It's Not Luck - Eliyahu M. Goldratt [106]
“Easy to say,” Granby sighs. “The problem is that so often there are conflicts between them.”
“No, there aren’t,” I say. “There are modes of operations that apparently conflict with one of them. These same modes in the long run conflict with all of them.”
“What you are telling us,” Jim is trying hard to digest, “is that we have to realize that there is no conflict between them. That they don’t contradict but in fact supplement each other.”
“Precisely.”
“Alex is probably right,” Brandon joins me. “As people who believe in making money as the goal we are also awakened to the fact that the other two entities are absolutely necessary conditions for achieving our goal.”
“The same awakening is happening in the other camps,” I add. “Show me a union leader who believes that there is job security in a company that constantly loses money. Show me a quality zealot who thinks that a company can provide good service to the market while constantly losing money.”
“So you claim that these three entities are actually important to the same degree?” Jim is on to it. “If that’s the case, how come everyone is talking about making money as the goal?”
“Maybe in Wall Street circles, everyone is,” I can’t resist the opportunity. “But you have a point. Making money is much more tangible than the other two. It’s the only one that can be measured.”
“I knew that we were right,” Brandon smiles.
“Don’t fall into the trap that the first entity is more important,” I warn him. “Making money can be measured just because of a coincidence. You see, somewhere in prehistory a genius invented a way to compare wheat to goats. He or she invented the abstract unit of money, a currency. No one yet has invented a unit of measure for security or satisfaction.”
“I’m three-point-seven X secure, and Jim is fourteen and a half Y frustrated.” Brandon demonstrates my point.
“I think that we’d better order dinner,” Jim says. “This conversation is deteriorating.
While we wait for our appetizers, Jim presses on. “Alex, this is all very interesting, but you still haven’t told us a thing either about strategy or how you suggest investing the money.”
“I don’t agree,” I say. “I think that we have actually defined what makes a good or bad strategy.”
“Maybe we did, but if so, it escaped me.”
“Do you agree that strategy is the direction we take to reach our goal?”
“Naturally,” he agrees.
“Do you also agree that if we violate any of the three entities that we outlined before, we are bound not to reach our goal? Remember, whichever of the three you choose as a goal, we agreed that the other two are necessary conditions to achieving it.”
“So a good strategy must not clash with any of them,” Brandon concludes. “How are you going to find a strategy that you know will not violate any of the three entities? And even if you find one, how do you know that it will work?”
“First of all, by not choosing a strategy that we know is bad. As you just said, any strategy that clashes with one of the three entities should be discarded. That trims out half of the strategies I’ve ever come across.”
“More than half,” Granby corrects me.
“You’re probably right,” I agree. “They are, by definition, not sensible strategies; at best they are panic-driven.” Like the original decision to sell the diversified group, I almost add. “So if the only strategies that I can come up with clash with one of the three entities, I must keep on looking.”
“Yes, but how?” Jim continues to urge me on.
I refuse to be urged. “I haven’t finished telling you what I think should not be done. We shouldn’t ever build a strategy based on a market forecast.”
“That trims away all the remaining strategies that I’ve ever seen,” Granby laughs. “But are you saying that we shouldn’t start with a forecast of the market? To me that seems like the most natural point to start.”
“No, because trying to