Eliyahu M. Goldratt, PhD, author of The Goal and creator of the theory of constraints and critical chain project management, passed away at his home in Israel on 11 June. He was an iconoclast who also established new methods for managing manufacturing, supply chains and projects.
After obtaining a doctorate in philosophy from Bar-Ilan University, Dr. Goldratt left the academic world to pursue a career in business. He joined Creative Output in 1979, which became the number-six company on the Inc. 500 list in 1984. Its optimized production technology software was the precursor to manufacturing and supply chain optimization, which became a multibillion-dollar industry in the late 1990s.
Dr. Goldratt became recognized as a business thought leader with his 1984 bestseller, The Goal, which introduced the world to the theory of constraints (TOC). It is among Forbes’ list of business bestsellers and is required reading in almost every master of business administration program, though the book's influence is best captured in a quote from The Economist: “A survey of the reading habits of managers found that though they buy books by the likes of Tom Peters for display purposes, the one management book they have actually read from cover to cover is The Goal.” Even though it was privately published, it has sold more than 5 million copies in 35 languages.
The underlying principle of TOC is that optimizing local efficiencies creates artificial constraints that prevent an organization from realizing its full potential. Dr. Goldratt famously proclaimed that cost accounting is the “enemy number one” of productivity. By keeping the focus on the ultimate goal, organizations can increase their speed and throughput. TOC has been adopted in a wide array of private and public organizations worldwide.
In 1997, Dr. Goldratt expanded TOC in his book Critical Chain, which provides the basis for critical chain project management. Critical chain project management emphasizes resources rather than scheduling or cost. This methodology is claimed to enable 10 to 50 percent improvement in project speed. Seven of the eight largest U.S. military air depots reportedly have used its techniques to improve fleet availability while cutting costs.
One cannot overstate Dr. Goldratt's influence on thousands of managers around the world, and it will only grow with time.
Sanjeev Gupta is CEO of Realization, a critical chain project management software and services provider in San Jose, California, USA.