Removing constraints to growth

A business can only grow as quickly as its biggest constraint… A business constraint can be anything which is stopping a business from achieving its goals, this can be time, space, manpower or another limiting factor.

Constraints can come from anywhere within the business, and it’s crucial that constraints are eliminated. The theory of constraints states that organisations are always faced with a minimum of one constraint which is limiting business operations. As a business, you should focus on removing the most pressing constraint, the one which you regard to be having the most negative impact on restraining the company’s ability to achieve goals. 

Typical business growth constraints include staff, workplace capacity, working capital and leadership. It is important to understand that even if the majority of your business is successful and pushing forward, that one constraint can hold everything back. 

There are 4 categories that constraints usually fall into:

• Physical – Typically lack of staff, material shortages, equipment, financial and other tangible items. For example – a faulty machine may not be able to get fixed immediately, which can therefore hold back production of a certain product. 
• Policy – Ways of working - whether they are recommended or required. This can include company procedures, union contracts or government regulations. For example –  The resource to pay overtime is lacking, which limits the time that employees can spend on time-sensitive projects. 
• Paradigm – A paradigm is a close relative of the policy constraint. This is deeply engrained beliefs or habits which can have a hindrance on efficiency. For example – A task can be completed quicker by working in a team, however an employee prefers working by themself which means the task is taking twice as long.
• Market – This occurs when production capacity exceeds sales. For example – The revenue of a company has shrunk due to their competitor gaining a market share. 

Although it is important to continually improve on the business’s strong points, it’s important to remove any weak links that are holding the business back. There are 5 steps to follow when applying the theory of constraints as a process:

Identify the constraint. 

It is important to acknowledge and pinpoint any weak links so you can assess what needs to be changed, improved, or removed. Identifying the problem is always a good starting point. The desired situation can then be decided. When planning how much growth you would like to achieve, you can ask yourself what needs to be in place for you to progress. At this point, any constraints will become apparent. 

How to eliminate the constraint

Once the constraint has been pinpointed, it is important to implement a plan on how the constraint can be eliminated or improved. Where possible it is beneficial to create multiple plans of action, so various approaches can be tried. Consider discussing this with the whole team if relevant, as it can be beneficial to involve the wider team when making decisions. This step focuses on quick wins, leaving more complex changes for later. 

Subordinate and align to the constraint. 

Businesses shift all their resources so that everything supports the removal of the bottleneck. This ensures fewer instances of constraint operation being stopped by upstream or downstream, resulting in an improved throughput for the process. You can skip to step 5 if the actions from this step break the constraint. 

Elevate the constraint. 

If any of the quick improvements haven’t been effective, you need to consider further actions to eliminate it. This can mean adding people, money, or other resources until the constraint has been broken.

Repeat 

Once the constraint has been resolved, the next constraint should be addressed immediately. To not become complacent, it is key to address the next constraint once the previous has been eliminated in order to continually keep improving the business. As soon as you remove one constraint there will always be another to replace it.   

The theory of constraints benefits companies as it maximises working efficiency. If you choose to do so, it enables you to maximise your output capacity, and even if you don’t it will help to minimise costly downtime and wasted resources. 

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Please note: This article is provided for information only and was correct as at time of writing (08/02/23). Any lists and details provided above are not exhaustive and are not intended to be full and complete guidance.  No action should be taken without consulting detailed legislation or seeking independent professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this article can be accepted.