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Episode 90: It's All About Throughput - Managing Constraints & Bottlenecks

by Hannah Rose | May 1, 2024 10:00:00 AM

Metaphors like funnels and flywheels fall short in capturing the true complexity of business systems. We should pay attention to and understand systems thinking, taking a holistic view to understand bottlenecks and optimize for throughput rather than efficiency.



Additional Resources:

Show Notes:

Pre-Show Banter: 

  • Doug is fired up after a team AMA and Jess will learn never to schedule a show recording after an AMA.
  • Kentucky has a new basketball coach.
  • Yukon and South Carolina won in the playoffs. 
  • Caitlin Clark was drafted and signed a 4-year contract.
  • The Caps are in the playoffs. 
  • Disney employees who wear costumes are unionizing and Disney is rumored to be expanding the park.
  • Taylor Swift has a new album releasing.

Today is all about constraints, bottlenecks, and fat kids on hikes. 

According to a bold statement from Doug, the topic for this episode is the most misunderstood, misaligned, and misapplied component of go-to-market and RevOPs. Throughput

There are two metaphors that are frequently used that Jess has never liked: 

  1. The funnel
  2. The flywheel

They’re great in theory, but it’s not how things actually work. You can’t speed these things up and you can’t skip steps. For a funnel, you can’t come in at the bottom; that’s not how a funnel works.

A business is a complex system of complex systems. They do not operate in a linear fashion like the funnel and flywheel do.

The other issue with these metaphors is when you try to improve the system and start to identify bottlenecks, these metaphors fall apart. The fundamental, structural problem with the metaphors is that both lead to an obsession with efficiency.

The right metaphor here is the system of systems.

When we focus on efficiency, we tend to lose the plot of what it is we’re trying to do. Efficiency is easy to measure and has a relatively short lag. We need to embrace the lag.

When you change a piece of the system, the system changes. When you make changes and you fail to account for the whole system change, that’s where problems emerge. 

The statement should not be efficiency. It should be optimized. 

The question you need to ask as a RevOps professional is, “Are you optimizing for the whole or the parts?” 

Are you looking to make the system more efficient or the parts more efficient? If you want to optimize the system, the only way you get there is suboptimal because there’s a fat kid on the hike. 

Note: This comes from the parable book, The Goal, which is all about constraints. One of the metaphors they talk about was these kids on a hike and one was a fat, slow kid. To keep everyone together, do you put them at the front, which slows everyone down? Do you put them at the back and make everyone wait? If you move them, you move everything. 

If you want to optimize your revenue, then you can only get there by sub-optimizing the components of your revenue path.

Systems thinking is based on an idea called holism. A holistic approach considers the system as a whole rather than focusing on parts in solidation. Revenue operations is the committee of the whole. 

The model is not reality. Look for conflicting elements. Respect the lag. Every decision is a trade-off. 

How do you make this actionable? 

Understanding The Three Zones of Execution is so important. They lay out the now, the 90 day period we’re in and the future (1 year+)

Build your staging ground. Run experiments. Progressive test. 

Understand what the constraint is. It’s not the chronological sales cycle time. 

Throughput is revenue that makes money. 

Jess’s Takeaways: 

  • Make sure that you’re solving for the whole system and that you’re looking at things holistically, not just one piece. 
  • In order to optimize, you have to be suboptimal. 
  • Understand your constraints and bottlenecks and don’t forget about the trade-offs. 
  • It’s all about throughput.

Next Steps: