Customer Reviews

THE HAYSTACK SYNDROME: Sifting Information Out of the Data Ocean

5 star:		(2)
4 star:		(3)
3 star:		(6)
2 star:		(2)
1 star:		(3)

 

 

If you have never been exposed to Eli Goldratt's work, this book probably should not be the first of his books one reads. It might be a good idea to read THE GOAL first and become somewhat familiar with Goldratt's terminology, but it is not essential. This book will hold the most interest for those who either work with, or make decisions based on, cost data. If you are looking for a "how-to" book, this is not for you. I recommend Dettmer's "Goldratt's Theory of Constraints". However, if you need a good primer on what Goldratt's philosophy is, and how it applies to business data and decision making, this is an excellent resource.

The Haystack Syndrome is composed of three parts, each roughly equal in size. Part One "Formalizing the Decision Process" is the most interesting and has the widest appeal since it is an excellent discussion of how cost data can be used and misused, depending on one's perception of what type of business environment one is in. This is where the real meat of the book lies. Part Two "The Architecture of an Information System" I found less interesting, but it does contain some useful information. However, many find it too dry and technical. Part Three "Scheduling" can be skipped without fear of missing anything you did not get in the first two parts. It is a nuts and bolts description of how Goldratt's ideal scheduling system should work. Since at the time of its publication Goldratt's company sold scheduling software, I think it was a thinly disguised sales pitch. Throughout the book, Goldratt does an excellent job of defining his terms, which is good because he quite often uses familiar terms but defines them in different, but logical ways. Pay attention to his definitions!

The book begins with the recognition that most of us have lots of data but never enough information. Goldratt distinguishes information from data and says that different levels and requirements for information exist within any organization. He believes that too many of our information systems are nothing more than data systems since much of what they produce is not actionable.

Even more important than a new information system, though, is the understanding of how to use that system. This requires a new management philosophy. Part One is primarily a discussion and illustration of that new philosophy. Most companies and individuals, he says, operate in a world defined by the traditional "cost world" philosophy which has served industry well for decades. In the "cost world", decisions are usually made based primarily on how they will affect costs. However, Goldratt examines the assumptions underlying the cost world philosophy and demonstrates how these assumptions are largely invalid now. In fact, decisions based on the old philosophy may be counter-productive. The new philosophy Goldratt advocates is one which emphasizes the maximization of throughput which he defines as the "rate at which the company generates money through sales." Adding the two words "through sales" is important because in the traditional cost world, building inventory is often treated the same as sales. In fact, cost effects are delegated to third priority in the throughput world.

The biggest difference between the cost world and the throughput world is in their perceptions of the systems in which we operate. Underlying the cost world perception, for example, is the belief that most organizations operate in a system of many independent, variable functions - a change in any one of which influences the bottom line. Due to this perception, much effort is expended to identify what the influence of nearly every given change will be. The throughput world view, on the other hand, holds to the perception that we operate in a system where many functions have to carry out many tasks in a synchronized manner until the product is delivered. This implies, therefore, that only a small portion of the functions are truly independent and it is only these functions that determine the results of the entire system. Therefore, any effort expended to optimize the performance of the non-independent functions is futile. These few, truly independent functions are called "constraints" (hence the Theory of Constraints). Several problems are presented and it is highly recommended that you take the time to work them. Most people have no idea how immersed in the cost world they are until they see the solutions to the problems.

Goldratt relates in Chapter 5 the sad story of a $9 billion (sales) company, well-known but unnamed, who applied cost world view thinking to its operations in order to determine "how much each part costs us to make". They then proceeded to buy every part that, according to their cost data, could be bought cheaper. This process was repeated over a period of several quarters until, within a couple years, they went into Chapter 11. To the end, they really had no clue because their system was telling them they were doing the right thing. Unfortunately, they asked questions without examining the assumptions underlying their questions. They got exactly what they asked for, good and hard. (I met Dr. Goldratt in Washington, DC in 1997 and had the privilege to spend an hour with him discussing his ideas. I asked him who the unnamed company was. It was International Harvester).

I first read this book in 1991, but I still find myself referring to it now and then. The style of writing in Part One is very readable, but much like Goldratt's speaking style (without the accent): he's an expert practitioner of the Socratic method so he uses lots of questions and thought experiments, along with many capitalized words and exclamation marks for emphasis. If you have little or no previous exposure to the concepts in the book, you may find it helpful to take notes. Goldratt's ideas have made inroads in the last ten years, and he is continuously refining them, but this book is a good place to start if you want to try to understand his "new way of thinking."

If you have already read Eliyahu Goldratt's classic manufacturing fable, THE GOAL, you will find this book to be a five star book for explaining his Theory of Constraints. You will not rate it higher than five stars because it is very tedious reading.

On the other hand, if you have not yet read THE GOAL, you will probably not be able to finish this book because it is so technical and devoid of interesting detail. You will probably rate it a one or two star book.

I averaged these two ratings to arrive at a three star rating.

So my advice is: Read THE GOAL first, then read this book. You can read my review of THE GOAL to see if that book is for you. THE GOAL is one of the best business books of all time, and I do hope you will read it.

Five aspects of this book will be most helpful to you. First, there is an exercise to identify the constraints in a manufacturing process, and then decide what to produce. Mr. Goldratt says that only 1 person in 100 is able to do this assignment correctly in his workshops. This is a superb way to test if you understand the principles of the Theory of Constraints. If you don't correctly solve the problem, go back over the material until the exercise is crystal clear to you. The next section in the book reviews the exercise for you, so be sure to do the exercise on your own before you read the discussion.

Second, the book has an example in it of a large company that was misled by its cost accounting data to outsource much of its production and drop many of its products. The result was a disaster for the company, its executives, and shareholders. This example will emotionally stay with you, and remind you to use the Theory of Constraints the next time your cost accounting data are about to be applieed in this usually harmful way.

Third, the definitions of the Theory of Constraints are simply and beautifully spelled out here. You will see your operations as a system rather than as arbitrarily divided subsections. When you optimize the subsections, you destroy the effectiveness of the system. If you like systems thinking from this experience, I suggest that you also read THE FIFTH DISCIPLINE and THE FIFTH DISCIPLINE FIELD GUIDE.

Fourth, the book is superb in reminding you that what you measure and reward is what you get. So you will have to change these measurements and rewards in order to overcome organizational inertia to do the wrong things. Here is the often-repeated admonition from the book: "TELL ME HOW YOU MEASURE ME, AND I WILL TELL YOU HOW I WILL BEHAVE."

Five, this book clearly defines what you need to have in the way of data and how to use these data in order to practice system optimization according to the Theory of Constraints. Many people will need help with these topics after reading either THE GOAL or the first two parts of this book. Although dry, it is essential material. Be sure you stick with this section until you understand it. I suggest reading the third part out loud to another person, and discussing it with that person as you go. That approach will make this section of the book easier to use.

After you have finished reading this book, I suggest that you immediately take some process in your organization and analyze it from the prespective of the book. Where are your contraints? How can you optimize them to the profit benefit of the system? What measurements and processes do you need in place to continue to do the right thing? What measurements and rewards do you need to eliminate? Until you apply this perspective of the Theory of Constraints, it will not be very valuable to you. After you have applied it 30-40 times, it will become a habit that will drive you and your company's success to unbelievable heights!

Optimize the system . . . always!

Overview

The subtitle of this book is "Sifting information out of the data ocean." The point that the author tries to make throughout this book is that we have vast quantities of data and we have ever-expanding systems to organize and file that data, but data is not information. The first part of the book covers the difference between data and information and how data and information relate to the decision-making process. Chapter 14 particularly goes into a summary of the difference between data and information.

The author then covers the structure of an information system and scheduling in the second and third parts of the book. The point of the first part is that without understanding the difference between data and information the goals of an information system and good scheduling are difficult or even impossible to achieve.

Part One - Formalizing the Decision Process

As noted above, this part does spend a fair amount of time explaining the difference between data and information. However, more is involved in decision-making beyond this distinction. The author also spends time in explaining how faulty paradigms can lead to poor decisions (which can also be caused by the difference between data and information). The author builds upon the concepts of data, information and decision-making throughout the early chapters of part one, leading up to the summaries in chapters 13 through 16. In fact, if you feel you understand the author's points, read chapters 13 through 16 and go back to earlier chapters as necessary to fill in any gaps.

Part Two - The Architecture of an Information System

While the title of this part of the book infers it is about information system, it is truly about the requirements of the software that should be used to make decisions, which includes scheduling decisions covered in part three.

Note that the principal value of this part is when you are evaluating software to perform "what-if" scenarios or the kinds of scheduling that the author advocates in this book and in his subsequent books. If you are not evaluating that type of software, or running into software problems, then this portion of the book will be less valuable than the other portions.

One interesting anachronism: at the time this book was written, computer hardware was a significant limitation. At this point I think that computer speed and power are such that the limitation is more the design of the software than the hardware. I believe that the author would likely agree with that statement today. The author spends some time focusing on the limitations of hardware and how those limitations affect the ability to run various "what-if" scenarios, since "what-if" can take a significant number of computations. With current desktop computers able to achieve 3 GHz clock speeds (note that clock speeds are numbers which have historically been outdated as fast as you can write it), in comparison to the 100 MHz clock speed of high-end computers at the time this book was written, I think that today the hardware issue is much reduced and limitations to accomplishing the author's intent are principally software-related.

Part Three - Scheduling

Part three is the real focus of this book for people involved in project management. However, the background provided by parts one and two are critical to understanding part three. If you understand the points presented by the author in parts one and two, you can jump right into part three and fill in as needed by reviewing parts one and two.

This part of the book presents several interesting techniques and points involved in scheduling and contingency planning. I would recommend reading this part of the book regardless of the other two parts if you are involved in project management and scheduling. A training class on the techniques presented would be of value to all project managers regardless of whether they manage Operations or Engineering projects.

I will not delve into any of the techniques presented. Suffice it to say that the author deals with issues such as poor or inaccurate data, system constraints and conflicts, and how to apply the theory of constraints to the whole process.

Summary

This book is very difficult to read in places. The concepts are very factually presented, and sometimes the detailed explanation is worded in a difficult-to-read fashion. I found myself re-reading entire chapters sometimes because I felt I missed the point.

After reading this book, I realized that Goldratt had written his other books (The Goal, It's Not Luck, etc.) to explain by example, and in a method that is much easier to read, the techniques he describes in this book. Certainly you can gain a significant portion of the knowledge provided in his other books by reading this book, but you will find the experience much less enjoyable.

I strongly recommend this book to project managers and to senior managers. The techniques described in this book would be particularly valuable for project and task management.

Good luck!

This book separates those readers who get TOC at a deep level from those who don't. It's not easy reading because it makes you think -- hard at times. But if you stick with it and really comprehend it, the last section is just as valuable as the first two.

This book gives you the best guidelines to the planning and scheduling world. It is easy readable, but be careful. The theory looks easy, but it isn't. Read again and again, and the value of the book increases.

Specially the last section is dynamite.

Goldratt plunges directly to the heart of the matter. Decision makers need information that will help them understand the likely results following from their choices. Most managerial accounting systems offer (at best) a glance at where an organization has been. Beginning with understanding the questions decision makers must answer to make effective decisions, Goldratt moves to how one might go about building an INFORMATION (NOT data) system which can offer up the answers to those questions.

Unfortunately, the valuable result will be heavy going for many readers. Particularly, the more narrowly one has specialized, the less likely it is that one will have the breadth of understanding needed to grasp the whole without help from one's associates. Team reading with an IT person, an accounting person, a manufacturing person, and an executive in the team should add value for all readers and their organization.

I'm an IT guy. I'm a huge fan of the theory of constraints (TOC) series by Goldratt. Then why do I give this book only three stars?

When I picked up the book I was happy to go and read it. After reading The Critical Chain I was somewhat disappointed, but this new book was all about my thing... IT.

The book reads the same as the other ones in the series, but it does not cover the excitement you had when reading them. Maybe as an IT guy I expected this book to be of great help and learn me some new stuff, but it basically states what every automation professional should preach: IT gives you the tools that make processes more efficient and profitable.

There, I just summarized the book for you. Still not convinced and an addict of the series? Then grab yourself a copy.

I am a huge fan of Goldratt and have got good results applying his ideas. This book is valuable, but only to those who have ready the more accessible books and thought about the content for quite a while. Definitely not an entry level Theory of Constraints primer.

In part that is because of the writing style, which is full of CAPITALISED TERMS which make the text HARD to read.

This is one of the best books on business administration I've ever read. OK, reading the final chapters related to information systems might be somewhat boring, but Part I alone is worth the highest praise. Why? Because it tears apart the obsolet Cost Accounting paradigms and other Jurassic sacred cows of the traditional administration that still nowadays, in the vast majority of the companies, lead business leaders to wrong decisions, with severe damage to the financial performance of companies and even countries! For example, if you read this book with an open mind you will learn that product cost is nothing more than an "accounting phantom" that haunts our daily routine and prevents us from seeing the whole picture and reaching to the best decisions for the company's objective. Moreover, Goldratt's system of Throughput Accounting is so much simpler that you'll be amazed about why we needed a physicist from Israel to teach us the obvious, common-sense thinking. The answer here is that common-sense is the least common of all resources, and learning to see the obvious simplicity in the middle of so much complexity created by ourselves is not obvious at all. Read, or better, study the book, and be prepared for mental challenges!

The Haystack Syndrome provides more detail than other books by Dr. Goldratt, especially in the area of optimizing the constraint through an example the reader is to work through, as well as information on identification of the constraints. Unfortunately this book is one of Dr. Goldratt's harder books to read and understand, even with a moderate understanding of T.O.C.

I would recommend the Haystack Syndrome for anyone already familiar with T.O.C., who is looking for a deeper understanding of the thinking process. For those who are just starting out, I would suggest reading some of Dr. Goldratt's novels first.