Archive for Theory-of-Constraints
Lean your Marketing thru Segmentation
Posted by: | CommentsHow do you look at your marketing? Do you know where your leads come from? How are you processing leads to make them successful? In my recent blogs about marketing and the Theory of Constraints, I discussed the connections between each step of the marketing hourglass. Many organizations do not look at their sales and
marketing process in a linear fashion, let alone segmenting it. When organizations first map out the process, they look at connections where people come from being all over the map such as the diagram to the right. They look at a simple chain as an oversimplification of reality. Not everybody goes through each step of the cycle. Some will skip from step one to step three. Someone may enter the cycle in step three. These interconnections are not trivial, it is what makes your process work and it also may be stopping it from working.
So what is the purpose?
Different opportunities, normal variation and changing workforce make it just about impossible to balance everything. There is a weakest link; there is one element in your system more limiting than another. Why is it so important to find that? Without working on your greatest constraint much of your work will be wasted and non-productive. Take a look at the diagram above and see how proper segmentation may alter your perception of the marketing hourglass. As you can see, not all steps may be needed for each and every channel. An excellent example is someone that has been referred to you. With the proper referral program in place, you will know exactly what step in the process that person should enter.
Keep segmenting your list, till you gain a linear flow. Yes, there may be a few exceptions. However, I think it might be interesting to scrutinize those exceptions. Are these exceptions really your target market or ideal client? I think you might find out that they are something less than ideal clients. Whatever you do, don’t ignore the exceptions; they may prove valuable insights to your marketing process. That thought may lead to another discussion.
Related Posts:
Using the Theory of Constraints in Marketing
Identifying your Marketing Constraint
Elevating and Repairing Marketing Constraints
Posted by: | CommentsA continuation of my blog posts of Using the Theory of Constraints. We are concentrating optimizing the Throughput of your Marketing utilizing the Five Steps of Continuous Improvement: Steps 4 and 5.
Step 4. Elevate the system’s constraint.
You may have found significant improvement in the preceding steps and another constraint may have actually developed at this time. This is the step that we have to add capacity to the constraint. It may be additional events, sales people or increased advertising.
Reviewing your Marketing you may have found significant shortcomings in one of the phases. You may have never instituted a formal referral program, for example. You may not have a presence in Social Media.
Jumping into this step early in the process is very common. The newest and/or the latest technology may seem an easy fix. Looking to vendors for your fix is an easy alternative, but you may not find the core problems associated with the constraint if you did. There is a reason this is the fourth step, and you should make every effort to improve the constraint through the fist three steps before adding equipment, software, increased advertising, etc.
This may also be the area that “Tribal Knowledge” may limit your thinking. We defend what we have always done. Look at new and different ways to accomplish the constraint.
Step 5. If a constraint is broken, go back to Step 1. However, don’t allow inertia to become a constraint.
You will always have a constraint. A fundamental concept of continuous improvement. As you correct one another will develop. As in Lean this is a fundamental concept of TOC.
Mot organizations have an unlimited number of things to improve. However, most of the time only a relative few will make a significant difference in your company’s bottom line. If you are going to improve something , IMPROVE IT.
Why waste everyone’s time? Changing the process without the data is cause for failure. You have heard it time and time again, JUST DO IT! We have been trained that way, action is accomplishment. However, the wrong action may accomplish little or drive you deeper into a hole. Without the data from the previous steps, you will not be able to make as effective and dramatic improvements that you desire. Seek 200% process improvements and cost reductions of half!
One of the sayings I have read about in TOC time and time again. Don’t leave inertia become the constraint. Change should help your performance, not hinder it.
Related Posts:
Using the Theory of Constraints in Marketing
Identify your Marketing Constraint
Posted by: | CommentsAs I mention in a previous post: Every System, typically has relatively few constraints. However, to operate at maximum efficiency, the limiting constraint must be identified. Five Steps of Continuous Improvement help identify and improve the constraint. How do I correlate a Marketing Funnel with the Theory of Constraints? TOC uses the weakest link, a chain as a visual in working with throughput.
Below, I have outlined my basic understanding of the Theory of Constraints from my readings and experience. If you would like to dive deeper into this subject start with the AGI-Goldratt Institute website and there is whole slew of books, trained consultants(Jonas) available throughout the country. I believe the Theory of Constraints principles are a requisite for continuous improvement.
Before starting with the 5-steps, there are two prerequisites:
1.Identify the Goal of the System /Organization
2.Establish a way to measure the progress
The most common goal is to make money and that should be our overall purpose. It sometimes can be overlooked in increasing sales, client retention and many other factors. Many will argue but increase sales can hide many problems. The companies that fail the quickest in a recession are the ones that were living on growth without really generating income.
There are several ways to measure progress with the most common being Throughput, Operating Expenses and ROI. Going into too much detail about how to use the ratios is beyond the scope of this blog. The important thing to remember is that TOC methodology values Throughput and it as the best means to fuel growth. TOC then looks at Inventory(Prospects) second and operating expenses third. So our concentration will be optimizing the Throughput of the Marketing Funnel utilizing the Five Steps of Continuous Improvement :
Step 1. Identify the system’s constraint.
Step 2. Exploit the system’s constraint.
Step 3. Subordinate everything else to the above decision.
Step 4. Elevate the system’s constraint.
Step 5. If a constraint is broken (that is, relieved or improved), go back to Step 1. However, don’t allow inertia to become a constraint.
Starting at the beginning:
Step 1. Identify the system’s constraint.
The system’s constraint is the phase or part of the phase that resource which limits the output of the entire system. Start following your actions and you may find out that your bottleneck is not just getting more prospects in the door. If you can monitor actual numbers, you may be amazed at what is happening to your prospects(inventory). This is where we need to identify the constraint , where is your constraint?
The easiest way in a manufacturing analysis is to walk around and see where the work is piled up. It is not that much different in a marketing process. Walk around and see if there is a pile of sale presentations waiting to go out. You may find people waiting on financing to be approved. Maybe, inconsistent delivery of Newsletters and so forth.
If you have done a good job of building your marketing hourglass, you may be surprised on how easy it is to find. You may be so lucky to be able to eliminate parts of a step, not the entire step. Start internally, as you gain internal control you will also gain the respect of your customers and vendors. This may help you significantly when you ask them to assist you in late improvement needs.
Our Next blog will continue with step 2 and 3.
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