Tag Archives: constraints

Your Business Model and Constraints

Every business has a model, an internal structure that helps to understand the way it interacts with its market. Business Model Generation defines these elements –

  • Customer Segments
  • Value Proposition
  • Channels
  • Customer Relationships
  • Revenue Streams
  • Key Resources
  • Key Activities
  • Key Partnerships
  • Cost Structure

I suggest another element surfacing as the world comes back on line in this pandemic – constraint.

Every system (business) has a constraint. That constraint is connected to a-capacity-of-something. Initially, constraints show up as whack-a-moles and we arm ourselves with mallets to snuff them out. Eventually we understand that every system will always have a constraint, our job is to put the constraint where we want it (strategic constraint). Some constraints are internal to our business model, sometimes they are outside (external systems, like the market, regulation, finance, labor, technology).

Examine your business model and its constraints. Capacity may have shifted due to the pandemic, your constraint may have moved, your business model may be wobbly because something subtle (or not-so-subtle) has changed.

How to Set Context With Your Team

From the Ask Tom mailbag –

Question:
I hear you say that management is about setting context. I think I understand what that means, but I do NOT understand how to do it.

Response:
Culture is context. Setting context is the prime objective for every manager. Context is the environment in which work is done. Work is making decisions and solving problems. This is fundamental managerial work. Three moving parts –

  • Communicate the Vision. This is the future picture of a project, picture of a product in a package, the output from a service. This is what a clean carpet looks like.
  • Performance Standard. This is the what, by when. This is the objective in measurable terms. This is the goal – QQTR, quantity, quality, time (deadline or evaluation period), resources. The vision is full of excitement and enthusiasm, specifically defined by the performance standard.
  • Constraints. There are always constraints and guidelines. Budget is a constraint, access to resources is a constraint, time can be a constraint. These are the lines on the field. Safety issues are always a constraint. When the project is finished, you should go home with all your fingers and toes.

That’s it, then let the team loose to solve the problems and make the decisions within the context. Do not make this more complicated. It’s always about the fundamentals. -Tom