One of the books I was assigned as part of my MBA course was “The Goal”, by Eliyahu Goldratt and Jeff Cox. For a business book it is highly unusual – mainly because it’s actually written as a novel. The scene is a manufacturing factory and the main character is the plant manager who has been hired to turn the failing facility around. It seems there are problems everywhere – missed orders, unhappy customers, high inventories, machine issues, staff unrest, and the plant is losing money at such a rate that head office is threatening to close it down. The poor plant manager doesn’t know where to start.
Anyway, with the help of a mentor, the manager comes to realise that everything in the factory can be broken into 3 categories; inputs, outputs and overheads. And most importantly, he realises that his job is to optimise the Outputs – which he defines as money. Eventually he works out where to focus and moves resources around to free up the bottlenecks and reduce the inventory by linking other parts of the factory to the slowest processes – thereby minimising the inventory associated with work-in-progress.
“The Goal” contains many important messages and although it’s been years since I read it, I often find myself thinking about it because it’s so easy to lose sight of what our own goal in business really is – and even when we know the goal, to figure out what we really should be doing to get there.
A Simple Way to ensure you’re Focussing on the Highest Priority
Although this book is about a manufacturing business, any business can be broken down into its process flows – and this is extremely useful in determining how to have the biggest impact on your business.
Should you be increasing your IT resources? Beefing up customer service? Investing in the newest social media platform? Hiring a sales manager? Working on redesigning your product? Getting more resources to deliver your product or service? It’s hard for a lot of business owners to know where to start.
For me, focusing on two concepts – “the goal” and the biggest “bottleneck” helps clear this up.
When you think of your business as a system with flows in and out, it becomes easier (although not easy) to see where the biggest bottleneck is. There may be many things you’d like to fix in the business, but what is the main thing that’s constraining your growth at this moment? That’s the bottleneck.
Find the Bottleneck in Your Business
- Defining the single goal for your business is the first step – and for many this will be easy (but you may also want to revisit or define your vision first).
- Then, think about what to optimise for – which outputs. A manufacturing business has a flow of materials through the plant, but for many businesses, you can think about this in terms of your customers and they way they “flow” through your business.
- Next, figure out where the bottleneck is. If your business is great at marketing, there’s not much benefit to adding extra resources to this as the number of leads is not what’s holding your business back. Find the bottleneck and then work out how to improve this area.
To illustrate, take Business A below. It’s marketing, sales and product/service provision are all doing relatively well and keeping the flow of customers moving through nicely. But what is really holding them back is customer service. In this case it might be that their next hire should be a dedicated customer service resource, or that they need to invest in some technology to improve the after-sales service for their customers. Whatever the exact solution, it’s clear that the focus has to be in this area.
On the other hand, Business B is doing well with marketing, product/service provision and customer service, but it’s the sales function that is slowing things down. This is where the focus should be. The solution might manifest in hiring a sales manager, a dedicated sales resource, or contracting a website sales conversion expert.
In other words, some questions to ask yourself are;
- Where is the weakest link in the business?
- What one thing could change that would have the biggest impact on the business?
- What’s your most pressing goal as a company right now? (This comes from a great Groove article – an amazing blog to follow.)
- What one area could you improve that would improve the whole business?
Whenever you’re wondering where to focus, zero in on the weakest link, the bottleneck, the thing that’s holding your business back. Of course, after you improve this area, the bottleneck will shift to a new area and a new focus will be required – but that’s what it takes to grow a business!
What’s the weakest link in your business right now? Let us know in the comments!
Neil Anderson says
It seems we’ve been similarly influenced by the same book.
Fiona Adler says
Yes, it was a while ago but worth reading again! Have you used the ideas and systems type thinking in your work?