Bottleneck Definition

Definition

Picture a wine bottle. It’s got a big body and a small neck. It may seem weird, but it’s actually designed that way for a reason. It creates a smoother pour, so you don’t spill. And you don’t get more out of it than you want.

The bottle’s narrow neck limits the total wine you can get out at any given moment, without breaking the bottle.

Your business processes, the resources that you use to make those processes work, the people that are managing those processes are just like that. They all have different levels of throughput, capacity, and utilization.

Throughput, Capacity, & Utilization

Throughput is how much work that person, resource, system, etc. is doing. So, for fast-food: it may be how many hamburgers you made in 1 hour. “I made 7 hamburgers in 1 hour.”

Capacity is how much work that person, resource, system, etc can do in a given period of time. They’re working as hard as they possibly can. It’s often just the personal record for results generated in a period of time.

Returning to fast-food, your capacity is your personal record for number of hamburgers made in 1 hour. “My personal record is 14 hamburgers in one hour.”

Utilization is defined as (Throughput / Capacity). In other words, it’s how many hamburgers you made in one hour divided by your personal record. “I made 7 hamburgers last hour. My personal record is 14. My current utilization is 50% (7/14)”.

Why They Matter

Bottlenecks (BN) set the limit for your whole business. Just like you can’t get more wine out of the bottle than the BN allows, you can’t get more revenue, productivity, or quality out of your operations than your BN allows.

If you want to increase profit, quality, and productivity without increasing your STRESS then you need to identify and manager your BN.

If you don’t manage your bottleneck, it will continue to manage you.

The 5 Bottleneck Rules

1. Know & Manage Your Bottlenecks

Your BN sets the limit for your system. It caps your system output, limits your business revenue, and reduces work quality. You need to know where it is so you can actively manage it. If you don’t, you’re putting up a barrier between you and your ability to grow your business, hit your goals, or improve work quality.

2. Avoid Bottleneck Downtime

Your BN caps your revenue. Why would you want it to take an unnecessary break? YOU WOULDN’T! Excluding downtime for maintenance and legally required breaks, you want your BN always operating.

Manage your system to the operating rate of the BN – your system can’t do more work than the BN gives it anyway. Also, create a small inventory/work buffer at the BN, so it won’t starve if it the people/resources feeding it have downtime.

3. Don’t Put Bad Work Through Your Bottleneck

Your BN has limited capacity. If you waste capacity by giving it bad work to do you lose time it could’ve spent on revenue-generating activities. In other words, that’s time the BN could’ve been making you money!

There are three different types of bad work: unprepared work, bad quality work, and unnecessary work. Set up systems to ensure this work NEVER makes it to the BN, (see “Work Elimination Matrix” for more tips on how to do that.)

Unprepared work is stuff that will be worked on by the BN, but it’s not quite ready for the BN. If your BN has to stop to tackle unprepared work, that’s time it could’ve spent making you money.

Bad quality work is stuff that has defects and will just be thrown out after the BN works on it anyway.

Unnecessary work is work that could be done by other people or resources. Any unnecessary work the BN does reduces its capacity and your potential revenue.

4. Increase Bottleneck Capacity

If you want to get more money out of your company without increasing costs, the trick is to increase your BN capacity. Focus on finding tools that will increase the productivity or impact of BN efforts. We call these force multipliers. Then, put your force multipliers in the hands of your best people. Make sure they know these rules, and let them go.

Your best people will naturally look improve operations, efficiency, and productivity, and follow the BN rules to a “T”.

5. Treat Bottleneck Output Like Gold

This rule is often confused with rule 3. While rule 3 focuses on the work that goes into the BN, this rule focuses on how you treat work coming out of the BN. If you waste work the BN does, then it’s wasted time and money, and lost revenue.

Whether it’s a physical or knowledge-based product, any time the BN output isn’t treated like gold, it requires rework. That’s lost system time, and the cost comes out of your profits.

Physical products like cookies, a phone, or a car can be lost or damaged. Knowledge products like a branding package, a growth plan, pictures & video, or counseling can be lost, deleted, forgotten, or misapplied.

If you treat BN output like gold, then you will do your best to not waste a single bit of BN work.

Work Elimination Matrix

Rule 3 is ALL about managing the work going into the BN.

This tool is designed to help you sort through the work the BN could, should, and is doing, to identify and remove unprepared, bad quality, and unnecessary work from the BN’s current workload and stop bad work in the future before it can reach the BN.

Everything in quadrant 1 is the work that only the BN can do, and work that needs to be done. All the work that belongs in quadrant 1 is GOOD work. The BN should focus as much time as it can doing quadrant 1 work.

Quadrants 2, 3, and 4 are bad work that the BN should pass off, automate or eliminate. Everything is quadrant 2 is work that needs to be done, but anyone can do it, so it makes sense to preserve BN capacity by passing it off to another team member or automating it.

Everything in quadrant 3 is stuff that only the BN can do, but it doesn’t need to be done, so it should be eliminated or automated, so the BN isn’t distracted from quadrant 1 work. Everything in quadrant 4 should be eliminated. It’s not in your zone of genius, it’s not special or unique. Kill it.

Conclusions

Owning a business can be hard. A lot of days, it can feel like getting punched in the face.

You show up every day and work hard. You’re HUSTLING, you’re GRINDING, but your business isn’t GROWING.

You could GROW your business…if you knew what was holding your business back.

YOUR BOTTLENECK IS HOLDING YOUR BUSINESS BACK. And you’ve got to find it and manage it if you want to grow.

We can help.

Our unique approach to business operations allows us to quickly find and clear out what’s keeping you stuck, so you can do what you do best.

Schedule a consultation call, today. In 30-minutes we can help you find out where your business problems are coming from, and help you figure out how to fix it.

If you have further questions, feel free to reach out to us by emailing zac@homericconsulting.com