“What I’m telling you is, productivity is meaningless unless you know what your goal is”…”And, by the way, there is only one goal, no matter what the company.”
High Level Thoughts
I wish I had read this book earlier in my life. It completely changed the way I looked at problems and gave a powerful process for conducting root cause analysis for the process of continuous improvement. A must read for product managers (though not limited to it!).
The Book in 3 Sentences
- If the goal of any business is to make money, then any action that moves you towards making money is productive while any action that takes way from making money can be defined as non-productive.
- A business’s ability to make money is limited by certain constraints or bottlenecks, which can be identified and managed to improve overall productivity.
- The Theory of Constraints: identify the constraints, exploit the constraint, subordinate everything else to the constraint, elevate the constraint, prevent inertia from becoming the constraint.
Insight for Product Managers
- The book provides a easy to understand perspective on the production process, which can help product managers think beyond just the product and focus on the entire process, improving overall performance and achieving the goal of making money for the business.
- The Theory of Constraints can be used to identify and manage the constraints within the product management process, helping you to know the right processes to break to achieve your goal.
- Understanding the flow of money through a business is crucial for product managers, and the concept of Throughput Accounting helps product managers understand how to track and manage financial performance in relation to the goal of the organization.
Notes, Highlights, Quotes
“A major constraint here in your system is this machine,” says Jonah. “When you make a non-bottleneck do more work than this machine, you are not increasing productivity. On the contrary, you are doing exactly the opposite. You are creating excess inventory, which is against the goal.”
“A plant in which everyone is working all the time is very inefficient.”
“They’re measurements which express the goal of making money perfectly well, but which also permit you to develop operational rules for running your plant,” he says. “There are three of them. Their names are throughput, inventory and operational expense.”
“Throughput,” he says, “is the rate at which the system generates money through sales.”
“What I’m telling you is, productivity is meaningless unless you know what your goal is”
Every action that brings a company closer to its goal is productive. Every action that does not bring a company closer to its goal is not productive.