Summary in 100 words or less
Productivity is the act of bringing a company closer to its goal. Any action that brings us closer to the goal is productive, and any action that doesn't is not productive. Since every system and organization is a chain of processes, it's only as strong as its weakest link. The capacity of a system is equal to the capacity of its bottlenecks. To improve any system or organization, identify its bottlenecks, decide how to exploit them, and subordinate everything else to the above decision.
Commentary
My Highlights
Science is simply the method we use to try and postulate a minimum set of assumptions that can explain, through a straightforward logical derivation, the existence of many phenomena of nature.
The only way we can learn is through our deductive process. Presenting us with final conclusions is not a way that we learn. At best it is a way that we are trained.
Do not believe in absolute truths. I fear such beliefs because they block the search for better understanding. Whenever we think we have final answers, progress, science, and better understanding ceases.
If we can better understand our world and the principles that govern it, I suspect all our lives will be better.
Productivity is the act of bringing a company closer to its goal. 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.
If the goal is to make money, then, an action that moves us toward making money is productive. And an action that takes away from making money is non-productive.
There is more than one way to express the goal. The goal stays the same, but we can state it in different ways, ways which mean the same thing as those two words, ‘making money.’
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. There are three of them. Their names are throughput, inventory and operational expense.
Throughput is the money coming in. Inventory is the money currently inside the system. And operational expense is the money we have to pay out to make throughput happen. One measurement for the incoming money, one for the money still stuck inside, and one for the money going out.
The goal is not to improve one measurement in isolation. The goal is to reduce operational expense and reduce inventory while simultaneously increasing throughput.
A bottleneck is any resource whose capacity is equal to or less than the demand placed upon it. And a non-bottleneck is any resource whose capacity is greater than the demand placed on it.
The capacity of the plant is equal to the capacity of its bottlenecks. Whatever the bottlenecks produce in an hour is the equivalent of what the plant produces in an hour. So an hour lost at a bottleneck is an hour lost for the entire system.
Activating a resource and utilizing a resource are not synonymous. “Utilizing” a resource means making use of the resource in a way that moves the system toward the goal. “Activating” a resource is like pressing the ON switch of a machine; it runs whether or not there is any benefit to be derived from the work it’s doing. So, really, activating a non-bottleneck to its maximum is an act of maximum stupidity.
If any organization was built for a purpose and any organization is composed of more than one person, then we must conclude that the purpose of the organization requires the synchronized efforts of more than one person.
If synchronized efforts are required and the contribution of one link is strongly dependent on the performance of the other links, we cannot ignore the fact that organizations are not just a pile of different links, they should be regarded as chains.
Since the strength of the chain is determined by the weakest link, then the first step to improve an organization must be to identify the weakest link.
