It’s Not Luck

1. “The objective of a buyer is to be in line with his corporate directives. In order to be in line with his corporate directives, the buyer must try to get the best financial deal from the vendors… On the other hand, in order to be in line with his corporate directives, the buyer must strive to reduce inventories… that means the buyer must order in small quantities more frequently.”

2. “We ignore product margin and it works. We have turned around all three companies from bottomless pits into break-even. It worked—but not enough. Every time we find a segmented market, we are happy to sell our excess capacity for prices lower than our average… To save our companies we must sell all our capacity at higher than average prices, not lower.”

3. “Actually, you bother to write a cloud only if you intend to use it. If after stating the problem precisely, after writing the cloud, no attempt to solve the problem is made, then I must agree that it is impractical. The real value of the cloud is that it provides a straightforward way to solve the problem, to evaporate the conflict.”

4. “In the past we used to focus on efficiency. Now we know that improving the constraint is what improves the system. If we improve where it doesn’t count, we just waste effort. That’s the beauty of TOC—it focuses where it matters.”

5. “Satisfying customers is not enough. If you satisfy all your customers but still lose money or don’t grow, you go out of business. Strategy must align customer satisfaction with profitability and growth.”

6. “Alex, do you know how many top execs forget that the goal of their company is to make money? They concentrate on production, on costs, on strategies, and so often they forget that those are only the means—not the goal. Take UniCo, for example. Do you know how long the top executives have behaved as if the goal of UniCo is to provide them with fat jobs? Sometimes I get the impression that top executives forget that it’s not their company; it is the shareholders’ company.”

1. Problems Have Logical Cause-and-Effect Relationships

Business problems aren't random events but result from specific causes that can be identified and addressed. Using logical thinking tools helps you trace problems to their root causes rather than treating symptoms, leading to more effective and lasting solutions.

2. Win-Win Solutions Usually Exist

Many conflicts seem like zero-sum games but actually offer win-win possibilities when you dig deeper into underlying needs and constraints. Instead of accepting trade-offs, challenge assumptions and look for creative solutions that satisfy all parties' core requirements.

3. Assumptions Must Be Surfaced and Tested

Hidden assumptions drive most business decisions, but they're rarely examined or validated. Systematically identifying and testing your assumptions about customers, markets, competitors, and internal capabilities reveals opportunities and prevents costly mistakes.

4. Focus on Leverage Points for Maximum Impact

Not all problems are worth solving equally. Identify constraints and leverage points where small changes create large improvements. The Theory of Constraints teaches that systems are only as strong as their weakest link, so focus effort where it will have the biggest impact.

5. Systematic Thinking Beats Intuition

While intuition has value, systematic thinking processes produce better results for complex business problems. Tools like logic trees, assumption mapping, and constraint analysis help you think more clearly and avoid cognitive biases that lead to poor decisions.