The tocleaders YahooGroup has had an interesting (if lengthy) thread on a sticky problem in business: how can it be that a company with hard-working people ends up losing money?
Traditionally, we are led to believe that a busy worker is an "effective" worker. The thought process goes that if everyone is working, then the company must be doing well. And if I can make everyone do more / work harder, then the company will do even better. This thinking has been embedded in our psyche long before Frederick Taylor devised "scientific management."
The discussion on the mailing list helped me see something else. It is not only "management" who demand that people work smarter, it is the workers themselves. Some of this is probably an endless loop of "idle = fired, therefore I must stay busy." However, in the days when the workers were craftsmen, they were creating the final, salable product. That meant when they weren't working, they weren't making goods and couldn't make money. As companies got larger and larger, and the work people did became more removed from the end product, it became harder to see the connection between an individual's contribution and the money making enterprise. Both managers and the individual workers were left with the "work harder" ethos, even though it is missing a helpful connection to the goal of the company.
Theory of Constraints gives direction to both management and workers by showing how to make better decisions and how to measure properly. And the same measures apply to deciding whether to buy new equipment, whether to buy or build, or whether to offer a new service.