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Book Reviews: Necessary But Not Sufficient, by Eli Goldratt, Eli Schragenheim, and Carol Ptak

“Necessary But Not Sufficient” is the fourth in Goldratt’s series of “Theory of Constraints Business Novels”. As in the other books, Goldratt makes his points through the format of a novel - the reader learns what Goldratt is trying to teach through the discussions and experiences of the characters. As in all of these books, neither the characters nor the plot are well-developed enough for the book to stand on its own as a novel. However, the technique works, because the novel format is both more entertaining and more accessible than a standard business book. At its best, this format encourages the reader to put down the book for a minute, and try to think through to the logical conclusion of whatever problem the main character is currently facing.

Necessary But Not Sufficient focuses on the fortunes of a large ERP (Enterprise Resource Planning) software vendor. The company is doing well in its industry, growing 40% each year, but faces a series of difficulties. The company president and sales director are confronted with the approaching market saturation in their target industry (very large corporations), a saturation which will in turn prohibit future 40%/year growth, and eventually kill the company’s stock prices. The company’s technical guru and the head of their implementation arm are struggling with the ever-increasing complexity of the software, which is dramatically slowing the response to customer-reported bugs, and customer-requested enhancements. Even as they are dealing with these issues, the management team is confronted by the needs of a loyal customer who has been asked to demonstrate the bottom-line value of the ERP software by his board of directors.

They spend quite a bit of time on this last problem, and conclude that to realize bottom-line value, the technology in the software is necessary, but not sufficient. To provide everything that is needed to extract the full value from the system, the company must do things that software companies do not ordinarily do. In particular, they must identify the hidden assumptions in how people were doing their jobs prior to implementing the software, and find out which of those assumptions no longer holds true with the software in place. Re-configuring such rules is necessary to extract value from the new system. For example, if your ERP system enables you to run financial reports once a day, instead of once a month, but you still only run them once a month, because that’s the process that’s in place, you won’t achieve the benefit that you could be getting.

As they work with this client, the management team comes to realize that the bottom line value question can help solve their other problems, too. At this point, they discover the Theory of Constraints methodology, and begin expanding their ERP system to use TOC production, project management, distribution, and engineering modules. This evolves into a bit more of a sales pitch for Theory of Constraints and Drum-Buffer-Rope than we would have liked. Basically, everyone in the book who is introduced to TOC finds it “refreshing” or “perfect” or something to be “crazy” about, and it leads to tremendous improvements. While we have nothing against TOC as a philosophy - there are many good things about it - it made the book seem too much like a vehicle for selling TOC consulting. Despite this problem, the book is an engaging read, and offers considerable food for thought in regard to improving both software sales and manufacturing performance.

In summary, this book proposes that when you are trying to justify a software purchase, or justify a new feature in a software program, you should focus on the bottom-line value of the system. Traditional software benefits like “better visibility into operations” are not useful, unless they can be translated into dollars. When implementing a large-scale software system, it is necessary to modify operating rules to fully leverage the potential of the software. According to Goldratt, software vendors and the companies that implement their products will be successful if they follow this prescription.

If you would like to buy this book, just click on the following link to open a new window and go directly to Necessary But Not Sufficient on Amazon’s website. FabTime is an Amazon affiliate.