The Goal

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Then I think about the "soft" things in business, things like knowledge-knowledge from consultants, knowledge gained from our own research and development. I throw it out to them to see how they think those things should be classified.

Money for knowledge has us stumped for a while. Then we decide it depends, quite simply, upon what the knowledge is used for. If it's knowledge, say, which gives us a new manufacturing process, something that helps turn inventory into throughput, then the knowledge is operational expense. If we intend to sell the knowledge, as in the case of a patent or a technology license, then it's inventory. But if the knowledge pertains to a product which UniCo itself will build, it's like a machine-an investment to make money which will depreciate in value as time goes on. And, again, the investment that can be sold is inventory; the de- preciation is operational expense.

"I got one for you," says Bob. "Here's one that doesn't fit: Granby's chauffeur."

"What?"

"You know, the old boy in the black suit who drives J. Bart Granby's limo for him," says Bob.

"He's operational expense," says Lou.

"Like hell he is! You tell me how Granby's chauffeur turns inventory into throughput," says Bob, and looks around as if he's really got us on this one. "I bet his chauffeur doesn't even know that inventory and throughput exist."

"Unfortunately, neither do some of our secretaries," says Stacey.

I say, "You don't have to have your hands on the product in order to turn inventory into throughput. Every day, Bob, you're out there helping to turn inventory into throughput. But to the people on the floor, it probably looks like all you do is walk around and make life complicated for everyone."

"Yeah, no appreciation from nobody," Bob pouts, "but you still haven't told me how the chauffeur fits in."

"Well, maybe the chauffeur helps Granby have more time to think and deal with customers, etc., while he's commuting here and there," I suggest.

"Bob, why don't you ask Mr. Granby next time you two have lunch," says Stacey.

"That's not as funny as you think," I say. "I just heard this