Once you know your constraints, you can also start to work on breaking them. Why would you want to do that? Well, they hold you back and keep you from reaching your goal faster.
The original TOC approach to continuous improvement has 5 focusing steps:
- Identify the system’s constraint.
- Decide how to exploit the system’s constraint.
- Subordinate everything else to those decisions.
- Elevate the system’s constraint.
- If you have broken a constraint, go back to step 1. But beware of inertia – the constraint might come back!
The wording needs some explanation, in order to understand the difference between step 2 and step 4. In step 2, you try to make better use of the constrained resource (machine or person) by organizational measures, i.e. by working differently or by arranging work in a different manner but without any new investment. Only if that doesn’t suffice, you proceed with step 4 and use more resources (money) to solve the problem.
In the startup world those focusing steps are condensed to just three steps (see the book Scaling Lean):
- Learn more about the constraint,
- Leverage the constraint, and
- Lift the constraint.
The common theme is: understand what’s constraining you from reaching your goal, make best use of what you have, and get more of what you need to resolve the constraint.
Looking back in my personal history, I’ve seen the following constraints in the early years of Catalysts:
- In 2004: my constraint was being employed. I could not deploy my full potential.
- In 2005: my need for safety kept me in that corporate job for another year.
- In 2006: being self-employed but alone, it was unexpectedly hard to get some business and actually make some money
- In 2007: we (=Christian and I) had started to collaborate with software developers in Nepal, The constraint was how to effectively transfer our know-how there; another constraint was the cash flow for growth.
- In 2008: we had started to develop a product for task-based collaboration, hence our constraint became marketing and sales for our product.
In 2010, our goal hierarchy was:
Looking back after another 7 years, I can say that we have achieved the goal: Catalysts is a profitable and highly respected company.
- We have increasing and steady revenues from our products and services.
- We are well-known for the value and quality of our work.
- We have reasonable costs.
We have achieved that by knowing our constraint and by giving it the requisite management attention that was necessary to break it.
For already more than 10 years, Catalysts has seen strong growth with a compound annual growth rate (CAGR) of 55%, both for team size and for revenue.
This is no mean feat, especially considering the many economical and political crises that we’ve seen in those years.