The greatest challenge that every startup must face is the constant pressure of managing limited resources. Regardless of whether that resource is people, money or time, there is usually a known, fixed limit as to what is going to be available to achieve the next set of goals.
For early stage startups, inability to surmount this challenge can mean the end of the company; in later stage and even successful startups, sub-optimal resource management will waste time, frustrate staff and customers, and hurt profitability.
The founders of the well known startup accelerator TechStars released a book in 2010 titled “Do More Faster”, which essentially sums up the operating mandate of every small startup in existence. So, with this in mind, a question I have often asked myself is: “How?”
The answer is not to work harder- are we not all working incredibly hard already? If I am able to process 50 emails in 15 minutes, then spending 30 minutes processing email will only get me through 100. I might be doing “more”, but I am not actually doing more with less and fulfilling my goal of “do more faster”. This simple logic applies to just about any startup activity, be that working with customers, releasing products, managing admin, etc.
While some of the answers to this fundamental question might feel intuitive to many entrepreneurs and managers, I have had the best results by applying a logical framework to help me try to solve the problem. In search of answers, I dusted off a book that I read in university and decided to try and apply the principles in my own company. (Side note: I’m constantly reminded by that old saying, the value of a book is not in what the author chose to put into the pages, it’s what you chose to take from the pages and put into your life). The name of the book is “The Goal”, written by Eliyahu M. Goldratt, who is a legend within engineering management and supply chain circles worldwide. It’s a brilliantly written business book structured as a fictional novel, and I highly recommend it to just about everybody.
The premise of the book is very simple, and its method for improving an organization can summarized by the following questions:
1. What is the goal?
2. What is the single greatest bottleneck right now in the process of achieving that goal?
There is a lot more here than meets the eye (which is why you should read the book), but I will try to deconstruct this a little further with a simple startup Q&A example.
- Q (mentor): What is the goal?
- A (manager): I can’t get through all my customer inquiries. Every day, the questions from various customers are just piling up, and the time spent on email is preventing me from doing more work. I need to figure out how to answer these questions faster.
- Q (mentor): Is the goal really to answer more email? What does that accomplish- what is the end goal?
- A (manager): The goal is to answer customers’ questions as quickly as possible, and make them happy.
- Q (mentor): Then that is your goal. What is the main thing holding this process up right now? What is the bottleneck?
- A (manager): I get too much email to respond to. I suppose I am the bottleneck- I don’t have enough time…
- Q (mentor): How can you open up this bottleneck? Can anything at all be done?
- A (manager): I’m not sure. There are so many daily emails and only I know how to answer them.
- Q (mentor): But can anything be done to open up the bottleneck, even a little bit?
- A (manager): I suppose that I could start recording common things that customers ask for, and then write publish a FAQ that new customers can check before emailing me. This would free up some time.
- Q (mentor): Boom! So what are you waiting for?
This simple, clear style of investigative dialogue can be applied to any challenge where one needs to deal with limited resources. Note that it is essential to address core issue being faced, and not to try to get tied up on the “hamster wheel” of addressing superficial symptoms or byproducts it causes (aka “damage control”). Another crucial aspect of the method is to remember to ask the “right now” part of the question, as bottlenecks in a system are constantly changing, so clearing bottlenecks and “doing more faster” is a really a process of ongoing improvement. With yesterday’s bottleneck eliminated, tomorrow will just present a new one (but hopefully by then things are moving a more smoothly). And, remember, only try to address one bottleneck at a time.
Goldratt coined his method as the “Theory of Constraints" (TOC), defining a constraint as "Anything that limits a system from achieving more of its goal".
This seemingly simple theory has had incredibly successful application to manufacturing and process oriented environments for almost 30 years. It can be pretty powerful when applied to startups too.
The application of TOC in our startup has been simple, structured, and effective.
Here is our method.
1. Define the System
A startup is just a system, comprised of different parts. (In business school they prefer to talk about the company value chain, but I digress). Define the different functional parts that matter most to the organization, i.e. where most of the resources (people, time) are being consumed.
Some example areas are: Sales & Marketing (getting new customers), Account Management (delighting existing customers), Operations (managing daily work and necessary customer activities), Software Development (building and deploying product), and Financial Management (managing accounts, debtors and creditors).
Every startup is different, so list the areas that matter to your organization. I suggest putting this into a spreadsheet as different column headings. Underneath that, define the singular goal of every one of those functions.
2. Identify the Bottlenecks
For each company function, take the time to analyze and identify where the greatest bottleneck exists right now. If the constraint ends up being a person’s time, try to dig deeper to figure out what tasks are chewing up a disproportionate amount their time.
Some examples of bottlenecks from our past experience are:
- Sales & Marketing: Repeating the same sales messages to prospects in writing or verbally due to lack of effective collateral.
- Account Management: Repetitive, high volume email to a variety of business and technical questions.
- Operations: Poor visibility on what everybody is doing forces management to ask too many questions and interrupt staff often, who become unclear on daily priorities.
- Software Development: Implementing a new customer installation involves many time consuming steps on our side.
- Financial Management: One person in charge of all payments and collections but does not have time to stay on top of it.
I suggest adding a dedicated Bottleneck row to the spreadsheet, so that a note can be made under each function column.
3. Identify the Solutions
Once the bottlenecks for each major area are identified, try to figure out practical steps that can be taken to eliminate, or free up the bottleneck. Following on from the example above, here are some of the past solutions listed to those problems:
- Sales & Marketing: Develop marketing collateral material to leave with prospects after a sales meeting.
- Account Management: Capture common questions and publish a detailed, easy to use FAQ for customers. Better yet, create a customer service portal with how-to guides, videos, and all manner of help resources.
- Operations: Implement a system or tool that makes everybody’s work tasks and priorities transparent to the entire team.
- Software Development: Focus the next wave of software development on automating deployment of the existing platform (as opposed to adding new features).
- Financial Management: Have a different staff member help the individual keep track of creditors and debtors; and bug them when something needs to be done.
Solutions can be added to the spreadsheet as an additional row below the Bottlenecks row.
4. Review Progress
As with all initiatives, for this to work there needs to be a consistent process of review in order to maintain accountability and momentum.
I recommend that the senior management team of a company do this jointly every two weeks. During review sessions, managers should commit to when they expect the solution to a particular bottleneck to be completed, and this can be noted for subsequent review.
Over time, old bottlenecks will be deleted off the spreadsheet and replaced with new ones that arise. These meetings tend to be very rewarding, because after a while the progress achieved by following this process becomes obvious to all involved.
When dealing with the day to day volume of work to manage it’s all too easy to ignore this method for weeks and months, trying to make that metaphorical hamster wheel spin faster and faster. It took me a long time to fully understand what a waste of time that can be.
To truly address the goal of achieving more with less, or doing more faster, and creating sustainable, long term performance gains I believe that constantly improving processes and eliminating bottlenecks holds the real key to startup efficiency. And that makes sense to the bottom line.