The Goal Movie DVD by Eliyahu M Goldratt is ON SALE

Through the month of December 2010 get The Goal movie based on The Goal book by Eliyahu M Goldratt for $645.  It's regularly $895 and not often on sale.

Available in English, Spanish, Chinese and Hindi. Order Here

Theory of Constraints POOGI Part 61 Exit Planning Questions

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints. {This series was co-written with Brad Stillahn.}

Dr. Lisa: Let me start. We established in our last article that Exit Planning is consistent with Theory of Constraints, Lean and Six Sigma because business owners need processes that will increase profitability and business value. So now, let's help business owners check whether they are ready to exit, or what additional steps they would need to take to be ready.

Brad: First, a business owner needs to understand his or her objectives. Here's the question we need answered:

1. Do you know your exact retirement goals and what it should take in cash to reach them?

Dr. Lisa: Oh, I like it. That's the first step in Theory of Constraints (TOC) as well, understanding the objective. And then design a process to achieve the objective more and more. In a for-profit business, it's usually "make more money now and in the future". I know my answer for question number one.

Brad: Good. Now we need to know where we are in relation to the goal. So next we need to know:

2. Do you know how much your business is worth today, in cash?

Dr. Lisa: That's a much tougher question for me - business worth.  How do you find out?


Brad: It depends. If the business owner is close to exiting, a valuation by a Certified Valuation Analyst is recommended. But if you are just starting the exit planning process, a range of value can be calculated by a qualified CPA, and should be updated annually. Industry "rules of thumb" aren't good enough, and may be misleading. Pay a few bucks and get it done. Next, we need to know:


3.  Do you know the best ways to maximize the income stream generated by your ownership interest?

Dr. Lisa: I know the answer, it's TOC!!! There is no better way to leverage existing resources to maximize profitability now and in the future. Use the Velocity Scheduling System to do more with existing resources, and create an unrefusable offer-a Mafia Offer-to sell the capacity that's revealed.

Brad: Was that a commercial? Not that there's anything wrong with that...

Dr. Lisa: Yes, of course! Theory of Constraints is so powerful and I feel inclined to remind people of that fact. We helped 30 highly custom job shops improve last year -- substancially! A 100% success rate! What else could you have had these shops do with that amount of success?

And, we've had over 70 companies go through our Mafia Offer Boot Camp -- all creating great offers that they can use to sell more and increase the value of their business.

But I digressed. Let's get back to exit planning.

Brad: The answer to question three is where most business owners get stuck both in operating their business and with exit planning. If there is a gap between what you need (question #1) and where you are (questions #2), then you need to know how to close the gap (question #3).

.... to be continued (and completed) next week in POOGI #62

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Want to have an Exit Plan? Go to http://www.scienceofbusiness.com/exitplan.aspx and take the first step.

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Here's to maximizing YOUR profits (and selling price of YOUR business)!

Dr Lisa

(c)Copyright 2010, Dr Lisa, Inc. All rights reserved.

The Goal Movie by Eliyahu Goldratt on DVD on SALE

The Goal DVD normally sells for $895 but is on sale until December 31, 2009 at midnight ET. From now until then you can get $250 off. So The Goal DVD is yours for only $645. The Goal movie is ON SALE!!!!Yes, the best selling book, The Goal by Dr Eliyahu Goldratt was made into a 45 minute movie.

To take advantage of this great offer, check on any of the hyperlinks in this post.If you miss this opportunity, just send me an email and let me know that you want to be notified the next time there is a sale.

This video takes The Goal book and shows you how to put the theories to work in your company.

Based on the best-selling book by Eli Goldratt, The Goal tells the story of Alex Rogo, a plant manager facing the threat of his plant's closure. The video follows Alex and his team as they use the Theory of Constraints to transform their mediocre division.

The first obstacle standing in the way of implementing a major change is reaching a wall-to-wall agreement on the direction of change. A powerful tool that can be used to create such agreement is The Goal: The How-To Version” video. The use of this video is not limited just to the beginning of the implementation process. Reaching agreement on the change in direction is not a one-time effort. As the company moves in a new direction there will be some unavoidable diffusion. To prevent too much diffusion there is the need to repeatedly realign interpretations and periodically use the movie.

A Process Of On-Going Improvement (POOGI) - Part 37

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints. {This series was co-written with Brad Stillahn.}

The PQ quiz below is deterministic, with one correct answer. You have only ten minutes to take the quiz once you have familiarized yourself with the data provided. This quiz has been given to CEO’s worldwide for over 20 years. Over that time span, less than one percent of CEO’s get the correct answer. Will you?

The Simple Company makes just 2 products: Pens and Quills. The goal of the company is to maximize profitability. The company has 4 resources that are not interchangeable: Abby, Bobby, Christi and David. The work week is 40 hours (meaning each resource is available for 2,400 minutes per week).

Unlike reality, the environment of the Simple Company has perfect information. Everything is fixed, and every piece of data is precisely known. There is no scrap, no set-up, no worker breaks or absenteeism, no downtime; this is just an idyllic company. We have removed all the uncertainties. Our marketing department is the best, and we know the exact weekly demand for each Pen and Quill.

Operating expenses are $6,000 per week. These are all the fixed costs which include labor, benefits, utilities, interest, SG&A expenses, etc. Labor is paid at the rate of $10 per hour for all resources but remember that labor is included in the $6,000 of operating expense. The raw material (RM) costs and processing times are shown in the diagram of the production process of the Simple Company below.

What is the maximum net profit (or minimum net loss) the Simple Company can earn in 1 week with the current demand?

Please email your answer at any time. You will receive back an email with the correct answer, as well as the methodology for arriving at the correct answer for more complicated real-life scenarios.

...to be continued.Here's to maximizing YOUR profits!

Dr Lisa Lang

(c)Copyright 2009, Dr Lisa, Inc. All rights reserved.

The pens and quills problem was adapted from the Haystack Syndrome.

A Process Of On-Going Improvement (POOGI) - Part 29

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints.

How will we know if we have a good solution before we try to implement it?

As business leaders, we’re smart people and fancy ourselves as problem-solvers. So, not only do we skip the step of developing a deep understanding of the problem, we jump to our favorite direction of the solution. Usually, we propose the solution and are surprised by the resistance we encounter. If we have enough power and stamina, we impose the solution. If we require the consensus of other people, we often get stuck arguing about the pros and cons of alternative solutions. Other people are very good at seeing what is wrong with our idea!

A useful way out is to identify the few criteria that would be associated with any good solution to the problem. And then list as many alternative solutions that meet the criteria in whole or part as possible.

For each alternative, also predict the negative effects and the implementation obstacles. These are what are normally referred to as the “problems” with a proposed solution. In the example above, the recently imposed no-overtime policy was an attempt to control costs in the face of declining productivity. Could you have predicted the negative reaction to such a policy? When the incentive system was initially implemented, do you think management expected it to de-motivate the workforce at the end of every quarter in which it was not earned? Probably not, but it was a predictable negative effect that should have been thought through before the incentive plan was implemented.

In this example, criteria for a good solution might include:

• Immediately improve the morale of the plant
• Immediately support increased productivity
• Be sustainable.

As for alternative solutions with our example company, one is to do nothing differently. This, in fact, is what is normally done. Remember Einstein’s definition of insanity: “doing the same thing over and over but expecting different results”. Inertia is powerful. Better to live with the devil we know…

Another direction is to address directly the conflict between the current company policies and the employees’ security and satisfaction. Notice that this does not require an employee survey. We all have enough intuition about causes of security and satisfaction. The difficulty is in removing bad policies and replacing them with better policies.

So what happened? The owner took charge, realizing that the company was lax in keeping current with employee reviews. While to every employee his or her review was very important, the company had not prioritized doing them, especially since that would require delivering bad news and having to talk about pay rates. The management had also allowed a few bad attitudes to affect everyone. The bad attitudes were addressed; there was a company meeting acknowledging the importance of employee security and satisfaction, and brief reviews were held emphasizing the importance of skills, cross-training, and attitude. The company committed to paying its most skilled people better than they could make anywhere, but needed their help with increased productivity. The feedback was positive and that “something really changed” this time.

...to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

NEW -- Seattle Group Mafia Offer Boot Camp. October 20 (all day), October 21 (pm), October 22 (pm), and October 23 (pm). If you're interested please contact me by email.

Are you a Vistage/TEC member who would like your team to hear my speech? Here it is: NEXT Maximizing Profitability Event (no charge): September 23, 2008 in Denver from 1:00 to 5:00 pm at the Science of Business Training Center. More information at http://www.viable-vision.com/. You can register by fax or on-line.