Identifying the Bottleneck Preventing Your Company from Growing?
Effective business management needs strong leadership, strategic planning, and the ability to overcome growth obstacles. One key element in optimizing operations is identifying the bottleneck—those points where processes slow down or become inefficient. Mastering business management and identifying bottlenecks streamlines workflows, boosts productivity, and drives greater company success.
Building a Strong Foundation for Business Management
In a world where success is crucial but often intricate, there’s an exciting journey waiting for those keen to explore. In the realm of organizations, whether they are companies, non-profit organizations, or others, there are two almost inevitable maxims:
- Organizations seek to remain, to survive, both in the short and long term, and
- Organizations – at least the majority of them – seek growth; needless to say, this second premise includes the very survival of the company.
Here are articles tackling challenges in organizational growth to enhance productivity and effectiveness. We will address various topics from the perspective of the “people, processes, and technology” framework (see here). The Leavitt model was first introduced by business management expert Harold Leavitt in the 1960s. It remains widely used, adapting concepts to new realities, especially in technology, creating a more fluid and expansive approach. It also addresses aspects such as more complex platforms and systems rather than just hardware.
Modern Approaches to Business Management
Our focus will be on people, without disconnecting them from the other two pillars, processes, and technology. From there, we will address topics such as delegation, and managing small and large teams (in terms of numbers). Similarly, we will also discuss topics such as personal development and the development of collective competencies. Additionally, we will discuss the impact of the other two pillars, especially the disruption of new technologies, such as artificial intelligence.
In his classic yet still highly recommended book The Goal, physicist Eliyahu Goldratt emphasizes that a system’s capacity depends on its bottleneck (for more information about his books and materials here). If I aim to travel quickly from point A to point B by land, owning a Bugatti Chiron Supersport 300+ (which is, for many, one of the fastest cars today) won’t matter much if the driver has never exceeded 60 miles per hour. Ultimately, in this case, the driver’s capacity will determine the speed, not the car.
Later on, we will return to this concept of a bottleneck.
In the business world, from the early stages of entrepreneurship to the maturity states in the company lifecycle, an almost absolute constant is growth: the ongoing need to enhance the company’s capacity to deliver improved solutions to more customers. However, for every founder, CEO, and manager at high and medium levels of organization, the question is: How to grow? How can we achieve it while mitigating risks and improving goal achievement, even if it doesn’t guarantee company permanence or expected growth?
In an increasingly competitive and complex world, there are many variables to consider.
Generally, we can approach the task by considering three main pillars: people, processes, and technology. This article is part of a series of publications that address relevant aspects to consider for growth, focusing on the first of those pillars: people.
The Impact of People on Successful Business Management
To grow, delegation is essential. Every entrepreneur knows this. Indeed, some entrepreneurs in the initial stage of their business lifecycle may find this challenging. However, it’s a necessary step in creating an organization capable of delivering on promises to those first customers.
At a certain point, it’s not just about growth but about survival: The founder quickly finds themselves at a crossroads of delegating to others to avoid neglecting current customers. Here, it’s not about growing but about delivering the promised value to those who have purchased my products or services today.
It is also about evolving a concept of “self-employed”. By this, we mean that the founder does all—or almost all—of the work. In doing so, they begin to build a system where they can delegate a large part of the tasks to others.
On the other hand, regarding the need to delegate, we understand that there may be exceptions. Say, one may have a brilliant idea. If patented and exploited through third parties, it might require only a few strategic external allies instead of building a full organization. But this is the exception to the rule. So, with few exceptions, in today’s world, to grow, you need to have highly capable teams for the growth of your organization.
In addition, selecting the appropriate technology for your organization (from hardware such as servers, cloud services, ERPs, CRMs, among others) can be extremely complex. It can also be difficult to design and implement robust and appropriate processes for your organization—processes that provide reliability and flexibility in changing and competitive environments. However, the pillar that almost always provides the most variability, uncertainty, and risk is people.
People are sometimes unpredictable: we get sick, our commitment to the organization varies, and being able to deliver high performance depends on multiple factors that the individuals themselves often cannot articulate. In general, we are complex beings who, if in the right ecosystem, can make a difference. Otherwise, we can simply walk out the door and never return to the place where we work, and that is often just one of the risks within the organization.
How A Decision Impacts Business Management Success
Alright, let’s start from the beginning. Like many things in life, it all begins with a decision. Every entrepreneur, whether they realize it or not, whether they are capable or not, has decided to work with people.
Once we understand this, we can see that some individuals do possess charisma and certain skills that make them better leaders. However, the general rule is that we make every leader; they are not born. It’s not about whether you’re extroverted or introverted. Each person, based on their personality, must make conscious and sustained efforts to maximize synergy with others (Daniel Pink extensively discusses this topic in the sales world, although it applies to every manager; the book To Sell is Human is highly recommended). We’ll expand on this later.
So, to be concise and to the point: If you’re founding a company, or are a part of one, and you want to grow, you must learn to work effectively with others. Otherwise, you’ll be deeply unhappy and make others unhappy too (especially if you’re in a leadership position).
How Technology Impacts Business Management Decisions
Pause, we hear an objection: increasingly, technology is taking over the work of people. Especially with the disruption of artificial intelligence, many voices argue for an increasingly limited role for humans. All these while platforms, algorithms, and “thinking” entities take on much of the daily work.
Not so fast.
Undoubtedly, we are experiencing unprecedented technological changes. Sustained increases in processing power, storage capacity, and bandwidth have enabled enormous advances and will continue to do so. By way of example, in 2021, around 10 billion devices were connected to the internet worldwide. Now, predictions for 2030 are for 30 billion devices connected to the internet globally (for further insights, the Digital Business Strategy MOOC from the University of Virginia is recommended). This is just a sample of the rapid advancement of technology.
In fact, the World Economic Forum has dubbed the current technological moment the Fourth Industrial Revolution. Certainly, these are times of great change. The new reality poses challenges for managers and, in general, for all individuals within organizations (and outside of them).
However, experts point out that while new technologies have rapidly increased predictive capabilities. This, in turn, has increased the need for greater judgment capacity on the part of people, where judgment is a skill inherent to human beings that has not been replicated by artificial intelligence thus far (see the aforementioned MOOC).
Without a doubt, the technology dimension or pillar is experiencing enormous changes. These changes challenge how processes are structured and transform people’s roles, demanding new skills from them. Technology is creating enormous disruptions that are pushing the other two dimensions (people and processes) beyond the limits known today. One must take this into account when addressing the needs and strategies in these dimensions.
Let’s talk about the process dimension
The other pillar or dimension of the Leavitt model. We understand processes as the sum of activities that together transform raw materials into products. A process could involve receiving information, transforming it, and ultimately processing payments (the product) for employees in a company.
Processes are shaped by factors such as:
- Business model
- Industry or sector the company operates in
- Size of the company
- Technology used
- Individual and collective capabilities
The business model ties directly to the company’s strategy and industry, crucially shaping processes that aim for efficiency and simplicity. Additionally, with the right technology and skilled people in the necessary roles, processes can become streamlined and more efficient.
The three dimensions and their interaction
In simple terms, the technological dimension is altering the other two dimensions. Generally, this is done so in a positive way. Still, presenting enormous challenges to adapt and adjust to the new changes that new technologies bring with them.
Processes become, in a way, the meat of the sandwich. Once the strategy and business model are clear–considering variables like size and sector–technology and people are the key forces that shape these processes. Ultimately, leveraging new technologies and maximizing processes and only be capitalized upon with the right people.
Do you remember the concept of the bottleneck explained by Professor Goldratt?
Of the three dimensions, the bottleneck concept clearly belongs to the human one. This is because it allows for innovation and maximizes the other two, which on their own have played a passive role. This last bit is rapidly changing with the arrival of increasingly active technologies.
This highlights the need to drive organizational growth through high-performance teams that adapt to evolving needs, challenges, and technologies.
Growth and survival require delegating effectively and forming teams that maximize each individual’s potential. In upcoming sections, we’ll explore challenges and opportunities for growth within the people pillar of organizations.
