Consulting and Management Method: Finding And Relieving The Bottleneck

When thrust into a situation where either resources are constrained, there are competing management choices, and paths forward are unclear, I often find a consulting method of "finding and relieving the bottleneck" useful.

For example, suppose a startup is trying to figure out how to ramp up sales from its first (non-repeatable) deals. Or suppose a company cannot determine whether sales or operations processes are the primary lever for stabilizing revenues. Yet another case might be that there is an incubator unit within a larger company that is underperforming – how might you approach the problem of fixing the situation?

At its core, "finding and relieving the bottleneck" is an analytical method used in production and operations. There are a couple of predominant ways that I look at operations by default, the former being a more quantitative method involving system & process flows and things like Little's Law, and the latter (which I strongly recommend) method using visual inspection and interviews with client management. Here I'll address the latter.

So back to the case of ramping up sales for a startup, where its first deals are largely non-repeatable because they were unique and early in the learning curve. Suppose you have 1-hour with client management. How might you help to tease out how where to start looking for improvements?

In a nutshell, the bottleneck method approach might simply be organized around finding where one gets the biggest bang for the buck in terms of making a change. I might ask the client if they had another resource or an additional day in the workweek, which of the following would ultimately result in more sales:

  • Refining Strategy – this might involve breaking the customer base into segments based on type and prospect awareness profile. Where's the lowest hanging fruit? What kind of marketing and sales material is each segment getting? If you had a choice to improve the marketing collateral or sales processes for the higher priority segment, which would you choose? Are there backlogs in the system (e.g., uncalled sales lead prospects), which would indicate bottlenecks? If you made the change, would it really address the end goal, e.g., getting more sales?
  • Changing Management Approach - in many situations, entrepreneurs may make the first sales, but they often have problems transferring knowledge on how those sales are made. Alternatively, they may have problems letting go of other areas that could be delegated or outsourced (e.g., finance and accounting, inside sales, meeting scheduling, and/or field sales). Would it be helpful to have someone shadow key executives to distill the sales processes and real value propositions that various customers are buying? If we could clone key people to offload some of the burden, would there be enough prospects and deal flow to make things worthwhile?
  • Adjusting Technology or Product - if the product were made less complex or if we simplified choices, would we get better yield and flow from the awareness to interest phase of the customer purchase process? Is there a way that we could get people to sample or experience the product before purchase to skip people past bottlenecks of overanalyzing things too much up-front?
  • Obtaining Financing for Expansion– if you focus time on more sales versus financing for expansion (presuming company has sufficient sales), what would you do and why? What if choosing one path doomed the other? Would the chosen path still be worthwhile? What kind of results could we expect by financing a new online versus a physical market for services delivery?

Optimal diagnosis clearly involves a mixture of tools and approaches, but the bottleneck method is an important method to learn in consulting because it can be increasingly used in facilitative situations where a client has substantial implicit knowledge (and such knowledge must be better formulated explicitly and transferred for company operations to scale).

I've also used this method in management situations (as opposed to in consulting situations only). The method can be particularly good when troubleshooting a problem that cuts across functional areas.

What are your thoughts? Have you ever used this type of approach? If so, how effective was it for you?

Related Posts: A Perspective On Client Facilitation Skills and Crash Course Consulting Reading List

Update (9/19/09): Readers may also be interested in post by Seth Godin on the priority list.

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How My Clients Can Bypass The MBA

Operations (whether manufacturing, service-oriented, etc.) is one of the most underrated subjects (I have at least two others) in MBA programs. Part of it has to do with that some aspects of operations use mathematics concepts like Little’s Law, statistical significance, queuing theory, etc.

But sometimes lack of enthusiasm for taking operations coursework has to do with how it is presold to students as opposed to how students feel after taking the course. Students generally love the lessons learned from MIT’s Beer Game. It is lesson that you can apparently now try online here.

For those more inclined to read about operations, bypass the mathematics, learn some of the main lessons, yet digest information in a popular, novel-style reading form, I highly recommend the book The Goal by Eliyahu M. Goldratt.  The book does not need any endorsements as it has sold millions of copies. I characterize it as a "bridge book on business". It makes complex information accessible to the more general public and business readers. The potential for books on corporate blogging excite me in the same way (although grounding in solid business theory may not be as difficult for the blogging subject as it is for operations).

Steve Shu
Managing Director, S4 Management Group

Thoughts on Virginia Postrel’s Post on “How to Get More Female Scientists”

Virginia Postrel has three excellent blog posts today covering Larry Summers and other stuff (here, here, and here). I generally agree with everything she’s said, but I wanted comment on the middle blog post that covers "How to Get More Female Scientists". As a person with a professorial wife and as a person that does nitty-gritty consulting with regard to pipeline operations (consulting that looks to optimize the relationships of metrics, people, jobs, workflow, throughput, quality, organizational structure, control structure, goals, systems, and culture), I really zeroed in on Virginia’s following text:

"So, if a university like Harvard wants to foster the careers of female
scientists, this is my advice: Speed up the training process so people
get their first professorial jobs as early as possible–ideally, by 25
or 26. Accelerate undergraduate and graduate education; summer breaks
are great for students who want to travel or take professional
internships, but maybe science students should spend them in school.
Penalize senior researchers whose grad students take forever to finish
their Ph.D.s. Spend more of those huge endowments on reducing (or
eliminating) teaching assistant loads and other distractions from a
grad student’s own research and training. If you want more female
scientists, ceteris paribus (as the economists say), stop extending academic adolescence."

Her closing comment "stop extending academic adolescence" is beautiful, but I would go further to say that universities should go even further to "stop creating academic obsolesence". The clocks don’t stop at the Ph.D. level. Getting tenure after becoming a professor means performing quality research (and sometimes also performing quality classroom teaching depending on the institution). Things like grading take up an extraordinary time and provide little if any benefit to either the professor or the students. There should be additional focus on actively monitoring, mentoring, and helping females through the academic process as opposed to having university adminstration passively check in on candidates.

Where I may differ from Virginia a little bit on specifics (although she probably was just blue sky thinking like I am doing now) is that I would focus more on acceleration of the graduate school part of the process (i.e., post bachelors degree through tenured professor) as opposed to the undergraduate part. Just my gut feel there. Although I hated undergraduate education more than graduate school, part of it has to do with that I wasn’t "educated" enough in a worldly sense back then to know the value and risks of shortening that timeframe.

As for Viriginia’s comment, "Penalize senior researchers whose grad students take forever to finish
their Ph.D.s.", I could get on board with that. But that’s a tough one to implement based on what little I know about the different flavors of university cultures and plethora of organizational processes.

Two other closing items I wanted to mention because it sheds light on both the pressure on females and the pressure of reasearch on both sexes in this whole process:

  • A number of female Ph.D. students I know have told one another that "the time to have kids is during the process before getting a Ph.D." Otherwise, you may be dead or childless unintentionally.
  • There was once a researcher who said something to the effect of "I have to think about research all of the time (even when I am not doing it) to be able to make it through the academic process. The only time I am not thinking about research is when I am swimming because I fear I will drown."

Steve Shu
Managing Director, S4 Management Group