When landing a high performance aircraft aboard an aircraft carrier there are Three Critical Areas of importance to the safe and successful landing or “trap.”
- “Meatball” which provided the visual glideslope or descent path reference via a lighting system on the left hand side of the deck. Note the carrier picture to the right and the green and yellow lights on the left hand side of the landing area
- “Line Up” which ensures that you are landing on centerline. (See the faded white and yellow centerline stripe)
- “Angle of Attack” or AOA which tells you that your aircraft is in the correct attitude and proper airspeed for landing. (This was a gauge mounted on top of the instrument panel in the pilots field of view)
This landing event is like a high-speed ballet with all three areas working in unison, where a change in one area results in a correction in another in order to bring it back to nominal. For instance, if my approach is “high” then I will need to reduce power while maintaining my AOA. If my line-up is left/right of centerline, this will require a turn, which decreases lift requiring a power adjustment to stay on the glideslope. All three areas work together.
This is also true in business. If we start with the premise that the purpose of a business is to make money, then all business metrics can also be put into Three Critical Areas and those are:
- “Throughput” or the rate at which the organization generates money through sales.
- “Inventory” which includes the dollar value of finished goods, work in process (WIP) and raw material.
- “Cost” which is the money spent to produce the Throughput.
The key here is that in order to make money, we need to maximize ‘Throughput’ while reducing ‘Inventory’ and ‘Cost.’ Just like the carrier example, these three areas work together.
For instance, if the business doesn’t have enough ‘Inventory’ to meet the customer orders, then ‘Throughput’ falls short. Too much rework in the process will result in increased ‘Costs.’ Too much ‘Inventory’ equates to money tied up on items just sitting and not contributing to ‘Throughput’. Just like the carrier landing scenario, they all work together in unison.
In My View From the Cockpit, for a business to function efficiently and be in position to “Accelerate Performance” it’s important to understand the inter-relationships of Throughput, Inventory and Costs.
For more on these Three Critical Areas of performance, I highly recommend re-reading “The Goal” written by Eli Goldratt.