In business, what is focus? The objective or goal of most businesses is to make money – as much as possible now and even more in the future. Every manager and every employee is (or should be) focused in a way that achieves that. My question is: Are all managers correctly focused to make as much money as possible now and in the future?
If I where to ask almost any manager in any business I believe the answer I would get is an incredulous look for such a silly question. Of course that is their focus.
Nevertheless I am quite sure that the majority of managers, while focused, have the wrong focus (sometimes what is called focus is something like focus on everything). Their company’s bottom line is damaged.
(I owe the 5 Focusing Steps to Dr. Eliyahu M. Goldratt)
The Limiting Factor
Every good manager continually asks, ‘How can I achieve a better performance? How can I get ahead?’ Senior managers often hear requests for more people, better people, training for their people, investment in more equipment, investment in new and more modern machines. These requests are all a sign that the manager making the request has identified something he believes will help him get ahead in his career. To get ahead his department within the business must have the best performance – he needs to be the star in the eyes of the boss.
If al managers, all employees, are doing their best to optimize their department, division or area; won’t the business be optimal? Or, could it be, that everyone doing the best for himself causes damage and sub-optimization in other parts f the business. It seems to me that everyone optimizing his area has a petty good chance f causing the business as a whole to be sib-optimal.
Should the CEO or managing director care whether or not the various areas of his business are operating optimally? Shouldn’t he be concerned with the results of the business as a whole? If the businesses results are optimal, while one or the other part of his business is not – what does he care? I speculate that your business is more likely to be optimal if the CEO focuses on the right thing – to get the most from whatever part of the business is the weakest link. The weakest link determines the maximum amount of money your business can make. (Even if your goal is something other than profit, making money is always a necessary condition to achieve your real target.)
This means that a requirement for every CEO is to know what his weakest link is. The first step f business focus is to ‘Identify the Constraint’.
In some businesses it is quite easy to identify where the constraint is. It (the machine, person or group) will have the biggest pile of work in front of them waiting to get done. If you are in this situation you are in an excellent position – you know where to focus!
Unfortunately there is a bad practice at work in many of the businesses around the World. It can be summarized by ‘A resource standing idle is a major waste.’ It seems to make sense, but look at the damage if every resource (people and machines) does work at capacity. Inventory will pile up at the constraint for sure, but it will pile up all over the factory and all over the business. There will be so much work in process that a constraint can no longer be easily identified, lead-times to get anything done will be enormous (Little’s Law), money will be tied up in too much inventory in process and managers will clamour for more resources just to get the backlog down. Fortunately a lack of space or insufficient funds (and a good finance department) will prevent the worst excesses. Nevertheless the need to keep resources busy (by managers and all employees) is so strong that work in process will usually be much higher than necessary.
To find the limiting factor a business must first drain work in process from the system until only the weakest link still has working waiting in a queue.
‘A resource standing idle is a major waste’ is a policy. It may not be a written policy, but that does not matter – if it is enforced as a work rule, it is a policy and will have the effects described. There are in fact many policies that can harm business results. Local optimisation instead of global optimisation is another. Standard costs, product costs, management by objectives are all policies when incorrectly implemented will harm your business. There are many policies and policies represent huge opportunities for business improvement. Many are damaging.
Policies are difficult things. They are implemented for very good reasons. When they are implemented businesses forget to check for potential negative consequences. When you deal wit these damaging policies it will be important to not remove the beneficial parts of them while ensuring that the negative consequences are cured.
We have our first step on the road to real focus: 1. Identify the Constraint.
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