Sunday, November 12, 2006

Success Secrets: Focusing on Constraints

Steves Goal has an important post entitled Geometric Change. In it he suggests that personal progress can be drastically accelerated by concentrating on and analyzing the various factors holding us back. He gives an example of designing a faster car. Multiple factors: weight, shape, engine, tires, etc would all contribute to improving the speed of the car. His recommendation: make lists of your limiting factors and tackle a few at a time. Improving multiple factors, instead of just one, would make a much geater change in the car's speed.

This concept is related to the Theory of Constraints. One of the pioneers of the Theory of Constraints is Eliyahu Goldratt whose book, The Goal is a highly readable classic. Goldratt suggests that, if we are only as successful as our weakest qualities, it may make sense to concentrate our efforts on that area: face it, break it down, and work on it.

Investors know this well. In a groundbreaking book, Invest Like The Best , James O'Shaughnessy analyzed the factors that made certain mutual funds successful and then built up a list of stocks based on those factors. He found that certain numerical factors mechanically generated stock picks that produced similar results to those of the great mutual funds. The lesson: again, find the factors and you find the route to improve the outcome.

Brain Tracy has also frequently focused on Critical Success Factors: the three to five things at are the core of our jobs, that , when scrutinized, can yield the most output when optimized. A good example is his audio program Thinking Big .

Success and failure are not a “lump”. They can be broken down, accelerated, fixed, and focused on. The more of these factors we can optimize, the better our outputs will be.

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