We need financial measurements for sure — but we don’t need them for their own sake. We need them for two different reasons. One is control; knowing … - Eliyahu M. Goldratt

Yet . . . why can’t we all just walk at the same pace as Ron and stay together? I’m watching the line when something up ahead catches my eye. I see Davey slow down for a few seconds. He’s adjusting his packstraps. In front of him, Ron continues onward, oblivious. A gap of ten . . . fifteen . . . twenty feet opens up. Which means the entire line has grown by 20 feet. That’s when I begin to understand what’s happening. Ron is setting the pace. Every time someone moves slower than Ron, the line lengthens. It wouldn’t even have to be as obvious as when Dave slowed down. If one of the boys takes a step that’s half an inch shorter than the one Ron took, the length of the whole line could be affected. But what happens when someone moves faster than Ron? Aren’t the longer or faster steps supposed to make up for the spreading? Don’t the differences average out? Suppose I walk faster. Can I shorten the length of the line? Well, between me and the kid ahead of me is a gap of about five feet. If he continues walking at the same rate, and if I speed up, I can reduce the gap — and maybe reduce the total length of the column, depending upon what’s happening up ahead. But I can only do that until I’m bumping the kid’s rucksack (and if I did that he’d sure as hell tell his mother). So I have to slow down to his rate. Once I’ve closed the gap between us, I can’t go any faster than the rate at which the kid in front of me is going. And he ultimately can’t go any faster than the kid in front of him. And so on up the line to Ron. Which means that, except for Ron, each of our speeds depends upon the speeds of those in front of us in the line.

Actually, the flow should be a tiny bit less than the demand.

I write down the three measurements which Lou and I agreed are central to knowing if the company is making money: net profit, ROI and cash flow.