highlights
13 highlights saved, filed under productivity.
- 01
This book explains why a focus on cost minimization is harmful to both the profitability and the growth of businesses. It then describes how you can (and why you should) shift your focus to the maximization of speed.
- 02
If unnecessary work is being done in your organization, you should eliminate it; however, if it’s necessary, it should probably be done faster.
- 03
Taiichi Ohno, the father of the Toyota Production System, once said: “It was not enough to chase out the cost accountants from the plants. The problem was to chase cost accounting from my people’s minds”.
- 04
In simple terms, profit is cash that is released by a business that can be used by the owners of that business for other things.
- 05
If we can identify the resource that limits the rate at which contribution margin is generated, then we can use the productivity of this resource as a proxy for the profitability of the organization.
- 06
The reason the Constraint location is unpredictable in most organizations is that organizations are managed with a view to minimizing cost rather than maximizing speed. The relentless minimization of cost within an organization is beneficial up to a point, after which it causes the organization to become chaotic, meaning that it causes the Constraint to move unpredictably from resource to resource.
- 07
If an organization is managed with a view to maximizing speed, it will never be allowed to become chaotic—meaning that the Constraint will not move unpredictably from resource to resource.
- 08
Operating costs are the cost of our organization’s capacity: the capacity to do work and, consequently, to generate Throughput (either directly or indirectly).
- 09
An idle machine (or person) is adding value if they are preventing the Constraint from becoming idle.
- 10
The Throughput value chain consists of the sequence of activities required to convert a customer’s order into money in the bank. (The various departments that perform these activities are typically members of the operations group.) The growth value chain consists of the activities required to increase the rate at which customer orders are received. (The departments that contribute to growth include sales, new product development, quality, and acquisitions.)
- 11
Eli Goldratt would often say, “Tell me how you’ll measure me, and I’ll tell you how I’ll behave.”
- 12
The most effective key performance indicators (KPIs) are compound measurements that, under normal circumstances, make additional measurements redundant.
- 13
If you want to outgrow your competitors, it’s critical that you reintroduce the time dimension to decision-making throughout your organization.