Let’s talk about constraints and the advantage of examining whatever organization you are associated with so you can remove the constraints that make your organization less effective. When we engage in this way as transformational leaders, we can help the organization to which we belong become better equipped and more effective.
We all want our lives, our relationships, and our companies to be productive. Constraints can hold all of us back. As we apply this process of looking for constraints through a business lens, we say that anything that moves you toward fulfilling a goal of your organization is considered productive. If you’re a leader in a for-profit company, one of your goals would likely be to generate profit. In a nonprofit or within a family, the goal would be defined in other ways.
How productive is your organization? How can you make your organization more productive?
One of my favorite teachings on how to solve these problems and increase productivity is called the theory of constraints, which was developed by Dr. Eliyahu Goldratt. I highly recommend that you read his book titled The Goal and see how his teachings can help you solve constraints in your organization. Below I’d like to share and expand on some of his teachings about his theory of constraints.
There are certain tangible and intangible things that must be processed through your organization’s system in order to achieve your organization’s goal. Dr. Goldratt labels these items throughput. For a company, it’s the rate at which a system generates money. I have expanded on his definition so it fits any kind of organization:
Throughput is the rate at which a system generates money (or whatever the goal is), from the time an idea is conceived until it reaches its final user, is paid for, and is not returned.
Your organization’s rate of throughput is the first measurement of productivity.
The fourth group is the real problem. Those are the lean–outers. They’re the ones who have no intention of ever getting in. They’re the ones who pull the pin on the grenade and toss it right into the middle of the group. Why do they do that? Because right now, they are exercising control over the culture. They enjoy that control, and they don’t want to give it up.
Two Kinds of Constraints
On the other hand, a constraint is anything that inhibits or stops throughput. It is any resource that cannot produce the demand placed on it. There are two types of constraints. First, there are personal constraints that we all have as leaders. Remember that no organization can move beyond the constraints of its leadership.
The second category of constraints is processes, policies, systems, and procedures. No organization can move beyond the constraints of its processes, policies, systems, or procedures. Typically, these are defined by the leader, so the leader has direct control of these types of constraints.
In addition to throughput, a second way to measure productivity is inventory, which consists of all the items we have purchased for the purpose of selling.
The third measurement of productivity is operational expense, which consists of all the money we spend turning net inventory into throughput.
What does all this look like in action?
Throughput in a Business
Let’s assume we want to sell a printed T-shirt. What’s the throughput? As we invest time and expertise to decide on the color of the shirt, the logo on the shirt, and the quality of the shirt, we are investing throughput to help us reach our goal of selling that shirt. We continue adding throughput as the shirt’s design goes through the production department, to the shipping department, and to the retailer where it must be sold. At that point, the goal has only been accomplished if the customer pays for it and doesn’t return it. If there is a return, the throughput does not fully take place.
If you are running a business, understanding the concept of throughput will help you to price your products and services properly as well as to enhance the quality of your work to minimize returns.
Throughput in a Family
What might throughput look like in a family? It depends on what the goal is. Let’s say that your goal is for your child to graduate from college, get a job, and be a successful participant in society. So, all the money you spend getting the child born is inventory expense. All the money you spend raising and training that child and getting him or her through college would be operational expense. If the child actually graduated from college, got a job, became self-sufficient, and contributed to society for the rest of his or her life, you achieved the goal. If your child drops out and returns home or quits his or her job and returns home, then throughput stops, and the goal has not been achieved.
Throughput in a Church
If the goal of a church or synagogue is to make disciples, all the money spent getting people into the organization and into the discipleship program would be called inventory expense. All the money spent training the people would be operational expense. If a person receives the training, becomes a disciple, and remains a disciple until death, the goal has been achieved. If he or she doesn’t remain a disciple, the goal has not been achieved, and throughput is not accomplished.
Two Types of Phenomena in Achieving the Goal
There are two challenging phenomena that you will face as you aim to remove constraints that hinder you from helping your organization reach its goals.
The first one is dependent events, which means that one event must take place before another event can occur. For example, you can’t print a logo on a T-shirt until you’ve purchased the T-shirt on which the logo must be printed. That’s a dependent event.
You’ll also experience statistical fluctuations. This means the process remains the same but requires different amounts of time and effort to complete each cycle. For example, let’s assume you have a goal of arriving at work within a specific amount of time each morning. If you took the same path to work every day, the travel time could vary based on the sequence of the red lights, the weather, how fast or slow the drivers are, an accident, getting pulled over for a ticket, etc. That’s a statistical fluctuation.
In order to reach the goals of your organization, the key is to remove the bottlenecks or the constraints in the organization. How can we do that? Here’s a process for you to think about.
Five-Step Process for Removing the Constraints
Let’s identify the steps to confronting/removing the constraints that hinder the effectiveness of your organization.
- Identify the biggest constraint.
This is often the hardest part of removing a constraint. But, if you can identify the biggest bottleneck, you’ll notice that many things you thought were your biggest problems are merely symptoms of that constraint.
- Exploit the constraint.
Get or squeeze everything you can out of that constraint. Once you’ve done this, it’s likely that you will have removed the constraint. Then, you can go back to step one and identify the next biggest constraint.
- Subordinate everything else.
If step two didn’t work, all your other leadership decisions should be focused on removing the constraint you identified in step one. Everything in the organization that is not a constraint (bottleneck) is now subordinated to the constraint.
- Elevate the constraint.
If step three doesn’t work, place even greater importance on understanding the constraint by researching and dissecting that constraint into its smallest details. Examine them in as much detail as possible to figure out how to break the constraint.
- Break the constraint.
At any point in the process, you may find that you have broken the constraint. When this happens, go back to step one and identify the next biggest constraint.
A Final Result
As you remove these bottlenecks, you’ll find that your organization’s production will flow much smoother. In a family, there will be significantly less stress. In a religious organization or nonprofit, people will want to be more engaged. As you see this happening, you’ll want to remain in this process of constantly identifying constraints in your organization. As a result, you’ll also knock out the problems that are actually just symptoms of the actual constraint.
I once applied this theory to my wife and marriage just as I had in companies and other organizations. After applying the process, I didn’t like what I found. Sandra’s biggest constraint was me! So, all we had to do was get me fixed to have an awesome marriage.
As a transformational leader, you can use this process to remove constraints in the organizations to which you belong. Thinking and processing through the five steps above will help you identify and break the constraint that is holding you and your organization back from being the most effective leader you wish to be and will help you guide your organization into reaching your goals more effectively.
Ford Taylor is a leadership strategist, keynote speaker, and the author of Relactional Leadership. As the Founder of Transformational Leadership, he is known as a man who can solve complex business issues, with straightforward practical solutions, while maintaining his focus on people.