Every business has what I have come to think of as a decision bottleneck: the single binary choice that determines whether the operation moves forward or stays stuck. Small businesses, in my experience, stay stuck in a rut because they aren’t sufficiently clear about the nature of what they need to decide, which leads to abdicating crucial decisions while obsessing over decisions that don’t matter. Sometimes it’s the smallest, most mundane decisions that quietly steer the entire business, and a moment of truth can come knocking at any moment without notice. In putting together the framework I’m about to share with you, I drew from one of my favorite sources of business philosophy: the Theory of Constraints, as originally championed by Eliyahu Goldratt.
Goldratt, often credited with revolutionizing the manufacturing industry, introduced his Theory of Constraints through his novel The Goal, a love story about a factory that became a cornerstone of the manufacturing world. The basic idea is that every manufacturing plant has a bottleneck, or a single resource that is most critical for the entire operation. If you shut down a bottleneck for one minute, you effectively shut down the entire plant for one minute. Goldratt found that a lot of manufacturing facilities seemed to struggle because management was focused on trying to keep the entire plant working all of the time, rather than focusing their attention on bottlenecks.
I observed the Theory of Constraints in action when I was wearing a green apron at Starbucks. The espresso bar was the bottleneck of the Starbucks where I was working as a barista at the time. The line of people and cars could only move as fast as the espresso bar could crank out drinks, which became apparent when cashiers would sometimes “bump” over to the espresso bar to help move drinks more quickly. I further learned that the espresso bar had its own bottleneck. One of the other baristas told me to make sure I never run out of steamed milk. She said, “If you just make sure you keep plenty of steamed milk ready, then everything will be fine.” Sure enough, I found that if I ran out of steamed milk, it wouldn’t matter how many shots of espresso I pulled.
You’ll notice that I used the word “was” instead of “is” in the paragraph about the Starbucks example. The bottleneck was at the espresso bar at the time when I was working at one specific Starbucks. I would not be so careless as to claim that the bottleneck is always at the same place in every location, or even that the bottleneck remains the same at the same location all of the time. Bottlenecks move. Solve one, and the next reveals itself. For example, a restaurant might find that the bottleneck is in the kitchen. The restaurant might find a way to make the kitchen a lot more efficient and then find that the bottleneck moves to the cash register. Everything begins with knowing where the bottleneck is at a given point in time. If you don’t know where the bottleneck is, then your decision-making process is the bottleneck.
A Different Kind Of Bottleneck
Every business is ultimately in the business of making decisions. The mother of all bottlenecks is the decision bottleneck. In today’s world, we are inundated with information and infinite choices. If we cannot make decisions quickly and decisively, we are falling behind in the game of business. We need to be clear about what data we need to make a decision. Once we have enough data, we need to act without delay. I think of the decision bottleneck as the single decision that blocks all other decisions downstream, or the single decision that needs to be made most urgently. Acting incorrectly at a decision bottleneck can be disastrous. Delaying the decision can be equally disastrous. To navigate the inherent pressure that comes with a limited time window, we need to be cognizant of the information threshold, or the point at which the cost of delay exceeds the benefit of any additional information we might gather.
And I think business owners are wise to think of every decision in binary. When we think in binary, every decision is a yes or a no. And whether the situation is simple or complex, I believe that every decision can be reduced to a single factor that makes the decision an obvious “yes” or an obvious “no.” Sometimes, identifying that key factor takes a lot of effort. Many times, people will just guess or decide based on feelings. It’s possible to make a bad decision and get a good result, which leads to a false sense of confidence in a bad decision-making process. It’s also possible to develop organizational superstitions and become proud of nonsense. (“What did I tell you? We ALWAYS have a great month when it’s sunny outside on the first Monday!”)
Sometimes, in order to reduce a decision to binary, we have to slice a big decision into smaller decisions. Let me give you a practical working example that I have encountered frequently in the last few years with a variety of different companies. Deciding how to market a business, on the surface, looks like an endless gray mist of ambiguity and unanswerable questions. There are always new tools, new software platforms, new theories, new markets, new competitors, and never a black and white answer to anything. The same methods don’t work consistently over time, not even in the short run. Even after going through the trial and error necessary to figure out something that works, there will inevitably come a point where the strategy just stops working…sometimes suddenly, sometimes gradually. Sometimes there is a clear and obvious reason, and sometimes there is no apparent reason at all. On the surface, marketing appears impossible to reduce to a single binary decision, but there’s a different way to look at complex problems.
If you are thinking about how to market a company, you first have to ask yourself if the decision actually matters or not. Do you truly have a bottleneck in sales, or are you turning away business? The answer is not as obvious as it seems. For example, let’s suppose you own a carpet cleaning company and you are accustomed to cleaning single-family homes and small offices, and you have no capacity issues when it comes to handling jobs of this size. But let’s further suppose that upon closer inspection, you realize that your goal is to secure a contract to clean all of the carpets in a large building like a skyscraper or a hotel. You get an opportunity for a job of the size you want, and you find that you do not have the capacity to pull off the job within the time required. So you miss out on the large job and don’t have enough small jobs to keep everyone busy. This is an example of a capacity bottleneck disguised as a sales bottleneck. In such a case, marketing or advertising will make your problem worse (if it works, or otherwise it will just waste your money).
Setting the above example aside, let’s assume you do indeed have a sales bottleneck and are nowhere near a capacity bottleneck. We need to slice the marketing problem into several different decision points.
Are good customers leaving? If so, why? This needs to be fixed first.
Are your customers regularly referring other customers to you? If not, why not? Are you doing all that you can to entice your happy customers to refer and recommend you? If not, a more likely starting point might be to implement a system for converting happy customers into raving fans.
Are your current customers buying all that they can from you? If they are going elsewhere for some needs that you could be doing a better job servicing, then that problem may need to be addressed first.
Do you have a system and a tool in place to capture new leads and ensure that follow-up happens in a timely manner? If not, that needs to be put in place before doing any advertising.
Assuming you have no quality or service issues, that your good customers are getting all of their relevant needs met through your company and referring their friends, that you have a well-oiled machine in place for following up on every sales lead, but you still don’t have enough new customers coming in the door, we can then start to slice the problem of how to go about marketing.
There are basically three ways to market any business:
You can run paid ads.
You can cold-contact.
You can network.
There are various different combinations of the above strategies, but everything you could possibly do to market any business is going to involve at least one of the three. We can consider each one separately as a yes or no question. For instance, let’s look at the question of whether or not to run paid ads. If the question is not an obvious “yes” or an obvious “no”, then we need to slice down the question into additional criteria to evaluate, such as:
Budget
Window of opportunity
Campaign time frame
Target population
Offering
Platform
The budget can be expressed as a binary question: is there sufficient available funding to run a viable advertising campaign? If not, then the rest of the criteria become moot and paid ads can be removed from the list. If we are uncertain as to how much money is required to make a campaign “viable”, we then have some additional work to do. We might mark the budget question “unknown” for the moment and focus on the remaining questions, beginning with the window of opportunity.
One way to ask a binary question about the window of opportunity: “Are there more buyers than we can feasibly reach one at a time before our next window of opportunity expires?” This question gets more complicated, because it depends on the nature of the product being sold and the length of the opportunity window.
By methodically eliminating options that don’t pass the binary test, we isolate the one decision that truly governs progress: the decision bottleneck itself. The process continues at length from here. Many more decisions need to be sliced into binary nodes on the tree before we arrive at our goal: identifying the decision bottleneck. In a real scenario, the tree might sometimes run 10 or 20 branches deep. It’s easy to see why many people dread and avoid this level of intellectual effort. It looks and feels so much easier to just guess, go with gut feelings, do what you’ve always done before, or copy what others appear to be doing.
If you feel overwhelmed with too many complex decisions, consider that you may be able to radically simplify your decision-making process by adopting the discipline of asking questions in binary. Open ended questions are conducive to endlessly generating more questions and inviting endless pontification with no action. A quality question slicing process should be subtractive. Our goal is to undergo a process of elimination until we are left with only the most logical course of action. We don’t always have the luxury of complete certainty, but we can achieve practical certainty. We can be certain that we have followed as thorough a decision-making process as we are capable of, given the information we know. We can be certain that even if we’ve made a wrong decision, we will learn from the outcome without incurring needless cost or risk.
Every decision has a bottleneck. It’s not always easy to find, but it gets easier with practice. The discipline of looking for bottlenecks is what gets a business out of firefighting mode and paves the way for growth.
