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Think about say a milk bottling factory.

If there is one machine for the entire plant that puts caps on bottles and can only do 6 bottles every minute.

Then the maximum output for the system will 6 bottles a minute.

You can improve other parts of the factory but it will never produce more than 6 bottles a minute if the speed of the capping machine is not improved.

The machine is the ‘constraint’ or ‘bottleneck’ for the entire system.

This is one of the most important ideas from the theory of constraints. If only one factor limits a system at a given time, then the only worthwhile thing to do is to fix it.

Effort expended fixing things which are not the most significant bottleneck will give negligible benefit until the biggest bottleneck is solved.

Don’t waste your time. Find and eliminate the largest bottleneck first.

What’s really cool about this is you have the power of compounding efficiencies.

Each bottleneck you eliminate results in increasing the speed of the process by a percentage every time.

Combine these together and they compound over time to add up to a huge difference.

This is where the magic of compound interest comes into place. You can see this visually in the following spreadsheet:https://docs.google.com/spreadsheets/d/1mx506x85EnP6btixveJW_4QFLGxqDWnMP8Xnlkcj7Bk/edit?usp=sharing

Your growth is limited by the speed at which you can identify and fix each bottleneck in sequence.

You only need to focus on the biggest bottleneck, and solve it first. With many things to think about at a given time, it makes things much easier to prioritize and manage.

Think about what companies often do instead.

We run around trying to fix everything, all at once. The theory of constraints tells us that all we need to do is get really good at identifying the biggest bottleneck and solving that.

After you solve the first bottleneck, find the next biggest one and solve that, rinse-repeat

It makes sense when you think about it.

If you know of a bottleneck and you can fix it, then chances are you will just go ahead and fix it if you can.

The bottlenecks which don’t get fixed as easily are when the people who can see the bottleneck are not in a position to fix it.

For instance one of the biggest bottlenecks in our support process is licensing inquiries. To fix that means building a new licensing system which is really more of an action for development.

So good management is as simple as having an open dialog to find out where the real bottlenecks are and getting those fixed.

If you do not tap into the knowledge of the people in the system who are closest to it, you may end up identifying things which you think are bottlenecks but actually aren’t the real bottlenecks.

Simple clear language is a huge advantage for an organization. Avoid unnecessary specialized jargon. Create space to focus on the problems that matter.

Bottleneck ideas can be applied in every area of an organization. Smart is simple.

One category of bottlenecks is the flow of your data. But keep in mind the bottlenecks may be in any area.

Physical processes, messaging, how you communicate with your team, your customers, product usability.

Most businesses plateau at some point where a management team is unable or unwilling to see or resolve the actual bottleneck.

Often a huge bottleneck most people overlook is not creating flow in their own personal day to day routines.

Eliyahu Goldratt was an Israeli physicist turned business consultant who popularized the Theory of Constraints in his novel “The Goal”.

The Goal is written as fiction novel about a manager in a mid-west manufacturing plant that is about to go under. He meets a character that sounds like Eliyahu who through a series of questions gets him to think harder about the operation of his factory and turns things around by applying the idea of locating the most significant bottlenecks and solving each one in turn.