My first post discussed Eli Goldratt’s first business novel, “The Goal” through a Cynefin lens. This post will do the same for his latest, “Isn’t It Obvious?” (written with co-authors Ilan Eshkoli and Joe Brownleer).
Some things about the two books are similar–they are both Theory of Constraints based business novels about managers facing challenges–but there are differences. The main character in “Isn’t It Obvious?” is Paul, the manager of a retail store, one of many in a regional chain of stores located in shopping malls. His story maps to the Cynefin Model even better than Alex’s story in “The Goal” and Paul doesn’t have Jonah, the Complex Domain Master, to help him. He and his staff solve their own problems in classic sensemaking fashion.
Paul’s store enters into the Chaos Domain at the beginning of the book when a major water pipe bursts in the ceiling above their basement store room. Acting quickly to restore order, Paul orders everything to be brought upstairs into the store, filling the shelves and aisles. A second round of Chaos strikes later that day as a truck from the chain’s warehouse shows up to deliver even more stock to the already overcrowded store.
This is the point where pressure and the willingness to think differently give Paul the chance to explore novel practice. A call to the warehouse manager results in a “favor” in which the warehouse manager agrees to store Paul’s stock in the warehouse until he can regain use of his store room. The warehouse manager points out that they do frequent deliveries anyway, so it’ll be easy to get the store any stock they need with a day or two notice.
Paul heaves a sigh of relief. Quick thinking and a bit of crisis management have got them back up and running again and the store reopens. It’s not exactly business as usual and Paul is amazed to hear that it’ll be weeks before the damage can be repaired and he can move back into his store room. Over the next week or so the store staff become used to their new remote storage process and conduct a series of safe-fail experiments as they hone the process.
Now, at this point, even as Paul is still frantically trying to hurry the contractors to finish the repairs, an odd thing happens–the monthly profit for Paul’s store jumps. It’s typically been somewhat below average and suddenly his store is showing the highest profit in the chain.
But why? Paul assumes it’s some sort of accounting correction and assumes it’ll be corrected later and goes back to hassling the contractor. Slowly, however, something dawns on him–their new approach to keeping the stock in the warehouse and doing daily replenishment of the previous day’s sales means that they have minimal cash tied up in slow moving merchandise and they have rapid replenishment of fast moving merchandise. Decreased stockouts on popular items mean higher sales and higher profits at the same time that more cash is freed up from excess inventory.
Basically, spurred on by a crisis and then through a series of experiments and a bit of analysis, Paul and his staff have created the Theory of Constraints supply chain distribution solution. They’ve gone from the Chaos Domain to the Complex and then the Complicated.
But that’s not the end of the book. Paul’s realization as to why his store is being so successful leads him to the further realization that if the entire chain moved to a similar type of rapid replenishment approach they could aggregate the variation in demand from individual stores, carry even less stock in the warehouse, while being able to almost eliminate stock outs of popular items. The results would be a significant increase in profits for the entire chain. But now Paul faces an even bigger challenge–he’s just one store manager, he has no authority over his peer managers. Many of them have been far more successful for far longer that he has and they’re not buying his new ideas. After all, his new “miracle” approach is fundamentally unproven, has only been used for a few months, and is simply “Not the way we do business around here.”
There are a number of key messages in the book. The one that may be the most interesting to readers of this site may be that crises can provide us with opportunities to explore novel, often breakthrough, solutions. If we do get such an opportunity thrust upon us we should not rush to go back to our normal patterns. Instead, we should look carefully at the advantages that our emergency responses provide and look for ways to make them the basis for new patterns of behavior. Chaos can provide the seeds for future success.
One of the other points to the book is that retrospective coherence is alive and well. Yes, in hindsight, the solution looks glaringly obvious, but no one saw it in advance. It took a dive into Chaos to shake people out of their familiar patterns and recognize the potential. The greatest danger is the lure of the status quo. Or, as Winston Churchill said, “Man will occasionally stumble over the truth, but most times he will pick himself up and carry on.”