The Goal

Why I bought this book?

I purchased this book after asking my manager, Matt Weil, for any recommendations he had. Matt is a Engineer with an MBA from Northwestern. I admire his strategic and analytical outlook on business. It is very similar to the way I look at things. While we both pursued degrees in engineering initially, I think we have both admitted to ourselves we are not builders with a hammer and nail. However, we are very good with numbers and solving problems.

Matt responded to my question with this book which he read as an student during his MBA. I took his recommendation and ran with it.

Under the Neon

“What you have learned is that the capacity of the plant is equal to the capacity of its bottlenecks,”

“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.”

“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 this is the goal: To make money by increasing net profit, while simultaneously increasing return on investment, and simultaneously increasing cash flow.”

Key Takeaways for my life

I think the most important thing to takeaway from this book is the importance of stepping back and thinking outside the box while in a work environment. When you are in a workplace you can often get caught in a way of doing things instead of immediate skepticism. This is because if something works well at some point it is assumed it is the optimal way. Nobody looks for answers when they are making money. As a result this becomes the way. The answer is “this is what has always been done”. This book tells you to question that. Think about the philosophy of the problem you are solving with numbers and derivation. Breakdown the problem like a math problem.

It can seem crazy in a work environment that sometimes paying people to not work is the most profitable thing, but its true. This is contradictory to thought. Managers often think if they see people standing around it means they are burning dollars. When actually building inventory and making them work is burning more money. This is proven with calculation. It is only proven by stepping away from the problem, looking at the whole situation and questioning it.