This book came recommended by none other than Amazon founder Jeff Bezos, and he’s right: it’s one of the better business books I’ve ever read. Written in a breezy, dialog style, it reads as much like a novel as a how-to book.
The “goal” in the title refers to the fundamental purpose of any business: Turn a net profit, with high ROI, while maintaining cash flow. How you do that: reduce operational expense and reduce inventory while simultaneously increasing throughput.
These principles are generalizable to any situation where you want to be more efficient, and the author suggests a “theory of constraints” based on a set of “five focusing steps” to help you do this:
- Identify the system’s constraints (aka bottlenecks) that prevent the organization from obtaining more of the goal in a unit of time.
- Decide how to exploit the constraints to get more out of them.
- Subordinate everything, realign the entire organization as necessary to support the decision above.
- Elevate the system constraints, making any other major decisions necessary to increase the capacity at the constraint (bottleneck)
- If in these steps, a constraint is broken, go back to step 1. Never allow a constraint to continue solely due to inertia.
Like most good theories, these ideas seem obvious – nearly trivial – when you finally notice them. I suspect the applications are more obvious in well-established systems than in situations where you’re building something new. But even then, it’s healthy advice to be aware of bottlenecks to manage your system as efficiently as possible
I can see how they apply to the field I know best (software development), and I’m surprised I haven’t run into this book before.