Breed the best to the best
More of a saying than a theory, the concept of "breed the best to the best and hope for the best" has a lot of validity despite its simplicity.
Analysis have shown that the best (=winningest) racehorses generally make the best sires and that the best racemares make the best broodmares. (Not every good racehorse makes a good sire but very few average or poor racehorses make even average sires.) So generally speaking, using sires and broodmares with the best career results is a good idea.
While it is a good idea, it is by no means a foolproof method. Not every stallions is suited to every mare and there is also the question of cost. Mating the best colt in a crop to the best mare in the same crop is no guarantee for success. But if you have have to select between two otherwise suitable and comparable partners for a stallion or a broodmare, one is generally well-advised to pick the one with the best performances.