"" Ted snorts. "Can/t be. 3o!/re tal-ing nonsense." Charlie/s (a#e is red" b!t he #ontrols himsel(" and doesn/t ans)er Ted. He loo-s at me and as-s" "Can I #ome to the board and sho) the sit!ation0" "4y all means." As he starts to dra)" he says" "This is not my real pro e#t" b!t it )ill sho) yo! my problem." T)o min!tes later the diagram is dra)n on the board.

".hat do the Ps stand (or0" I as- him. "They are steps done by the same spe#ialist" o( )hi#h )e ha*e only one. Ass!me that ea#h step re+!ires (i*e days" and my (eeding b!((ers are also (i*e days. $o yo! see the problem0" .e loo- at the diagram. Charlie/s problem is #lear. It is also #lear that this sit!ation #an happen in many pro e#ts. There are many #ontentions (or P. &or a period o( time" P is o*erloaded and is (alling behind. That/s )hat is #a!sing the delays" )hi#h are passed (rom one non#riti#al path to another. The (eeding b!((ers are not eno!gh to absorb these delays. No )onder his #riti#al path is !mping (rom one path to another. "It/s ob*io!s that I m!st a#-no)ledge the limited #apa#ity o( P"" Charlie says" "b!t then all o!r ni#e method #ollapses." "Hold yo!r horses"" I say. "Let/s go ba#- to yo!r diagram. .hat is the #riti#al path here0" "I don/t -no)"" he replies. "Not )hen I ta-e the limited #apa#ity o( P into a##o!nt." I see the light. "Let/s go ba#- to o!r de(inition o( critical path"" I say #on(idently. "The longest #hain o( dependent steps" the longest in time. $on/t ignore the limited #apa#ity o( P. $on/t ignore the (a#t that dependen#ies bet)een t)o steps #an be be#a!se they are per(ormed by the same reso!r#e that has limited #apa#ity" so yo! #annot do both steps at the same time> yo! m!st do them se+!entially rather than in parallel. That is dependen#y." "2o )hat is the #riti#al path0" R!th as-s. "3o! tell me"" I address the )hole #lass. Bim is (ranti#ally ta-ing notes.

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".e #annot start )ith P"" R!th says" "so )e ha*e to start some)here. Then immediately P be#omes a problem and it does determine the lead time. .hen )e/*e (inished )ith P )e ha*en/t (inished the pro e#t" there are still more steps to be done." "E,a#tly"" I say. "$ependen#ies bet)een steps #an be a res!lt o( a path or a res!lt o( a #ommon reso!r#e. .hy are )e so s!rprised that both dependen#ies are in*ol*ed in determining the longest #hain o( dependent steps0" They seem to agree. "In general"" I #ontin!e" "the longest #hain )ill be #omposed o( se#tions that are path dependent and se#tions that are reso!r#e dependent." "2o i( )e sti#- to the de(inition o( a #riti#al path" )e get something nobody #alls a #riti#al path0" 4rian is p!==led. ".hy are yo! so s!rprised"" Ted #omments. "Nothing else )e do is #ommon either." "I agree. 4!t )e/d better straighten o!t the terminology. Let/s lea*e #riti#al path to be )hat e*eryone else #alls a #riti#al path" the longest path. 4!t )e -no) that )hat #o!nts is the #onstraint" and the #onstraint is the longest #hain o( dependent steps. 2in#e )e m!st a#-no)ledge that dependen#y #an be the res!lt o( a reso!r#e" )e better pro*ide another name (or the #hain o( steps that are the #onstraint." ".hy not /critical chainH/0/ 4rian s!ggests. 2o!nds good. "Criti#al #hain it is"" I de#lare" be(ore I/m (looded )ith other" more bi=arre" s!ggestions. %eople lo*e to arg!e abo!t names" and I/m all o( a s!dden pressed (or time. .e ha*e to hammer o!t all the rami(i#ations o( o!r ne) reali=ation> it )ill not be restri#ted to !st a #hange in terminology. "Let/s go ba#- to Charlie/s e,ample"" I say. "Again" )hat is the #riti#al #hain0" I lo*e this ne) name. "R!th0" "I/m st!#-"" she says. "There are (i*e steps that need the P reso!r#e. .hat se+!en#e sho!ld I p!t them in0 I don/t -no)." "Anybody ha*e an idea0" I as-. %eople lo*e s!#h riddles> s!ggestions #ome (rom all sides. As e,pe#ted" many o( them #ontradi#t ea#h other. I (ight my tenden#y to #!t this !seless dis#!ssion short. It be#omes more and more #on*ol!ted" and the st!dents get more and more #on(!sed. Good. A(ter abo!t (i(teen min!tes I de#ide they are ready. "Ho) m!#h is eight times eight0" I as-. Nobody ans)ers. They probably )onder i( I ha*e lost it. "Let me remind yo! that in pro e#ts )e are not dealing )ith determinate n!mbers"" I start to #lari(y the intent o( my +!estion. ".hen )e say" (or e,ample" that a step )ill ta-e eight days" do )e really mean that it )ill ta-e pre#isely eight days0 '( #o!rse not. 2o ho) m!#h is eight times eight0" And I )rite JGR1K , JGR1K S0 "The ans)er si,ty1(o!r is )rong. It gi*es a (a!lty impression o( a##!ra#y." "Li-e an a##o!ntant )ho is (or#ed to gi*e an ans)er a##!rate to the #ent" )hen e*en the (irst digit is +!estionable"" &red o-ingly remar-s. "Corre#t." I li-e &red/s e,ample. "Anyone see the rele*an#y to o!r debate0" I help them. "It is a mista-e to stri*e (or a##!rate ans)ers )hen the data is not a##!rate. Ans)ers that pretend to be more a##!rate than the !n#ertainty embedded in the problem are not better ans)ers." Charlie does the #onne#tion. "$o yo! mean that the se+!en#e in )hi#h )e s#hed!le P doesn/t ma-e any di((eren#e0" "In some #ases it does ma-e a di((eren#e. There are endless arti#les that deal )ith s!#h #ases. 4!t the +!estion is" does it ma-e a real di((eren#e0" Co!nt on R!th to as-" ".hat do yo! mean by /real di((eren#e/0" "A di((eren#e that is bigger than the !n#ertainty o( the pro e#t"" I ans)er. 4e(ore R!th #an +!estion my ans)er" I do it. ".hat #an )e ta-e as a reasonable yardsti#- (or the !n#ertainty o( the pro e#t0" I let them thin- abo!t it (or a little )hile. "The pro e#t b!((er0" 4rian hesitantly as-s. ".hy0< More s!re o( himsel(" he ans)ers" "4e#a!se the pro e#t b!((er is )here )e dampen the a##!m!lated e((e#ts o( all the !n#ertainties." ".hat do yo! thin-0" I as- the #lass. They thin- 4rian is right. 2o do I. "I don/t -no) ho) many arti#les dealing )ith reso!r#e se+!en#e optimi=ation I ha*e read"" I tell them. "More than I #are to remember. They #ontain many algorithms and he!risti# r!les to se+!en#e reso!r#es. 4et)een them" these arti#les #onsider e*erything yo! bro!ght !p here" and many more #onsiderations that yo! ha*en/t bro!ght !p. 4!t I don/t )aste my time reading them anymore. .hy0 4e#a!se in ea#h #ase the impa#t on the lead time o( the pro e#t is less than e*en hal( the pro e#t b!((er."

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Bim raises an eyebro). '( #o!rse these arti#les don/t spe#i(y a pro e#t1b!((er. I !se o!r r!le o( th!mb to appro,imate it. Ass!ming the time estimation o( ea#h step #ontains sa(ety" the pro e#t b!((er is abo!t one +!arter o( the lead time. I ma-e a mental note to #lari(y it (or him. 4!t the st!dents are not going to read these a#ademi# arti#les" so I #harge on. I bring the dis#!ssion ba#- to (o#!s. "Charlie is right in bringing !p reso!r#e #ontention as something )e m!st #onsider. There are pro e#ts )here the #ontentions are too big (or o!r (eeding b!((ers to absorb. 4!t there is a di((eren#e bet)een #onsidering reso!r#e #ontention and (iddling aro!nd )ith optimi=ing the s#hed!le o( these reso!r#es." Charlie doesn/t arg!e" he is too pra#ti#al (or that. "2o )hat am I s!pposed to do0" "Remo*e the #ontentions"" Ted tells him. "Easy to say." Ted tries to e,plain that it is easy" b!t his e,planation is so #on*ol!ted" e*en I don/t !nderstand it. ".o!ld yo! li-e to #ome !p to the board and sho) )hat yo! mean on the e,ample that 4rian dre)0" I s!ggest. Ted is happy to do it" b!t he (lo!nders a little. E*erybody is trying to help" )hi#h doesn/t help m!#h. It/s not )hat one might #all an orderly session. 4!t at last" Ted (inishes. He made s!re that no t)o steps done by P are s#hed!led in parallel. "Can yo! highlight the #riti#al #hain0" I re+!est. He p!ts a dotted line. "2in#e yo! #hanged the #onstraints" yo! m!st #hange the (eeding b!((ers in a##ordan#e"" I remind him. .ith a little help (rom his (riends he does it. .e e,amine the t)o diagrams" the one (ollo)ing the #riti#al path that Charlie originally dre)" and the one that Ted did. D!ite a di((eren#e.

"It delays the #ompletion date"" Charlie is #on#erned. "No" it didn/t." Mar- says. "It !st pre*ented yo! (rom (ooling yo!rsel(." "'( #o!rse. .hat I mean"" Charlie #lari(ies" "is that reso!r#e P delays the #ompletion date. I thin- that I ha*e to #he#- )hat #an be o((1loaded to others." "'r o((1loaded not to other people b!t to other times"" 4rian #omments. Charlie gi*es him a gla=ed loo-. 4rian h!rries to e,plain. "Reso!r#e P is not loaded (or the entire time o( the pro e#t. I( yo! e,amine the details o( his )oryo! might (ind that some o( his a#ti*ities #an be done m!#h earlier or later. &rom my e,perien#e" I -no) that many times people bat#h a#ti*ities together" not be#a!se they are needed to be done then" b!t to sa*e time." "3o! are right"" 4rian #on(irms. "A ma or part o( this person/s ob is do#!menting her #ode. 2ome o( the do#!mentation is essential (or the integration o( the *ario!s parts o( the so(t)are. This m!st be done immediately. 4!t a lot o( the do#!mentation is needed only (or (!t!re maintenan#e. '( #o!rse it/s easier to #omplete the do#!mentation )hile the #ode is (resh in yo!r mind" b!t yo! are right" she #an do it later." I still loo- at the t)o diagrams on the board. I/m not bothered by the (a#t that the #riti#al #hain is longer than the #riti#al path. That/s to be e,pe#ted. .hat o*er)helms me is that almost all (eeding b!((ers ha*e #hanged their lo#ations. Is this al)ays the #ase" or are )e misled by an arti(i#ial e,ample0 I ha*en/t seen it in the three pro e#ts that ha*e s!##ess(!lly (inished. 4!t they )ere near #ompletion> most a#ti*ities )ere already done. No )onder there )as little reso!r#e #ontention. I raise the +!estion to the #lass" as-ing them to relate it to their pro e#ts. Ho) serio!s is reso!r#e #ontention0 H8

Less than ten min!tes later )e ha*e the ans)er: "It depends." There are many pro e#ts )here it does not matter> reso!r#e #ontention is not a big deal. 4!t (or some other pro e#ts" and not !st a (e)" it is. "I( there is reso!r#e #ontention"" I remar-" "the #riti#al #hain might be *ery di((erent than the #riti#al path. In those #ases" )hat is the real danger in (ollo)ing the #riti#al path rather than the #riti#al #hain0" "It #an lead to #atastrophes." Charlie is alarmed. "That/s )hat happened to me. The #riti#al path is !mping all o*er. 3o! lose #ontrol." "It is e*en )orse"" Mar- says in his deep *oi#e. "Loo- at the t)o diagrams on the board. The (eeding b!((ers" not to mention reso!r#e b!((ers" are in the )rong pla#es> the #onstraint is not prote#ted." "And )e -no) )hat happens then"" Ted oins in. "M!rphy is !st )aiting (or it." ".e/d better #he#- all o!r pro e#ts"" &red says to his (riends. "I/m s!re that )e ha*e reso!r#e #ontentions. A lot." "Good"" I say. "E,a#tly )hat are yo! going to do0" Mar- ans)ers. "&irst )e are going to add the reso!r#es to o!r %ERT #harts. They are not #learly mar-ed in all pro e#ts. Then )e are going to... " He stops. "Ho) are )e going to ens!re that steps done by limited reso!r#es )ill not be s#hed!led in parallel0" R!th is #on#erned. "That/s my problem"" Mar- says" and then adds" "rather than dra)ing the steps on paper" )e/ll ha*e to !se something more (le,ible. &or ea#h step" )e #o!ld #!t a pie#e o( paper so that the length represents the time. This )ay )e #an mo*e them aro!nd !ntil there is no #ontention." "Good idea"" R!th agrees. "Maybe )e #an (ind s!itable so(t)are." I loo- at my )at#h. "Contin!e"" I !rge them. "'n#e all #ontentions are remo*ed" and I promise not to spend too m!#h time playing )ith the se+!en#e" then )e identi(y the #riti#al #hain. And then )e p!t in the (eeding b!((ers." Relie*ed" he adds" "This )ill #hange some dates" b!t it doesn/t #hange the )ay )e learned to manage a pro e#t." ".hat happens i( yo! (ind a (e) #hains that ta-e abo!t the same time0" 4rian as-s. Mar- loo-s at me (or the ans)er. "Choose one" any one"" I say. "And in order to pro*e that I/m right" here is yo!r home)or- assignment. Ta-e the pro e#t yo! are )or-ing on" and do )hat )e said today." ".e/ll do it anyho)"" 4rian #omments. "Right. 4!t (or me" add the ans)er to yo!r +!estion. I( a (e) #hains ha*e appro,imately the same length" )hy doesn/t it matter )hi#h one yo! pi#-" as long as yo! pi#- one." As they are lea*ing" Bim approa#hes. "3o!r style o( tea#hing is really something"" he #ompliments me. "It/s li-e ne) -no)ledge is #reated right in (ront o( the st!dents/ eyes. &as#inating." I don/t ha*e the #o!rage to tell him ho) m!#h he is right" that be(ore this lesson I ne*er s!spe#ted there )as something li-e a #riti#al #hain.

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Chapter 8?
"As yo! -no)"" Christopher %age says in his polished baritone" ")e s!##eeded in pers!ading lo#al #ompanies" some o( them *ery ma or" to (orm a #ommittee. The #ommittee/s tas- )as to rea#h a #onsens!s on )hat these #ompanies )o!ld li-e !s to tea#h." Apparently 4.B. is not happy )ith the )ay Chris is p!tting it. "'!r E,e#!ti*e M4A program is the most l!#rati*e program )e ha*e. Fn(ort!nately" )e don/t enroll eno!gh st!dents in it. This is the (irst time )e/re tal-ing dire#tly )ith organi=ations abo!t o!r E,e#!ti*e M4A program"" she emphasi=es. "The presidents o( the organi=ations )ho (ormed the #ommittee told me that they don/t send more st!dents to E,e#!ti*e M4A programs be#a!se these programs are not tailored to their spe#i(i# needs." "In the last three )ee-s"" Chris #ontin!es" "Bim spent many ho!rs )ith the members o( the #ommittee" helping them *erbali=e their re+!irements. This paper is the res!lts o( their e((orts." He hands a thin do#!ment to 4.B. 5ery thin. The (irst page is !st a title: "-pecial .+ecuti$e /BA 0rogram"" The se#ond page #ontains a relati*ely short list o( topi#s. It doesn/t ta-e long to read. ".e )ill not ha*e any problems #on(orming to their re+!irements"" Chris says to 4.B. "As a matter o( (a#t" I thin- that e*en today )e #o*er all o( them. .hat do yo! thin-" Bim0" "3es"" Bim says (latly. "I( yo! ignore the some)hat strange *erbali=ation" it/s all the standard topi#s> pro e#ts" prod!#tion" systems" (inan#e" managing people" mar-eting. Nothing is spe#ial abo!t it. It/s the standard topi#s #o*ered in e*ery M4A program." 4.B. is slightly impatient. "This is an opport!nity )e #annot a((ord to miss. And in order to ma-e it )or-" o!r program m!st be spe#ial. I( )e #ontin!e to do )hat )e ha*e done" )hi#h is )hat e*erybody else is doing" )e )ill #ontin!e to get the same !nsatis(a#tory res!lts. My +!estion is" ho) #an )e ma-e o!r program spe#ial0" "The -ey is on the ne,t page"" Bim says. "The problem is not )ith the s!b e#ts #o*ered" b!t )ith the #ontent and the method o( deli*ery. Loo- at the ne,t page." "The -no)ledge ta!ght does not bring *al!e to the #ompany"" 4.B. reads the (irst item. "Ho) #an they say s!#h a thing0" Chris is indignant. "Easily"" 4.B. (latly responds. "The +!estion is" #an )e do something abo!t it0" "I belie*e )e #an"" Bim says. "Ta-e" (or e,ample" Bohnny/s ne) prod!#tion #o!rse. I heard (rom some o( the st!dents that they ha*e already implemented this -no)ledge and gotten impressi*e res!lts. In their departments they #!t the in*entory )hile impro*ing *ol!me. 'r Charlene/s #o!rse" in a##o!nting" it/s (antasti#6" "A (antasti# #o!rse in a##o!nting0" Chris #annot hold ba#- his astonishment. "3es"" Bim says. ".hat she tea#hes no) abo!t in*estment !sti(i#ation is o( great *al!e. I/*e personally heard stories (rom o!r st!dents o( ho) they !sed this -no)ledge to sa*e h!ndreds o( tho!sands o( dollars (or their #ompanies." "Hard to belie*e"" Chris m!rm!rs. Bim pretends he doesn/t hear. "Allo) me also to say that my systems #o!rse" the )ay I ha*e radi#ally modi(ied it this year" is also bringing *al!e. 4!t the best" no do!bt" is Ri#hard 2il*er/s #o!rse. 3o! ha*e heard abo!t it0" "'( #o!rse"" 4.B. responds. "4!t may I as- )hat happened0 3o!/*e all ta!ght these #o!rses (or ages. Ho) #ome no)" all o( a s!dden" they are all so great0" "It/s Bohnny &isher"" Bim responds. "He bro!ght the brea-thro!gh (rom FniCo" and )e/*e all b!ilt on it. It had a ma or impa#t on )hat )e tea#h. Almost e*erything had to be modi(ied. Chris" yo! heard his #ollo+!i!m." "'nly the (irst (i(teen min!tes> there )as an important meeting I had to attend. 4!t I did hear *ery good things abo!t it." Can it be that the dream team I )as praying (or e,ists in my !ni*ersity0 4.B. )onders" in#red!lo!sly. 2he reads the se#ond item" "The e,amples !sed in #lass are too arti(i#ial." "That/s a real problem"" Chris says. "&or +!ite some time I ha*e been p!shing (or more e,tensi*e !se o( the Har*ard 4!siness 2#hool #ase st!dies. 4!t yo! -no) ho) to!gh it is to o*er#ome inertia" espe#ially among !s pro(essors." "The Har*ard #ases are a step (or)ard" b!t I/m a(raid they are not good eno!gh"" Bim *ent!res. ".hat do yo! mean0" Chris is s!rprised. "The problem )ith #ases is that they are deterministi#"" Bim e,plains. "Either the data is gi*en or not. 4!t reality is not li-e that. Reality #ontains many things that are malleable" *ag!e" e*en debatable." "Tr!e"" 4.B. agrees" "b!t there is nothing )e #an do abo!t that." "I thin- there is. Ri#- has sho)n !s the )ay." "Ri#hard 2il*er0" 4.B. #he#-s.

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"3es. In his #o!rse" all the problems that they )or- on are real. They are problems that the st!dents bring (rom their )or-. I agree that it/s not so easy to !se his style o( tea#hing" b!t one thing is (or s!re" he is *ery s!##ess(!l )ith it." "&ine. And the last item is" /2t!dents do not a#+!ire problem1sol*ing s-ills./ .ell" ob*io!sly in Ri#hard/s #lass" they do." "Corre#t"" says Bim. "4!t that/s not eno!gh. 2ol*ing a (e) problems is not s!((i#ient. .e ha*e to tea#h them ho) to do it systemati#ally (or e*ery s!b e#t." "That/s a tall order"" Chris #omments. "It is"" Bim responds. "4!t )ith the thin-ing pro#esses Bohnny bro!ght (rom FniCo" it/s m!#h simpler than one )o!ld thin-. .e don/t tea#h eno!gh o( it. 4!t no) that the rest o( !s ha*e learned it" )e are going to integrate it into all o!r #o!rses. It )ill also help !s !se Ri#-/s tea#hing method. Not e*erybody )as born )ith his nat!ral talent." A(ter a se#ond he adds" "It/s not only possible" it/s mandatory." 4.B. is trying to absorb all the good ne)s" )hen Bim +!ietly #ontin!es" "There is one ma or problem" yo! -no). Ho) are )e going to #on*in#e #ompanies that o!r E,e#!ti*e M4A %rogram is o( s!#h *al!e0" "It )on/t be easy"" 4.B. agrees. 2he #ontemplates )ays. None loo- promising. "$o yo! ha*e any ideas0" she as-s. "The (o!r o( !s )ere tal-ing abo!t it" and )e did #ome !p )ith an idea. 4!t it/s too !n#on*entional." "Carry on"" she says so(tly. "I thin- the ma or problem is that #ompanies no longer belie*e that a person (inishing an E,e#!ti*e M4A program has be#ome a m!#h better manager d!e to it. They don/t see the tangible bene(it to the #ompany. 2o" )hy don/t )e promise it to them0" ".hat do yo! mean0" Chris as-s. "2omething li-e... &or e,ample" #an )e o((er that the #ompanies pay (or the ed!#ation only a(ter the st!dent has !sed his -no)ledge to bring the #ompany bene(its o( at least one h!ndred tho!sand dollars0 It/s not s!#h a big ris-. 3o! see" the mista-es #ompanies ma-e today are so (!ndamental the (o!r o( !s are #on(ident )e #an deli*er s!#h bene(its" at least !ntil o!r -no)ledge be#omes standard pra#ti#e in these #ompanies. 4!t by then the *al!e o( o!r tea#hing )ill be established." "'!t o( the +!estion"" Chris e,#laims. ".e are a !ni*ersity. .e are not some (ly1by1night #ons!lting (irm. .e don/t ha*e to pro*e o!rsel*es." "3es" )e do"" 4.B. says. "It/s abo!t time )e got o(( o!r high horse. .e do not deli*er eno!gh *al!e> )e hear it #onstantly. .e do ha*e to pro*e o!rsel*es." "No other !ni*ersity )o!ld thin- o( o((ering s!#h a thing. It/s embarrassing." "Listen to yo!rsel("" 4.B. tells him so(tly. "/No other !ni*ersity )o!ld thin- o( s!#h a thing./ 3o! are right. They )on/t o((er it be#a!se they #an/t deli*er. Moreo*er" i( no other !ni*ersity )o!ld thin- o( o((ering s!#h a deal" it is e*en better (or !s." Chris sha-es his head. ".e don/t o((er deals. It/s #ra=iness." "I thin- )e/d better thin- it o*er>" 4.B. says #almly. ".ith open minds. Than- yo!" Bim. 3o! opened my eyes" and in more than one )ay." .hen Bim has le(t" Chris t!rns to her" "4.B." )e are a !ni*ersity" not a b!n#h o( gamblers. .hat/s gotten into yo!0" "Tell me" Chris. $o yo! belie*e )hat Bim told !s" all these great things0" "I/*e -no)n him (or o*er t)enty years no). He is one o( the most solid and reliable people I -no). .hat he told !s so!nds hard to belie*e" b!t i( he says they #an deli*er" they #an." "2o it/s not s!#h a big gamble." Chris starts to protest" b!t 4.B. stops him. "Let/s not arg!e> let/s do o!r home)or- (irst. 4e(ore ne,t )ee- let/s ea#h tal- )ith one president" not ne#essarily (rom the #ompanies that (ormed that #ommittee. Let/s see )hat is needed to pers!ade these b!siness people that )e ha*e an e,#ellent program (or them." "I/m not going to o((er any #ra=y deals"" Chris is adamant. "I didn/t as- yo! to. B!st try to pers!ade them that )e ha*e an e,#ellent M4A program. 2tress the points that )e dis#!ssed: that the program )ill bring *al!e to their #ompanies" that it !ses their real1li(e s#enarios and that it )ill tea#h their managers to sol*e problems better. Let/s learn )hat it ta-es to pers!ade them." "That" I #an do." "'h" yes" Chris" there is something else. It loo-s li-e this Ri#hard 2il*er is a real gem." "He is" and )e are going to lose him" sin#e yo! )on/t appro*e any ten!re." ".e #annot a((ord to lose him. 2!bmit the papers> I/ll sign them. "$on %ederson" please." "May I as- )ho/s #alling0" "%ro(essor &isher." "Hello" %ro(essor &isher. B!st a moment" please." M!si# #omes on" b!t not (or long. "Bohnny. Ho) are yo!0" HC

"&ine" $on. Got a moment0" "Al)ays. .hat/s !p0" "I thin- I/*e done my part o( )hat )e dis#!ssed last month. It/s yo!r t!rn to mo*e." "2o soon0 Are yo! s!re0" "I thin- so"" Bohnny says in a tone that indi#ates more #on(iden#e than the )ords imply. "Tell me more." $on" tr!e to his nat!re" )ants to ma-e his o)n e*al!ation. "I( I !nderstood yo! #orre#tly" yo! in*ested in the (i*e o( !s so that yo! )o!ld not ha*e to in*est so m!#h in e*ery person yo! hire." "Corre#t. There is no sense in FniCo ha*ing to ed!#ate e*ery ne) employee" )hen that is s!pposed to be the ob o( the !ni*ersities." "'!r !ni*ersity is ready"" Bohnny says" and then elaborates. "This year/s grad!ates (rom the E,e#!ti*e M4A program are thoro!ghly indo#trinated in the thro!ghp!t )orld. They (eel #om(ortable )ith Theory o( Constraints appli#ations in prod!#tion" (inan#e" in systems" and listen to this" $on" in pro e#t management." "2o it/s not !st yo! tea#hing it." $on is pleased. "'( #o!rse not" one person doesn/t tea#h all these s!b e#ts. All the pro(essors in*ol*ed in the E,e#!ti*e M4A program are #ontaminated. And $on" they are doing an e,#ellent ob." "Ho) do yo! -no)0 Are yo! !dging by their grades0" "3o! ta!ght me too )ell (or that" and besides" (inal e,ams are more than a month a)ay. I/m !sing yo!r #riteria: res!lts a#hie*ed by the st!dents in their o)n #ompanies." "Great. .hat abo!t mar-eting and the learning1organi=ation aspe#ts0" "There is mo*ement there as )ell. 4!t that/s not the iss!e. $on" I thin- )e ha*e #rossed the biggest obsta#le> the dean and the president o( the !ni*ersity are all (or it. They are la!n#hing a spe#ial M4A program that is #entered aro!nd T'C. And listen to this. They are mar-eting it to lo#al ind!stry" based on res!lts to be a#hie*ed in reality. Tal- abo!t an o((er that #an/t be re(!sed. Ne,t year )e are going to r!n three o( these programs in parallel. "That/s good. 4!t Bohnny" )hat abo!t the other aspe#t0 3o! -no) it is as important" i( not more so. "3o! mean demonstrated" pra#ti#al" resear#h ability0 I told yo! )e de*eloped the appli#ation (or pro e#t management. It/s already been tested in se*eral #ompanies. It gi*es the same type o( astonishing res!lts as the other appli#ations o( T'C." ".e need that"" $on says. ".e are not doing so )ell managing pro e#ts." "3es" I -no)"" Bohnny replies. "I/*e heard the (a#ility yo!/re p!tting !p here in to)n has already slid si, months behind s#hed!le. 4!t $on" this appli#ation is *ery po)er(!l. It )as tested on ne)1prod!#t de*elopment as )ell" and it/s )or-ing." "&ab!lo!s. It loo-s li-e yo!/*e #o*ered all the ne#essary gro!nd )or-. It is time (or my in*ol*ement." "$e(initely. I( yo! )ant o!r !ni*ersity to tea#h this pra#ti#al -no)1ho) to o!r !ndergrad!ates as )ell" yo!/d better mo*e no). 4y the )ay" )hat progress ha*e the other (o!r pro(essors made0" "Not bad. It loo-s li-e )e )ill ha*e h!bs in an engineering s#hool and in h!man reso!r#es. 4!t !dging by )hat yo! say" yo! are the most ad*an#ed. Tell yo! )hat. In three )ee-s I/m #oming to yo!r ne#- o( the )oods to straighten !p o!r operation there. Maybe it )o!ld be a good idea i( yo! #o!ld arrange a one1day r!sh #o!rse (or me in this pro e#t management0" "No problem" b!t don/t yo! thin- yo! ha*e to meet )ith the dean o( the b!siness s#hool0" "Bohnny" I -no) ho) to handle s!#h things. .hat I ha*e to do is to s!ggest that this -no)ledge )ill be ta!ght at the !ndergrad!ate le*el as )ell. I( they )ill agree" Fni#o )ill #ommit to hiring their top grad!ates." ".o)"" Bohnny #annot hold his e,#itement. "That )ill gi*e o!r !ni*ersity national a##laim." "3es"" $on says. "Espe#ially )hen Fni#o )ill donate handsomely so that yo!r !ni*ersity #an get the biggest bang (or their *al!able ed!#ation. And" Bohnny" the person to tal- to is not !st the dean. .hen )e deal on s!#h a s#ale" I/ll ha*e to tal)ith the president. Is he a strong person0" "3o! may say she is." Bohnny grins to himsel(.

H9

Chapter 8@
Today is the last session I/m gi*ing this a#ademi# year" and I/m going to brea- a tradition. Fs!ally )hen I rea#h the end o( the year I r!n o!t o( steam" or e*en )orse" I r!n o!t o( interesting material. 4!t not this time. This session )e are going to #o*er the sol!tion to the problem that has been ha!nting me (or )ee-s. It/s going to be a *ery spe#ial session. I e*en in*ited Bohnny. "Mar-" )ill yo! please des#ribe yo!r en*ironment to the #lass0" Mar- stands !p and starts to (ill the room )ith his deep *oi#e. "As yo! -no)" )e are no longer dealing )ith the A889. That modem is past history (or !s." "It/s #!rrent reality (or o!r #ompany." R!th doesn/t )ant anybody to misinterpret. "It/s the biggest s!##ess )e e*er had." "Tr!e"" Mar- smiles pro!dly at her. "Any)ay" the three o( !s are #harged )ith the tas- o( shrin-ing the de*elopment time o(... all de*elopment at Genemodem." "3ahoo"" Ted )hispers. "Right (rom the start )e -ne) that the biggest #hallenge )o!ld be to deal )ith reso!r#e #ontention." Mar- pa!ses to (ind the proper )ay to e,plain the essen#e o( their #hallenge. "Ha*en/t )e already dealt )ith that0" Roger as-s. "I tho!ght that reso!r#e #ontention )as sol*ed by the #on#ept o( #riti#al #hain. .hat am I missing0" I( somebody has gone thro!gh a paradigm shi(t" it/s Roger. He/s dropped his (a#ade o( /I -no) it all/" and de*eloped a -een interest in the s!b e#t. &rom time to time he e*en see-s my help on implementation iss!es. That sho!ldn/t be mista-en (or a #hange in personality. He is still as #yni#al and sel(1#entered as he )as. "Critical chain"" Mar- e,plains" "remo*es reso!r#e #ontention )ithin a pro e#t. It does not address reso!r#e #ontention bet)een pro e#ts at all." ".hy don/t yo! !se the same logi# (or a b!n#h o( pro e#ts0 .hat/s the di((eren#e0" Ted doesn/t see the #on#ept!al di((eren#e bet)een one pro e#t and many. 4e(ore Mar- is able to ans)er" I interr!pt. "Ted" in yo!r #ompany yo! do )or- on more than one pro e#t at a time." "'( #o!rse." "2o yo! m!st ha*e eno!gh int!ition to ans)er yo!r o)n +!estion. Try. Gi*e an ed!#ated g!ess. .hat might be the problems0" "'((hand" I see a syn#hroni=ation problem." "2yn#hroni=ation is an impressi*e )ord"" I say. "2o impressi*e that it/s o(ten !sed to disg!ise ignoran#e. Ted" yo! don/t )ant !s to s!spe#t yo! o( s!#h a thing." "No )ay." And he !mps to the other e,treme. "Reso!r#e #ontention means that the same reso!r#e is s!pposed to do t)o di((erent steps at the same time"" he )astes o!r time de(ining a term that is #lear to !s. "Remo*ing reso!r#e #ontention bet)een t)o steps"" he #ontin!es methodi#ally" "ne#essitates" many times" postponing one o( those steps. The problem is that" as )e dis#!ssed at length" there is no #lear )ay to de#ide )hi#h step to postpone. It is almost an arbitrary de#ision." I li-e the )ay he/s approa#hing it. In order to (or#e him to #ontin!e" I prod" "The same is tr!e )ithin one pro e#t. .hy is it a bigger problem )hen the steps belong to t)o di((erent pro e#ts0" "4e#a!se t)o pro e#t leaders are in*ol*ed"" he #on(idently ans)ers. "It/s not li-e yo! )or- in one domain" )here it doesn/t matter )hi#h step yo! mo*e. Here ea#h pro e#t leader )ill nat!rally (ight that the step to be postponed )ill not be his." "Is it a big problem0" I #ontin!e my almost rhetori#al +!estioning. "Are yo! -idding0" Ted smiles. "Mar-" no) I see )hat yo! are (a#ing. It/s not !st a syn#hroni=ation problem" it/s a nightmare." "&air des#ription"" Mar- agrees. "Fn(ort!nately )e didn/t reali=e ho) big the nightmare )as be(ore )e stepped into it." ".ith both (eet"" R!th adds. "Not be#a!se )e are thi#-"" &red h!rries to p!t in a #a*eat. "4!t be#a!se )e didn/t -no) )hat else to do." "$o yo! )ant to hear )hat happened0" Mar- as-s. I/m not the only one as-ing rhetori#al +!estions. ".ell" the (irst problem )as me#hani#al. '!r pro e#ts" li-e almost any si=able pro e#ts" are des#ribed by abo!t one h!ndred steps. 3o! -no)" it ta-es some time to play )ith one h!ndred pie#es o( paper !ntil all reso!r#e #ontentions are resol*ed. 3o! mo*e one pie#e to remo*e #ontention )ith one reso!r#e" and yo! ha*e to mo*e the other steps on the same path. This" many times" #reates #ontention (or other reso!r#es. It ta-es ho!rs. No)" imagine doing it )ith si, pro e#ts." "2o"" &red #ontin!es" ")e )ent to o!r #omp!ter department."

HE

"And that/s the end o( the story"" 4rian interr!pts. "In my #ompany e*erything yo! as- (rom the #omp!ter department ta-es months. "It/s the same in o!r #ompany"" &red replies. "4!t )e p!lled ran-. 3o! see" o!r tas- is regarded as s!per" !ltra" top priority. 2o )e got a /good1eno!gh/ pie#e o( so(t)are (rom them pretty +!i#-ly. .e loaded all the data" and then )e started to play." "And play. And play." R!th la!ghs. "These #omp!ters are an e,#ellent )ay to pro#rastinate"" Mar- agrees. ".e )ere dealing )ith min!te #ontentions" things that i( )e had to do them man!ally" )e )o!ld ne*er ha*e bothered. 4!t )e remo*ed all #ontentions. Then" o( #o!rse" as Ted predi#ted" )e had to (ight )ith all the pro e#t leaders." "To #!t a long story short" )e s+!ee=ed agreement"" &red s!mmari=es days o( (ier#e arg!ments into one senten#e. "Then reality sho)ed !s )hat (ools )e )ere. Any spe#!lations on )hat happened0" Mar- as-s the #lass. E*erybody is thin-ing hard" b!t nobody #omes !p )ith any ideas. Not e*en Ted. Mar- doesn/t )ait long. "$id yo! e*er see a step that (inished some)hat late0" He gi*es them a #l!e. "'ne small de*iation in one step and 4''M1yo! get the domino e((e#t" #ontentions all o*er the pla#e. .e (o!nd o!rsel*es )asting all o!r time sorting o!t (ights. Ted" yo! #alled it a nightmare0 3o! are absol!tely right." "I #an see it #learly"" Ted agrees. "It #o!ld easily happen in my pla#e. 2o )hat did yo! do0" "4e(ore )e see the sol!tion"" I say" "#an yo! tell !s the #on#ept!al mista-e yo! made0" ".e )ere treating estimates as i( they )ere real"" R!th ans)ers. ".hat do yo! mean0" I prod. "2!ppose a step )as s!pposed to ta-e ten days. 3o! -no) there is a good #han#e it might ta-e se*en or (i(teen" b!t )e (ed ten days into the #omp!ter. Then )e treated this n!mber as holy." "I still don/t !nderstand"" I say. ".e regarded #ontentions o( three days as signi(i#ant e*en )hen the estimate (or the path )as thirty days." "4asi#ally"" &red #lari(ies (!rther" ")e (ell into the trap o( thin-ing that eight times eight e+!als e,a#tly si,ty1(o!r> )e )ere trying to be more pre#ise than the noise. E*erybody )as (ighting abo!t #ontentions )hi#h" le(t alone" #o!ld ha*e been easily absorbed by the b!((ers." "As a res!lt"" Mar- s!mmari=es" ")e )ere #onstantly #hanging s#hed!les (or nothing" and by that #reating real problems." "I !nderstand"" 4rian says. "And than-s (or telling !s abo!t it. No) I -no) )hat not to do mysel(" b!t I don/t -no) )hat to do. .e #annot ignore #ontentions. "Absol!tely"" Mar- agrees. ".e #annot ignore #ontentions in one pro e#t" )e de(initely #an/t ignore them )hen )e loo- at all pro e#ts." "3o! see the dilemma )e )ere #a!ght in0 &red as-s. 'n the one hand" )e had to #onsider #ontentions" b!t on the other hand" )hen )e did" )e ran into the nightmare." "2o )hat did yo! do0" 4rian is eager to (ind the ans)er. ".e #alled %ro(essor 2il*er in to help." ".hi#h )as totally !nne#essary"" I emphasi=e. "3o! -ne) the ans)er. 3o! )ere !st too la=y to reali=e it." "That/s !n(air6" R!th rebels. "E*en a(ter yo! sho)ed !s" it too- me some time to digest." "The ans)er )as ta!ght to yo! by %ro(essor &isher in yo!r prod!#tion #o!rse" and then it )as elaborated on by %ro(essor .ilson in yo!r systems #o!rse." I -no) that I/m !n(air. I spent )ee-s )or-ing on it mysel( be(ore I (ig!red it o!t. 4!t I )ant to open my st!dents/ minds to the possibility o( trans(erring a good #on#ept (rom one (ield to another. ".e are dealing here )ith reso!r#e #ontention problems"" I start to e,plain. "Ha*e yo! seen the same problem in yo!r prod!#tion #o!rse0" "'( #o!rse"" 4rian says." E*ery time there is a +!e!e o( tas-s in (ront o( a ma#hine and the priorities are !n#lear" )e ha*e reso!r#e #ontention> a (e) tas-s are (ighting to be pro#essed at the same time by the same reso!r#e." "E,a#tly"" I say. "And ho) do yo! handle s!#h a #ase0 3o! ha*e learned that it is (oolish to try to s#hed!le the )or- o( ea#h and e*ery ma#hine. .hat are yo! s!pposed to do0" "Identify the bottlene#-"" Charlie says. "And then0" "Then e+ploit it> s#hed!le the se+!en#e o( )or- (or the bottlene#-." "4y that"" I say" "yo! ha*e eliminated any #ontention on the #onstraint. 3o! don/t as- it to do t)o things at the same time. And then0 Charlie0" "And then subordinate. 2!bordinate all the other reso!r#es to it. "And )hat is the res!lt0" I as-. I am getting good at as-ing rhetori#al +!estions. Rhetori#al to these st!dents )ho ha*e learned it (rom Bohnny.

HG

"4y that"" Charlie replies" "yo! ha*e remo*ed most o( the o*erloads (rom the other reso!r#es. And the sporadi# pea-s o( load that still e,ist #an be absorbed by the b!((ers." "E,a#tly"" I say tri!mphantly. ".hy don/t )e do the same in pro e#ts0" "4!t in pro e#ts )e don/t ha*e a bottlene#-"" Ted rea#ts too +!i#-ly. "Really0" Mar- as-s ironi#ally. "In yo!r #ompany yo! don/t ha*e a bottlene#-0 Remember" )e are not tal-ing abo!t one pro e#t> )e are tal-ing abo!t all o( them together." "I see." "And )hat is the impa#t o( not a#-no)ledging s!#h a bottlene#-0" I as-. "It/s not !st that it #reates ha*o# syn#hroni=ing bet)een the pro e#ts. 3o! )ill get the same de*astating impa#t )e get in prod!#tion. Not paying spe#ial attention to the bottlene#-" not prote#ting it (rom M!rphy )ith b!((ers" !na*oidably res!lts in )asting time on the bottlene#-." ".hi#h #a!ses"" &red #ontin!es" "a red!#tion in the o*erall thro!ghp!t o( the organi=ation. .e deli*er (e)er pro e#ts in total than )e #o!ld." "2o"" Mar- ta-es o*er" ")e identi(ied the bottlene#-. 5ery easy" )e -ne) it all along. It is o!r digital pro#essing department. And then )e s#hed!led their )or-." "Ho)0" 4rian interr!pts. "The same )ay )e do it in prod!#tion. There the priority is mainly determined by the d!e dates o( the orders. In o!r #ase" by the targeted #ompletion dates o( the pro e#ts." R!th #ontin!es" "And (rom there it )as easy. .e )ent ba#- to dealing )ith ea#h pro e#t as a stand1alone. The impa#t o( the other pro e#ts )as ta-en into a##o!nt by the additional in(ormation )e got (rom s#hed!ling the digital pro#essing department." This e,planation is too abbre*iated (or most. "In e*ery pro e#t )e ha*e steps done by digital pro#essing"" &red elaborates. "The s#hed!le o( the digital pro#essing ga*e spe#i(i# start and (inish dates (or these steps. 2o" (or ea#h pro e#t )e (irst did the )or- as i( no other pro e#t e,isted. 3o! -no)" remo*ing any ma or #ontentions. Then )e ad !sted the pro e#t to (it the digital pro#essing di#tates." "$id it #hange the #riti#al #hain0" Ted as-s. "&or some pro e#ts it did"" &red a#-no)ledges. "Then yo! p!t in the b!((ers0" 4rian #he#-s. "'( #o!rse"" Mar- ans)ers. "4!t here #omes a ma or point. All the b!((ers that )e/*e tal-ed abo!t so (ar" pro e#t b!((er" (eeding b!((ers and reso!r#e b!((ers" are all prote#ting the indi*id!al pro e#t. Here )e ha*e to remember to also prote#t the bottlene#-" the o*erall per(orman#e o( o!r organi=ation." R!th #ontin!es. "2o )e had to insert another b!((er" the bottlene#-1b!((er. It/s not as big a deal as it so!nds. .e de#ided that t)o )ee-s is more than eno!gh" (or !s it is" and e*ery path that goes thro!gh digital pro#essing )e s#hed!le to start t)o )ee-s earlier. It/s as simple as that." The #lass is +!iet. E*eryone is trying to digest )hat they/*e heard. I don/t brea- the silen#e. ".e are still not s!re i( s#hed!ling !st the digital pro#essing department is eno!gh"" &red says. "Remember" in prod!#tion there is the need to sometimes #onsider not !st the bottlene#- b!t another #apa#ity #onstraint reso!r#e" or t)o." "Ho) are yo! going to -no)0" Charlie in+!ires. ".e monitor the (eeding b!((ers )ith ha)- eyes" (or early )arnings"" &red ans)ers. "I( a reso!r#e #ontention starts to e,ha!st one (eeding b!((er a(ter another" )e/ll -no)." "4!t only then )ill )e de#lare it as another reso!r#e #onstraint" not a min!te be(ore"" Mar- is (ast to inter e#t. ".e are not going to be hysteri#al and #onsider e*ery department a #onstraint !st be#a!se they #laim to be o*erloaded. .e/*e learned o!r lesson. Ne*er again are )e going ba#- to that nightmare." .e are sitting in a small deli in Ne) 3or- eating brea-(ast. Me and my B!dith. .hen in Rome a#t li-e a Roman" so I/*e ordered a bagel )ith #ream #heese and lo,. Not bad. Ne) 3or- is B!dith/s (a*orite h!nting gro!nd. 2he has per(e#ted it to a s#ien#e. .e don/t )ander (rom shop to shop loo-ing (or something that )ill #at#h o!r eye. 'h" no" )e are m!#h more sophisti#ated. B!dith plans it all in ad*an#e" do)n to the spe#i(i# shops and the best ro!tes. 3esterday )e )ere a(ter an 'riental r!g. A(ter se*en shops I )as too e,ha!sted to #ontin!e #o!nting. At si, o/#lo#- )e )ent ba#- to the se#ond pla#e )e *isited in the morning and the battle started. Hal( an ho!r later" nine h!ndred and (orty dollars poorer" )e stepped o!t" the pro!d o)ners o( a small" staggeringly bea!ti(!l" %ersian r!g. ".e sa*ed at least (o!r h!ndred dollars"" B!dith s!mmari=ed the day. ".hat is o!r target today0" I as- my general. "An anti+!e #o((ee ser*i#e."

HH

"I tho!ght yo! )ere pleased )ith the #hina yo! got last year0" I li-e it" e*en tho!gh I m!st admit that at the time I didn/t li-e (inding o!t )e )ere another (i*e h!ndred in the hole. I e*en made a small (!ss. "'!r #hina is (ine. 4!t )e need a sil*er set. &or spe#ial o##asions"" and #as!ally she adds" "yo! ha*e #heese on yo!r #hin." I almost #ho-e. 2pe#ial o##asions" li-e t)i#e a year )hen the +!een o( England pays !s a *isit. ".ipe yo!r #hin"" she reminds me. I do. ".hat/s the b!dget0" I dare to as-. "No more than si, tho!sand"" she ans)ers. "It )on/t be easy" so this time yo!/ll ha*e to play yo!r role )hen I/m bargaining. $on/t !st stand there li-e a depressed log." No) that I ha*e ten!re )e don/t ha*e to )orry abo!t sa*ing (or old age> the !ni*ersity pension )ill ta-e #are o( that. 4!t si, tho!sand dollars0 And (or something that )e/ll ne*er !se0 Then I see her point. It/s a good idea. 2atis(ied" I anno!n#e" ".e are starting a #olle#tion." "The 2il*er #olle#tion"" B!dith titles it. I de*o!r )hat/s le(t o( the bagels" and )a*e (or a re(ill. "'*er the years )e/ll b!ild a #olle#tion that )ill be something." Bo-ingly I add" "Then )e/ll lea*e it to the to)n and people (rom all o*er )ill #ome to see it." "I )ish )e #o!ld lea*e it to o!r -ids"" she says in a lo) *oi#e. "2o do I. 2o do I." Absentmindedly I drin- my #o((ee. "I )ish there )as something )e #o!ld do." I p!t the #!p ba#-. "Come on" B!dith" let/s #on+!er the #ity." I stand !p" all ready to go. "There is something"" she says. I mo*e behind her to p!ll her #hair ba#-. 2he doesn/t stand !p. "There is a )ay )e #an ha*e a #hild." I sit do)n again. "4!t" darling" I tho!ght yo! )ere not )illing to adopt0" 2he p!ts her hand on mine. "There is a )ay to ha*e o!r o)n #hildren." "4!t..." I (eel )ea-. 2he stro-es my arm. "Nothing is )rong )ith my eggs or )ith yo!r sperm." "3o! mean a s!rrogate mother0" "3es." I try to digest. .e #an ha*e a baby. "Ri#-... darling... let/s go." 2he stands !p. "It/s o!t o( o!r rea#h." "No." I grab her hand and p!ll her ba#-. "3o!/re s!re it/s (easible0 I -no) that in this thing nothing is g!aranteed" b!t is it (easible0" 2tanding" she replies" "3es. 4!t )hat/s the point in tort!ring o!rsel*es. .e/ll ne*er be able to a((ord it. Let/s go" honey." "Are yo! )illing to go thro!gh all it ta-es0" "3o! -no) I am." 2he sits do)n. "And i( at the end )e (ail. Can yo! ta-e it0" "I/ll still ha*e yo!." "B!dith" i( yo! are ready" I/ll (ind the money. .hate*er )e need." "There is one problem"" she says. ".hat0" ".e/ll ha*e to postpone the start o( o!r sil*er #olle#tion. Is that o-ay )ith yo!0" I( it )asn/t Ne) 3or-" )e )o!ld probably be arrested (or ma-ing a s#ene in p!bli#.

1;;

Chapter 8C
They started early. 4y ele*en" Ri#- had (inished his presentation. There )as no do!bt that $on %ederson )as impressed. He e*en said that this -no)1ho) )ill be o( great *al!e to FniCo. Then Bim too- the lead" and ga*e a presentation on the design o( a #omp!ter system (or pro e#t management. His presentation #entered aro!nd the thin- tan-/s )arnings abo!t the ease )ith )hi#h a too sophisti#ated system #an thro) pro e#t teams into a nightmare. .hen he (inished" $on did not hold ba#- his praise. They didn/t go o!t (or l!n#h. Bohnny arranged (or sand)i#hes. $on is not entirely pleased. .hat he heard this morning dealt )ith only one aspe#t o( pro e#ts. An important aspe#t" b!t not the most important one. In $on/s opinion the most #ostly mista-es are made be(ore the e,e#!tion starts. They are made in the de#isions> the de#isions abo!t )hi#h pro e#t to #hoose" the de#isions de(ining the s#ope o( a pro e#t. .hat he heard this morning )as good" e,#eptionally good. 4!t e*erything presented )as geared to the )or- o( the le*els (rom the pro e#t leader do)n. .hat abo!t helping the de#ision pro#ess o( top managers0 He hesitates. He thin-s abo!t ho) to bring it !p" i( at all. These people ha*e done an e,#eptional ob" and he doesn/t )ant to say anything that )ill be interpreted as #riti#ism. 4esides" he already (o!nd )hat he )anted. This gro!p #an be tr!sted to de*elop ne) -no)1ho). It )o!ld be ni#e i( they )ere not restri#ted to !st the logisti#al arena" i( they )ere #apable o( #o*ering also the (inan#ial aspe#ts. Ni#e" b!t not mandatory. He de#ides to raise the iss!e o( in*estment !sti(i#ation" b!t i( they try to de(end #on*entional methods" he is going to drop it. "I/m going to spend the rest o( the )ee- )ith the team p!tting !p o!r ne) (a#ility here. I #ertainly #an and )ill !se )hat yo! ha*e ta!ght me"" $on prepares the stage. "Let me as- yo!r ad*i#e. 7no)ing pro e#t team leaders" they are going to as- (or additional in*estments." ".itho!t a do!bt"" Ri#- agrees. "2!ppose they as- me (or an additional ten million dollars (or something that )ill help !s start operations three months earlier. Ho) sho!ld I e*al!ate it0" "I/m s!re that by adopting )hat )e/*e tal-ed abo!t yo! #an #!t more than three months" )itho!t any additional in*estments"" Ri#- says #on(idently. "3o! are probably right"" Charlene agrees" "b!t the +!estion still holds. 2!ppose that an additional in*estment #an bring (or)ard the #ompletion time o( a pro e#t" ho) does one go abo!t e*al!ating )hether or not to in*est0" $on nods. Charlene" being a (inan#ial pro(essor" is (amiliar )ith this problem" b!t he doesn/t e,pe#t m!#h. He has been in*ol*ed in n!mero!s dis#!ssions abo!t in*estment !sti(i#ation" and nothing #ame o!t o( them. As a matter o( (a#t" he sometimes (o!nd himsel( (r!strated by the inability o( (inan#ial e,perts to re#ogni=e )hy he is not satis(ied )ith the #on*entional methods. ".hy not !dge by a payba#- #al#!lation0" Ri#- as-s. $on is preparing to ans)er )hen" to his s!rprise" Charlene does. And she hits the nail right on the head. "%ayba##al#!lations do not properly ta-e into a##o!nt the most important (a#tor" the s#ar#ity o( money." Ri#- is p!==led. 2o are Bim and Bohnny. $on !st smiles to himsel(" )aiting (or Charlene to #ontin!e. Charlene" being a good tea#her" (irst #lari(ies the problem. "Ri#-" )hen do )e (a#e the problem o( #hoosing bet)een t)o pro e#ts0 I( one o( the t)o alternati*es" or both" don/t e*ent!ally bring more than the in*estment there is no problem ma-ing a de#ision. 2o the di((i#!lty is #hoosing bet)een t)o good alternati*es." "Corre#t." "No)" i( both alternati*es are good" )hy do )e ha*e to #hoose0 .hy not do them both0 3o! see" the need to #hoose arises only )hen a*ailability o( money is a #onstraint." $on is pleased )ith Charlene/s #lean e,planation. He leans ba#- in his #hair )aiting to hear more. "4a#- to payba#- period"" Charlene #ontin!es. "Ri#-" s!ppose that yo! (a#e t)o alternati*es. 4oth )ill gi*e yo! t)o years/ payba#-" b!t one re+!ires an in*estment o( one million dollars and the other ten million. B!dging by the payba#- period" these t)o alternati*es loo- the same" one is no better than the other. 4!t )hen money a*ailability is the #onstraint )e -no) that the t)o alternati*es are *astly di((erent." "&or me they aren/t"" Ri#- o-es. "'ne million dollars is o!t o( my rea#h to the same e,tent that ten million is." And then" )itho!t a smile" he adds" "And I thin- that (or a #onglomerate li-e FniCo" it also doesn/t ma-e any di((eren#e. 'ne million or ten million do not represent any problem in terms o( money a*ailability." "It does"" $on #orre#ts him. ".e al)ays ha*e more in*estment opport!nities than a*ailable money. Charlene" )o!ld yo! re#ommend !sing net1present1*al!e as a #riteria0" 1;1

"No"" she ans)ers. "It is a more sophisti#ated method" b!t I/m a(raid that it/s #on#ept!ally )rong." $on straightens in his #hair. That is also his opinion" b!t !p !ntil no)" e*ery (inan#ial e,pert tried to pers!ade them that net1 present1*al!e )as the only pr!dent )ay to !sti(y in*estments. "Net1present1*al!e is the )ay to translate (!t!re in*estments and in#ome into terms o( #!rrent money"" $on repeats the arg!ments he/s heard so many times. "This method ta-es into a##o!nt that interest and in(lation e,ist> that one h!ndred dollars in*ested or earned ne,t year are not e+!al to one h!ndred dollars in*ested or earned today. .hat/s )rong )ith it0" "3o! !st said it"" Charlene ans)ers. "To estimate the *al!e o( in*estment this method !ses interest" b!t )e !st said that as long as a*ailability o( money is a #onstraint" interest is not the appropriate meas!re." "4!t isn/t that )hat interest is all abo!t." Ri#- doesn/t !nderstand. "I( the ban- #harges me ten per#ent interest per year" isn/t that the pri#e I ha*e to pay (or holding the money0" "Ri#-" go to the ban-" o((er to pay them" not ten per#ent" b!t t)enty. .ill they lend yo! a h!ndred tho!sand dollars0" "Not )itho!t #ollateral"" Ri#- admits" not re*ealing that is e,a#tly )hat happened to him yesterday. 4e(ore B!dith (inishes the medi#al pro#ed!res" he may need more than one h!ndred tho!sand. .here #an he possibly get it0 "3o! see"" Charlene #on#l!des. "The a*ailability o( money" )hi#h is at the heart o( $on/s +!estion" has little to do )ith interest." "Agreed"" says $on. ".e at FniCo are not pleased )ith either payba#- or net1present1*al!e methods." .ith little hope" he as-s" "$o yo! ha*e a better alternati*e0" "I thin- so"" Charlene ans)ers. "4!t I/m a(raid yo! )on/t li-e it." ".hy not0" "4e#a!se it ne#essitates de*eloping ne) int!ition." E*erybody )aits (or her to e,plain. ".e/*e !st agreed that the a*ailability o( money is -ey (or !dging bet)een in*estment alternati*es. It is not di((i#!lt to pro*e that time is as important. I( time )ere not part o( the e+!ation" i( the ret!rn )ere immediate" )e )o!ld not (a#e any problem. .e )o!ld in*est in one alternati*e" get the immediate payba#-" and then in*est in the other. .e are dealing here )ith a t)o1dimensional problem" time and money." "That/s ob*io!s"" $on says. "It is"" Charlene agrees" "b!t )e thin- in terms o( time or money. .e are not !sed to thin-ing in terms o( time1money. Loo- at the methods )e !st re e#ted. %ayba#- period is trying to gi*e the ans)er in terms o( time1t)o1years" three1years payba#-. Net1present1*al!e is trying to gi*e the ans)er in terms o( money" o( dollars. I/m a(raid that the ans)er #an only be e,pressed in terms o( time and money" together" not separate." "I don/t !nderstand"" $on says. "Let me gi*e yo! an e,ample (rom another (ield. There are things in reality that are *ery important. Ne*ertheless" sin#e they in*ol*e s!mmation o( m!ltipli#ations o( t)o di((erent dimensions" )e ha*e a hard time !nderstanding them." "I de(initely ha*e a hard time"" Bohnny interr!pts. "Can yo! repeat that please0" "%hysi#ists -no) that one o( the most important r!les is #onser*ation o( moment!m. They -no) that the s!mmation o( the masses o( all the parts in a system" ea#h m!ltiplied by their #orresponding *elo#ity" is #onser*ed" no matter )hat happens inside the system. 2till" people o!tside physi#s ha*e a hard time !nderstanding this #on#ept." "I/m a(raid that doesn/t help me m!#h"" $on grins. "Can yo! gi*e !s a simpler e,ample0" "2!ppose yo! ha*e a (ield s#attered )ith ro#-s. $o yo! agree that it is interesting to -no) the e((ort re+!ired to #lean the (ield0" "&or some people..." "Ho) #an )e e*al!ate the e((orts0 .e ha*e to -no) the )eight o( ea#h ro#- and the distan#e o( ea#h ro#- (rom the nearest border o( the (ield. The e((ort to remo*e one ro#- is represented by m!ltiplying the )eight o( the ro#- times the distan#e to the nearest border. 2omething )e don/t ha*e a name (or. The e((ort to #lean the entire (ield is the s!mmation o( those m!ltipli#ations. "3o! see" here )e ha*e an e,ample o( something that #an be presented only thro!gh a s!mmation o( the m!ltipli#ations bet)een t)o di((erent dimensions." "I see"" says $on. "And I e*en *ag!ely see ho) it #an be tied to the s!b e#t o( in*estments. 4!t #an yo! please do it (or !s." "2!ppose yo! in*est t)o dollars"" Charlene pre(ers to e,plain in tiny steps. "A(ter one day" yo! are in*ested (or t)o dollar1 days. A(ter (i*e days yo! are in*ested (or ten dollar1days. $oes this m!ltipli#ation o( money1time ma-e sense to yo!0" 2he is ready to drop the iss!e in #ase o( a negati*e response. "%er(e#t sense"" $on ans)ers. "%lease" #ontin!e." "No) s!ppose that at the beginning o( day ele*en yo! in*est another three dollars. &or ho) m!#h are yo! in*ested at the end o( the day0"

1;8

"Let me see"" $on tries to de#ipher. "My original t)o dollars are in*ested (or ele*en days" that gi*es !s t)enty1t)o dollardays. 'n top o( it I in*ested three more dollars (or a day" )hi#h means another three dollar1days. In total I/m in*ested (or t)enty1 (i*e dollar1days. 3o! are right" it is a s!mmation o( m!ltipli#ations. 4!t )hat/s the point0" "The point be#omes #lear )hen I tell yo! that on the morning o( day t)el*e yo! got yo!r (i*e dollars paid ba#-. Ass!me no in(lation or interest. Are yo! satis(ied0" "No" I/m not"" $on smiles. "I tied !p my money (or a period o( time" I got ba#- my money" b!t I didn/t get any *al!e (or the (a#t that the money )as tied !p." "E,a#tly." Charlene tal-s to him as i( he is one o( her st!dents. "3o! in*ested t)enty1(i*e dollar1days. 3o! got ba#- yo!r (i*e dollars" b!t yo! are still t)enty1(i*e dollar1days in the hole. As long as this in*estment is not ret!rned" yo! right(!lly are not satis(ied." "I got my money ba#- and I/m still in the hole0" $on doesn/t get it at (irst. They all thin- abo!t it. "3o! are right"" $on says a(ter a)hile. "My in*estment is a#t!ally the s!mmation o( dollar1days. 4y the )ay" do yo! ha*e a name (or it0" "I call it 1flush"" Charlene almost giggles. "To be satis(ied" yo! m!st ma-e s!re that yo! at least (l!shed o!t yo!r in*estment. I stress it be#a!se at the end o( the payba#- period" )hen e*erybody tells yo! to be satis(ied that yo! got yo!r money ba#-" that/s e,a#tly the point in time that yo! are in*ested the most" )hen yo! are the deepest in the hole in terms o( dollar1days." "No) I also !nderstand yo!r )arning abo!t not ha*ing the int!ition"" $on says. ".e regard money and in*estments as almost synonymo!s" b!t no) I see ho) *astly di((erent they are. They don/t e*en ha*e the same !nit o( meas!re. Money is meas!red in dollars" in*estment in dollar1days. I ha*e to thin- abo!t it" it may #hange o!r entire in*estment program." He loo-s at his )at#h. "It/s a pity I ha*e to lea*e no)" b!t I/m s!re )e/ll ha*e many more (r!it(!l dis#!ssions. Bohnny" #an yo! please sho) me the )ay to yo!r president/s o((i#e0 4y the )ay" )hat does 4.B. stand (or0"

&or m!#h more in(ormation on the Theory o( Constraints JT'DK please *isit the )eb site at: http:TT))).goldratt.#om

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N'TE2 Jby R!bUn $r!ghieri I r!ben.dr!ghieriVgmail.#omK:

Theory of Constraints: T'C is a blend o( three di((erent" b!t related" brea-thro!ghs: 11ItOs a ne) management philosophy. 81The resear#h methods it introd!#es 1adapted (rom the a##!rate s#ien#es1 to (it systems that #ontain" not !st atoms and ele#trons" b!t h!man beings. ?1Its broad spe#tr!m o( rob!st appli#ations.
8

Troughput: The right prod!#ts m!st rea#h the right #lients in a )ay that they )ill pay (or them.
?

0rocess of focusing' or ongoing impro$ement2: 11 I$ENTI&3 the systemOs #onstraintJsK. 81 $e#ide ho) to EP%L'IT the system/s #onstraintJsK. ?1 2F4'R$INATE e*erything else to the abo*e de#ision. @1 ELE5ATE the systems/ #onstraintJsK. C1 I( the #onstraint is not anymore: G' 4AC7 to step one.
@

To define a problem precisely: T'C adopts the de(inition a##epted in the a##!rate s#ien#es: A problem is not pre#isely de(ined !ntil it #an be presented as a #on(li#t bet)een t)o ne#essary #onditions.
C

Conflict sol$ing (e$aporating cloud*: T'C #laims: )hene*er )e )itness a #on(li#t " it is a #lear indi#ation that someone has made a (a!lty ass!mption" that #an be #orre#ted" and by doing so the #on(li#t remo*ed. TDM and BIT are adamant abo!t thro!ghp!t e*en tho!gh they ha*en/t reali=ed that it mandates a m!#h sharper (o#!sing. Reengineering p!ts the emphasis on ree,amining basi# ass!mptions. A #ornerstone o( the learning organi=ation is to repla#e !nsatis(a#tory #ompromises )ith )in1)in sol!tions. Fsing the #larity pro*ided by T'C and systemati#ally !sing its analyti#al methods" all these philosophies" at last" merged into a #oherent )hole.
9

Current reality tree: ItOs the logi#al des#ription o( the e((e#ts stemming (rom the (a#t that someoneJsK operate in the en*ironment #reated by a non1apropriate meas!rement. Remember that the main reason (or an operational meas!rement is to ind!#e the departments to do )hat is good (or the #ompany as a )hole.
E

-afety into the time estimates of almost e$ery step of a pro3ect : >ow it is inserted ... 11 The time estimates are based on a pessimisti# e,perien#e" the end o( the distrib!tion #!r*e. 81 The larger the n!mber o( management le*els in*ol*ed" the higher the total estimation" be#a!se ea#h le*el adds its o)n sa(ety (a#tor. ?1 The third is that the estimators prote#t their estimations (rom a global #!t. ... and wasted ... 11 The st!dent syndrome: there is no r!sh" so start at the last min!te. 81 M!lti1tas-ing: to lea*e ea#h tas- a(ter itOs (inished" in(lates lead times. ?1 The dependen#ies bet)een steps #a!se delays to a##!m!late and ad*an#es to be )asted.
G

#in lose situations: $onOt e,ist" a##ording to T'C: e*ery time it seems li-e a )in1lose e,ists" it/s be#a!se )e are loo-ing at the problem too narro)ly.
H

Critical Chain: As critical path is the longest Jin timeK #hain o( dependent steps" T'C #alls Critical Chain to the longest #hain o( dependent steps. It #onsiders that dependen#ies bet)een steps #an be a res!lt o( a path or a res!lt o( a #ommon reso!r#e. 2o" the longest #hain )ill be #omposed o( se#tions that are path dependent and se#tions that are reso!r#e dependent. .ant to -no) more abo!t Theory o( Constraints JT'DK0

%lease *isit JspanishK: http:TT))).*enta1dire#ta.blogspot.#om 2ome notes abo!t GoldrattOs tho!ghts" T'C" and other related topi#s.