“You are right,” Kristen relented. “I really am too busy. My priorities are focused on short term fires. I feel like all I do, all day long, gets consumed with management issues and keeping people motivated. I don’t have time to work on basic stuff like writing job descriptions. When I look at doing that, it is so far down my urgency scale, I almost think writing a job description is silly.”

“What would be the payoff?” I asked.

“The payoff? I can’t even think about the payoff. I could write a job description and then I would have a job description, but I would be further behind dealing with all the crap,” she explained.

“Kristen, you are not unlike most managers,” I nodded. “If you could truly focus on getting the right people, most of the crap you deal with would largely go away.

“Stop working on crap and start working on systems. Your life will only improve when you start working on systems.” -TF

“This has nothing to do with bonuses,” Dean protested.

“As I look at these goals, each attached to a bonus, every team has an internal goal, based on some efficiency. The highest efficiency for each team can best be achieved by ignoring the goals of the other teams.

“Here is the central question,” I continued. “Do you think the company can be most effective by making each of its internal departments most efficient?”

“Well, yeah,” Dean replied.

“It seems counterintuitive, but for the company to be most effective, some of the departments may have to be less efficient.”

Dean looked puzzled.

“Look, Dean, of your four departments, which is the slowest, the department that everyone has to wait for?”

Dean looked at a chart with his four teams. Red, blue, green and orange. “It’s the green team. They’re the bottleneck. We would put more resources in there, but they are too expensive. We just do the best we can.”

“And when everyone is focused on their own stuff and not paying attention to the green team, what happens?”

“Well, the blue team feeds them work. But the blue team works most efficiently in batches, so they feed zero work for two days, then dump a bunch of work on the green team at the same time. The green team can only work so fast, so everything stacks up there and everything goes late.”

“So, why doesn’t the blue team work in smaller batches and feed work sooner?” I asked.

“Well, if the blue team works in smaller batches, they can’t produce enough to make their goal. And their goal is tied to their bonus.”

“So, you have a bonus problem.” -TF

This continues our conversation with Dr. Lisa Lang on Theory of Constraints.

TF: If we do a good job of placing our constraint in our highest cost, most scarce resource, what is the next most difficult thing to do?

Dr. Lisa: Leverage it. Leverage is a great word but we are not taught how to do this or what we are taught is simply wrong.

The book The Goal describes leverage as exploiting the constraint and subordinating everything else based on the point where you have placed the constraint.

Exploit means not wasting any of what you have. Subordinating is often the harder one because it requires the non-constraint silos to fall in line by supporting the exploitation of the constraint. This is difficult because each silo is usually measured and rewarded on its individual results.
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Dr. Lisa Lang has many resources on her website www.scienceofbusiness.com. She has made this offer to our readers. If you would like to receive her three hour audio and workbook (usually $199) for $99, please drop her an email at drlisa@scienceofbusiness.com.

This continues our conversation with Dr. Lisa Lang on Theory of Constraints.

TF: If the idea is to strategically select your bottleneck (constraint), what are the characteristics you look for in a strategic constraint?

Dr. Lisa: A strategic constraint should be relatively hard to get more of, compared to a non-constraint. Hard to get more of, means that it’s expensive, hard to find, hard to train or something like that.

Non-constraints, on the other hand, are generally less expensive and easier to get. And a starting rule of thumb is to have 25% excess capacity at your non-constraints.

So we are leveraging our very expensive hard to get resource (constraint) and we have excess capacity at our easier to acquire (non-constraint) resources.
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Dr. Lisa Lang has many resources on her website www.scienceofbusiness.com. She has made this offer to our readers. If you would like to receive her three hour audio and workbook (usually $199) for $99, please drop her an email at drlisa@scienceofbusiness.com.

We will continue our conversation tomorrow.

This is a continuing conversation with Dr. Lisa Lang about Theory of Constraints.

TF: You talk about bottlenecks in systems. Conventional wisdom says bottlenecks are bad and that it is management’s job to get rid of them.

Dr. Lisa: Bottlenecks are what determine how much money you can make. I don’t think of them as bad. They just are. And by definition you will always have one. The question is, where is it? But, unless you have unlimited profits, you have a bottleneck, somewhere.

If you think bottlenecks or constraints are bad (like we were taught), then you will strive to get rid of them. But, as soon as you get rid of one bottleneck, another pops up, somewhere else. Essentially, we are taught to chase them around. Find them and get rid of them. It’s like being trapped in that arcade game – Whack-A-Mole.

If, by definition, you always have a weakest link or bottleneck, instead of chasing it around, my recommendation is to strategically place it. You decide where you want this control point to be. By doing that, you can get very good leveraging it and knowing how to control and grow your business with this control point.

So bottlenecks are not bad. Management’s job is to control them so that we can meet our commitments and grow. And more importantly to LEVERAGE them so that profits can be maximized.
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Dr. Lisa Lang has many resources on her website www.scienceofbusiness.com. She has made this offer to our readers. If you would like to receive her three hour audio and workbook (usually $199) for $99, please drop her an email at drlisa@scienceofbusiness.com.

We will continue our conversation tomorrow.