Theory of Constraints Principles Simplified [With Pictures]

You rarely find something original in business books these days. The usual tips are shared and re-shared with a different title and a different author. Even worse. Since everybody is trying to win in the online game of money-making. We are bombarded by short, superficial prompts on social media that sound interesting, but teach us little. Accidentally, I found a book that is quite old but extraordinarily exciting. A book about the Theory of Constraints (TOC). A theory that can revolutionize your life.

The book I’m talking about is The Goal by Elliot Goldratt.

It’s written in a novel-style way where the main character – Alex – is trying to save the factory he is managing along with his career and marriage.

Is the plot of the story any good?

Nah.

At times, it almost feels like you’re reading an old-school romance novel. You know. The type of books your grandma used to read where the cover is occupied by half-naked bodies and in the background, behind the layers of exposed skin, you see the ocean and a boat.

The interesting thing is not the writing itself. But the theory explained in the writing – the Theory of Constraints.

What is The Theory of Constraints?

As the expression goes, the strength of a chain is determined by the weakest link.

And simply put, the Theory of Constraints (TOC) will help you identify the weakest links inside a system, organization, your life in general. From there, show how you can strengthen these links so you can increase your productivity.

the-weakest-link-theory-of-constraints
In Process A, even though the first three departments are producing, say, 20 points of work, the fourth one is capable of producing only 5 – weakest link. So, the end result is 5 shipped items. Process B, the improved system, is perfectly balanced.

Productivity can be everything that is currently stagnant.

In the novel, the goal is described as increasing the throughput in the plant Alex is managing – the amount of sold items.

But productivity can be also things like: Getting more work done; Writing more articles; Learning how to code (or anything) faster; Shipping more products in a SaaS business, etc.

To start improving. After the desired result is clear, you first need to identify the bottleneck in the system.

How Do You Use The Theory of Constraints?

In simple terms, you identify the bottleneck in the system – the weakest link – and you make it stronger by increasing its capacity and smoothing the flow of operations.

The bottleneck, a.k.a., the tight place where things get stuck, is the most important component of the theory.

For instance, when Covid initially swarmed the world. The bottleneck was the capacity of factories to produce masks – along with other things, sadly.

The-Theory-of-Constraints-example-with-masks
The bottleneck here is the production of masks.

Demand was much higher than the available capacity of the factories producing masks. That’s why there was a period of shortage.

To help equip every living human with a mask. A lot of other companies – primarily selling clothes – started also producing masks.

The-Theory-of-Constraints-example-with-masks-solution
When more factories started producing masks, the flow of production was fixed. It was no longer a bottleneck.

The system was flooded with orders. Only when the capacity was increased, everyone in the world got a mask.

Surely, in your life and organization, the bottleneck is going to be something different.

  • You can be short-staffed.
  • You can work 2 jobs to pay the rent and that’s why you probably don’t have enough time to read books and have fun.
  • Or, you can simply waste major parts of your day living in the online world we collectively call social media.

And while the bottleneck is the main thing that requires your attention. The process of optimizing a system starts with something different: identify the goal of your organization/your life.

Here are the six main steps – also labeled as Theory of Constraints principles – that will help you achieve better results in everything you do.

Theory of Constraints Principles

Goldratt defines the Theory of Constraints as 5 + 1 steps. By following them from top to bottom, you will successfully implement TOC in your business and life and make the weakest links stronger:

Let’s look at them one by one:

1. Identify the Goal

In the Theory of Constraints book – bible. The goal is painfully simple: Make money.

I know. No one mentions this on LinkedIn, but all corporations are fighting for the same thing: Making more money so they can increase their market share and mock their competitors.

It makes sense. After all, if there is no profit. There won’t be any business to worry about.

If you are running a business, your goal will surely be the same. Don’t fool yourself. Even if you claim to be a non-profit – or actually are. You still need money to operate.

If you are using TOC to make improvements in your daily life. The goal will be based on what you want to enhance – lose weight, read more books, learn a new language, etc.

2. Identify the Constraint

What’s preventing you from making money?

Depending on the industry. This will be a different thing.

If you are selling clothes. The constraint can be ineffective time management. You can have enough people working but for some reason, you can’t ship orders on time. If this is the case, you need to examine your internal processes and find where things get stuck.

  • A particular machine is jamming too often?
  • People are slacking off?
  • Or, the clothes you are producing are not getting enough attention and thus orders are low?

Usually, if the problem is shipping items on time. You can just walk around your factory. Check how many items are in front of your machines/stations. The one with the biggest pile in front is your bottleneck.

3. Exploit the Constraint

Once you figure out where things get stuck. Optimization starts.

In the book, the main character finds that certain machines in the factory responsible for important components are not working efficiently.

They are regularly left without parts to process because of poor organization with the other machines in the plant.

This inefficiency puts the whole plant on pause. Since the parts responsible for the end product are not produced, the end product cannot be finished. Therefore, there is no end product to sell. And from there, the plant is not making money.

On paper, the solution(s) look rather simple:

  • Ensure that the bottlenecks are always working on the most important tasks.
  • There are enough incoming parts for the bottlenecks.
  • The right resources are provided for the people working with the bottleneck machines so they can do their job effectively.
  • And, they are also uninterrupted while doing their job.

4. Subordinate Operations To The Constraint

Once the bottlenecks are working at a steady rate. Don’t interrupt them.

The priority of the whole organization becomes that the bottlenecks have the time and space to do their job properly.

After all, if tasks get stuck in the bottleneck. The whole organization gets stuck. And if the organization gets stuck, the flow of money is stuck, too.

To further improve things. The extra resources (free time) of non-bottlenecks should be directed towards increasing the capacity of the bottleneck.

Do you have a couple of people standing around doing nothing – or doing insignificant tasks?

See how they can assist the people working on the bottleneck position without interrupting their steady flow.

5. Elevate the System’s Bottlenecks

The next step is increasing constraint capacity.

This stage is easily recognizable in organizations.

For instance, when a team is swamped with work. The management of the company is usually quick to hire extra people.

Of course, this is a suitable solution.

Adding more people, machines, or buying software that can increase the capacity of the bottleneck is surely something one should consider.

But there are other solutions, like:

  • Training current employees working on non-bottlenecks to help.
  • Improving the existing tools. This, in the long-term, will reduce operational expenses. It will also take less time for people to learn the new software.
  • Reducing the needed parts for the end product without compromising on the quality.

The last part is probably the best way to produce more work in less time. Creating a business with fewer moving parts should always be a priority.

6. Repeat With a New Constraint

The last step of the theory of constraints is to find where else your company is underperforming and start to make corrections.

But not only.

You need to keep your eyes on the system you’ve just fixed.

You must not allow inertia to get you back to where you started.

If for some reason, the fixed bottleneck gets dysfunctional and starts to underperform, again. Restart the whole process.

Theory of Constraints Example in Writing

How all of the above can be applied to something else than a big organization?

I’ve asked myself the same question.

Fortunately, it didn’t get me too long to figure out the bottlenecks in my daily life – most notably, the processes related to my website.

As a blogger. Online librarian. I wasn’t surprised that my bottleneck was no other than the process of publishing articles – writing, editing, etc.

Here’s a simplified version of the Theory of Constraints applied to my blog:

The more books, articles, podcasts I consume. More ideas for articles are generated in my already busy mind. I simply can’t stop myself. A single paragraph from a book can inspire me to write an article.

However, my time for writing is limited. With all of these incoming ideas. I was getting really overwhelmed – angry even – that I can only write a small portion of the ideas I have noted down.

A couple of months ago. I was able to ship only 1 article per week because I wasn’t aware of this phenomenon. Now, I publish 2 and sometimes even 3 articles per week.

How did I fix the situation?

Let’s go through the process presented above but this time, we’re going to observe my personal bottleneck:

Identify the goal:

Unsurprisingly. My goal, besides using this site as a platform to express myself and share what I learn from the books I read, is to make money. There’s no point in trying to sugarcoat it.

Sure, I love when people share my work or get in touch with me to tell me that my articles resonated with them. But the highest measurement is people actually paying me. If someone becomes a member. This means that I’ve done a lot of things right. I provided enough value for them so they can pull out their credit card and swipe it on my website.

And to achieve this goal, I must publish more content. More content reaches more people and potentially more people become members.

So, while the goal of the site itself is to make money. The process needed for this to happen is content. Therefore, the task I actually need to focus on is the production of content.

Identify the constraint:

Obviously, based on the mentioned above. It was clear that my bottleneck was the ability to write articles.

I have nearly infinitive ideas for articles but finite time to produce them.

Since I can’t write about everything. I needed to sift through the incoming ideas and make sure that my time is very deliberately organized. I needed to be sure that I’m spending my time working only on the articles that are right at the current moment.

Exploit the constraint:

I have around 2 hours per day dedicated to writing. Between 06:00 and 08:00 in the morning. Occasionally, I also write on the weekends.

For some folks, two hours per day might seem enough. But my articles and book summaries range between 2000 and 4000 words – sometimes even 5000 words. That’s a lot of text.

Previously, I was wasting time a lot of time. My pocket was full of ideas, but a lot of times I needed more research. Meaning that I wasted time during the mornings to fully shape the idea about the article in my head.

Here’s how things looked:

morning routine

Here’s what I did to exploit the constraint:

When taking notes, I started researching the idea in depth.

A couple of other things on my checklist:

  • Create a structure of the article before starting to write the article.
  • Conduct keyword and SEO analysis to find the most suited keyword for this particular idea.
  • See how this idea will fit the overall content on my site.
  • Stop writing isolated pieces. Start writing article series that cover one particular topic. Or in other words, I now approach topics, not articles. I pick a topic, and I write between 3 and 5 articles to fully cover the subject.

All of the above planning is done outside my time for writing.

And one more thing: Before going to bed, I note down exactly what I’m going to write about in the morning.

And finally, when I wake up in the morning. I avoid all possible distractions and focus exclusively on the writing.

This is the improved process:

improved-morning-routine

Thanks to the above, I’m no longer disorganized in the mornings, thinking about what I’m going to write about. The structure was clear. The idea was inspected. And all I had to do is fill the blank page with words based on my research.

Subordinate operations to the constraint:

Somewhere in the middle of 2021, I asked myself: Why read so many books if I can’t practice nor write about everything I learn from them?

Previously, I was reading 40 books a year. And each book was giving me between 3 and 7 ideas about articles – a lot of times even more. Besides, I’m regularly reading articles from other writers which gives me additional ideas.

But what was the point of all of this reading if it wasn’t leading to exercising what I’m reading about?

Or in other words, the non-bottleneck was reading. So, I took part of the time I spend consuming in order to have more time creating.

This reduced the inflow of ideas but increased the outflow of articles.

Elevate the system’s bottlenecks:

Writing clearly is thinking clearly.

In order for me to write better – and faster. My mind must be worry-free. Also, the idea I’m writing about should be already digested by the brain so I can produce good work.

One thing I do to prevent my mind from getting stuck. Is to ensure that I’m quite familiar with the idea I’m working on.

Other things that can help me improve throughput are:

  • Writing shorter articles – something I’m actually trying to do.
  • Hiring people to help me – not considering it but it’s an option.
  • Improving my writing by training and mentoring – I’m regularly participating in writing courses to get better at the art of putting words on paper.

Repeat with a new constraint:

Based on the above. I was able to switch from publishing 1 article per week to publishing 2 – sometimes even 3.

But what else I can do? What else I can do to improve my writing? My website in general?

The next obvious things that are related to improving my sites are:

  • Thinking clearly.
  • Taking better notes.
  • Improving my SEO skills.
  • Meditating to improve concentration.

Visually, here’s how the whole process looks.

First, my capacity was 1 published article per week.

Theory-of-Constraints-Example-with-blogging

Instead of reading more, which lowered the generated ideas, I directed part of that time so I can write more. This increased my capacity of published work to 2 articles per week.

Theory-of-Constraints-Example-with-blogging-solution

Writing is still a bottleneck. But my throughput is increased by 100%.

Theory of Constraints Example in Investing

Another relatable example that I’m just going to briefly mention is bottlenecks in finances.

If your goal is to increase your future passive income by investing. The bottleneck is the amount of money invested every month which is determined directly by your income.

In this situation, you can increase your income – start a side hustle, get a new job, work hard to get a promotion, win the lottery, etc. Or, you can cut costs. Of course, doing both is preferred.

The next step, subordinate operations to the constraint, will be portrayed by the following thing: When you get paid, you immediately invest.

By doing this, you ensure that you won’t abstain from directing money towards your investment portfolio because of other important expenses. Your whole flow of spending will be determined by what is left after you invested money.

This is what I do.

When I get paid. The first thing I do is to invest part of my money.

My expenses after that are based on what is left. It’s not the other way around – invest only what is left after my expenses.

Some Closing Thoughts

Don’t think that the above applies to you?

Take a sober look at your life. I’m sure you’ll find soft spots that need improving.

The Theory of Constraints principles are not only for organizations or bloggers like me.

If you take the time to observe your day-to-day tasks. You will surely spot bottlenecks – weak links.

Probably you are short on money. Or on time.

If this is the case, you need to identify where money is spent and why. Then, figure out how you can reduce the outflow of money and increase the inflow.

Watching too much Netflix?

Unsubscribe from the service and use the extra time to learn a new skill.

This way, you water two plants with one hose.

The Theory of Constraints is all about clarity. You get clear on what is important for you. Then, find a way to improve your processes to ensure that the end result is reached faster and better.

Curious to find out more about this topic?

Check out my summary of the Theory of Constraints book or get the book itself.

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