Metrics are a good thing.

But, as the old adage goes, “not everything that can be measured matters and not everything that matters can be measured.”

For today, we’ll focus on the first part of the statement.

In The Goal: A Process of Ongoing Improvement, Eli Goldratt uses a parable based in a manufacturing plant to demonstrate that many of the systems, processes, and metrics that organizations use to “measure” productivity are actually counter-productive.

In the factory model, there are only three things that matter.

1. Throughput-how much product you put out to satisfy market demand in a timely basis
2. Inventory-the money invested in the components that will lead to the final product
3. Operating Expenses-what is spent on the system to create the Throughput

While the big ideas of the book could probably have been expressed in one page, I think the parable does a great job because it helps you really learn the concepts.

And the concepts have broad applicability to all businesses, not just manufacturing.

It affects service businesses as well. We’re just not manufacturing a physical product, but the “Theory of Constraints” which sits at the center of this book applies just as well.

The book cover claims that over 3 million copies have been sold and I read the “20th anniversary” edition.

My client, Luis Derechin of JackBe, had suggested that I read it…and I’m glad I did.

At the very least, it’ll give you some additional framework in how you think about your life and your business, particularly, since some of the convention is turned on its head.

And, most importantly, it force you to focus on the “Goal” of your business.

To find out what that is…read the book :-)