Productivity is defined as bringing you closer to your goal. Every action that brings you closer to your goal is productive. Every action that does not bring you closer is not productive, even if it seems so.
The Goal of every business is to make money. Likewise, activities that do not bring you closer to making money are not productive.
Organizations can be measured by 3 metrics: Throughput, Inventory, and Operational Expense.
Ideally, your activities improve all three at once.
**The bottleneck of the system determines the throughput of the entire...
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The Goal is a classic management text, and on Jeff Bezos’s short-list of books recommended to new managers.
The Goal is written in the form of an allegory, where a manufacturing plant manager has to reduce a large backlog of orders and improve factory throughput. Its management lessons are interwoven with the manager’s epiphanies. Because we felt the lessons were more important than the narrative,...
Productivity is bringing a company closer to its goal.
Defining the Goal is critical. The Goal of every business is to make money. Without money, the company is dead.
If you improve efficiency at one step without increasing overall output, you are not being more productive. You might even be causing an excess inventory and increasing cost per good sold.
Make sure you’re focusing on the right output and not just wasting time.
What is your big Goal? What is the ultimate purpose of your work?
In manufacturing, a balanced plant tries to match average capacity of every resource exactly with market demand. Any resource beyond the average rate is seen as extraneous, so it is either put to use or eliminated. This is the traditional mode of thinking at the protagonist’s company in The Goal.
However, two interconnected concepts make the balanced plant backfire, thus decreasing throughput, increasing inventory, and increasing carrying costs:
Fluctuations happen regularly at each part in the chain. However, **each downstream part can only catch up to the extent that the...
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The critical concept in the book is identifying the bottleneck, or the key constraint that holds back throughput. While this sounds like common sense, it can be hard to objectively identify your own bottlenecks when you’re in the thick of work.
Relationships between a bottleneck (X) and non-bottleneck (Y) can be summarized in the following 4 diagrams:
Y → X
X → Y
X → Assembly ← Y
X → Product A | Y → Product B
Find the bottleneck that’s decreasing your total throughput.
In what step do you have the greatest inventory piling up in front? Where is your largest backlog?
Now that we know the bottleneck is hugely significant, we’ll learn how to improve the bottleneck’s capacity.
In The Goal, Goldratt describes the 5-step process for continuous improvement:
We’ve discussed identification in the previous chapter. We’ll now dive more deeply into improvement.
The protagonist of The Goal book undergoes multiple iterations of increasing capacity as his bottleneck to increase overall throughput. Without detailing every struggle, in this book summary we’ll cover common causes of reduced capacity at bottlenecks, and fixes to increase capacity.
(Shortform note: This is a good point to consider your own work or life in this context, and to construct effective ways to relieve your personal...
Try to increase capacity at your bottleneck. This might not be a machine in an assembly line, but also your knowledge work or personal life.
How could you improve work at the bottleneck itself? (Remember: skip unnecessary steps; add supplements to increase capacity; increase time the bottleneck is active.)
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Once you identify the bottleneck and improve its capacity, you may find other problems arising that decrease throughput. In the narrative, the team goes through multiple iterations of solving problems, yielding the below principles.
In the story, the team identifies a robot as the bottleneck. They devise a system whereby all parts destined for the bottleneck are always worked on at highest priority at non-bottleneck steps. This increases throughput temporarily, until they discover that at final assembly, suddenly there are shortages in non-bottleneck parts while there is massive inventory upstream of the bottleneck. How could this be?
They discover that they were running non-bottlenecks at full-speed and cranking out bottleneck parts far in excess of what the bottleneck could process. In turn, the non-bottlenecks had insufficient capacity to produce their non-bottleneck parts.
To avoid this, you must synchronize the non-bottlenecks with the bottleneck, to prevent massive deviations. Goldratt proposed the Drum-Buffer-Rope method, as follows:
**The bottleneck dictates the pace of production...
Measurements like financial accounting should induce the organization to do what’s good for itself. But as you improve throughput, traditional accounting measures may make your situation look worse than it really is.
However, these are usually temporary adjustments. Remember, what really matters is the total throughput of the system - increase that, and you’ll be able to make more sales. Over time you’ll enjoy lower...
As an allegory, The Goal is explication of a philosophy with a fictional novel wrapper.
This has various effects beyond pure entertainment value. Portraying the protagonist’s struggle makes you empathize and absorb the teachings better. Unlikable characters stereotype critics of the philosophy (like Eddie, who doesn’t ever question the traditional way of doing things). Overcoming the struggle paints a vivid picture of how the strategy can work.
However, at times the dialogue and epiphanies in The Goal book can feel forced, and the conversations don’t sound natural.
Thus, we consider the plot to be a minor portion of the value of the book. Here’s the summary, for context:
Alex Rogo is a beleaguered plant manager in a small manufacturing town. They’re in a bad situation: large backlog of orders, all orders are late unless expedited.
Company policies are to blame. The division’s goal has been to increase cost efficiencies, so they focus on local efficiencies of production (like the fallacy, “we have to keep the robots running at all times or else the cost per part will go up and we’ll never make back the cost.”). Large inventories accumulate, and they...