There are so many voices telling us how to succeed, how to achieve success, how to scale, how to leverage our capital, how to produce more with less, how, how, how. But, what we lack far too often are the practical measurements to know when we have reached the how they recommended, or even more important, if the how we are seeking is the right how.

Eli Goldratt developed what we now know as Theory of Constraints, and in my life experience, it is the only SYSTEM that starts with a GOAL (the how that matters), then provides the tools that tell us how to Identify what we should focus our time, attention and resources on, and the measurements to know how we are doing at moving towards our GOAL. Theory of Constraints addresses the achilles heel of most other systems of Continuous Improvement (focusing time, attention and resources on the wrong things).

Theory of Constraints distinguishes between a Local Improvement and a Global Improvement. It’s possible that a local improvement can impact global throughput (if the item improved happens to be the Constraint), but more often than not, it will NOT impact global throughput, thus providing us with phantom improvements (local improvements that do not improve our global throughput). For example, to say an improvement allowed us to machine 25% more rectangles and squares (local improvement), but does not translate to more overall cabinetry delivered, installed, billed and paid for is a classic phantom improvement, and if the investment to make the local improvement was significant, we may actually make less money now and into the future as a direct result of our local improvement.

Once we know what to focus our time, attention and resources on, we also know what NOT to focus our time, attention and resources on, which just might be the most valuable business related wisdom we can gain. Having key measurements that tell us if we are moving closer or further from our Goal is PRICELESS!

Leave a Reply