Constraint and risk avoidance

How do you manage constraints and risks?

The two significantly impact your company’s ability to stay alive, much less grow.

Constraints appear in many different forms: people, equipment, capital, cash flow and mental bandwidth are just a few.

Being constrained by hardware actually makes it impossible to do the things that you want to do as a business.” – Amazon.com CTO Werner Vogels.

Computer server hardware and manufacturing gear like a CNC machine or 3-D printer speeds are constraints that could prevent you from keeping up with demand, much less expanding how much and how many different things you can deliver.

While Vogels’ comment is a little self-serving, it doesn’t make it any less accurate, nor does it change that Amazon Web Services’ (AWS) has commoditized server hardware and eliminated server capacity as a constraint.

Constraints are risks

If you look closely at them, constraints are risks because they limit your ability to grow, deliver and respond to client and market demands.

When you can’t address those demands, your business risks not only the loss of critical staff members and clients to competitors, but potentially deadly stagnation.

Stagnation creates problems with design, engineering, delivery, creativity and new product development, as well as staff retention and sales.

Scalability problems are a common symptom of hitting constraints. Are you dealing with increased delivery turnaround times? Do you have increasing customer service or professional / consulting services response times?

If you think about what prevents you from delivering 30% more product next quarter, it usually comes down to scalability-related constraints.

Raw material availability, production capacity, quality control, engineering/design and other staff and/or manufacturing limits can all cause you to hit a wall where you simply can’t produce more, creating a situation that feels like walking in quicksand. Increasing price pressures are a form of risk that can push those limitations even further.

These issues can be growing pains, but more often than not, they indicate too little time is being spent running the business.

Spend less time running the business?!?

Yes, absolutely.

When you spend too little time running the business, it’s often because you’re spending most of your time on production-related duties.

It may seem counter-intuitive for owners and senior managers to spend less time doing production-related work, but you simply cannot spend all time on these things without putting your management obligations at risk.

For example, it’s your job to make sure that the business can handle the increases in production that your marketing and sales efforts are working toward. Most managers can’t do that when they are solely focused on production.

You can’t lose sight of your primary obligation to manage risk and eliminate constraints in your business, any more than you can prioritize a nice tan over the health of your body’s circulatory system.

A visible constraint changes behavior

A good example of a visible and behavior-changing constraint can be seen in change at Apple.

One of the unique aspects of Apple new product delivery during the Jobs era was a lack of vaporware. Most tech companies have gotten into a habit of announcing a product months (or longer) before delivery, wasting the media attention these announcements create.

When Jobs took the Apple stage in June and September to announce new products, he frequently finished his pitch with an availability date of “Today.” This took advantage of the excitement his announcement created by allowing buyers to purchase and take delivery minutes after Jobs left the stage.

That significant advantage changed in the last two years at Apple, making them like everyone else.

Staff and mental bandwidth

Most businesses have a backlog of physical tasks, workload and services. This isn’t a bad thing, unless the backlog is so big that your ability to promise and meet delivery times has you months out.

Most clients can’t or won’t wait that long. For service-oriented businesses like tech businesses, mental bandwidth can create significant problems for delivery and deployment, as well as constraining the ability of management and design teams to spend time on “the next big thing”. Stagnation results.

These constraints point directly at your ability and willingness to delegate. You and your staff have to be able to focus on the tasks that they perform at levels no one else can reach.

The bandwidth question to ask is “Is this work that no one else can do?”

Uncertainty and Starships

Today’s uncertainty has a tendency to freeze people’s behavior.

It makes us forget, even momentarily, that doing nothing or continuing to do the same old thing may be more risky than doing that next big thing on their strategic plan.

That doesn’t mean you have to take giant expensive steps like people did in 1999-2000 or in 2005-2006 when almost anyone could act big and get away with it.

When everyone else is hunkering down, even more opportunity is left available to the observant and aggressive – even if they are careful.

Are you looking at mergers, acquisitions, strategic partnerships, cross-marketing, new markets, derivatives of your existing products and services? Are you looking harder than ever for those things that can bridge you into your next big thing?

Those are all worthwhile things to consider, but have you considered your customers’ situation? What has today’s economy done for their needs? What’s the uncertainty done to them and their customers?

Have you visited your customers lately, even if you have to do so by phone, Skype or Facetime? What’s on their minds? What’s their biggest concern that didn’t exist a year (or 3) ago? How can you help?

Sometimes a quiet moment of thought yields ideas that your noisy day, week, month wouldn’t let through any other time.

Likewise, a quiet conversation with your smartest customer.

  • What can you show up with that would provoke an Aha! moment?
  • What can you do to tighten your relationship with your customers?
  • What would seal your reputation in their minds as as business that is all about making sure they are doing well?

People start businesses for a lot of reasons. They aren’t necessarily doing so for the comfort of a job but often for something else. Perhaps for the same reasons man will someday step onto the deck of a starship… because risk is our business.

Risk, Breakthroughs and the Torrent of Change

Today’s guest post from Tom Asacker continues a theme from yesterday.

Taking yourself seriously…or as Tom writes doing what risks everything.

Read Tom’s post about risking it all.

How are you risking it all?

Abolish risk

Summer Release, River Fun in California
Creative Commons License photo credit: moonjazz

Or at least, minimize/manage it.

Today’s guest post from Everett Bogue (posted over at Julien’s place) is a nice little wake up call if you’ve been thinking about making changes in your life (or lifestyle).

One of the biggest things about taking the big step you know you need to take is dealing with the risk involved in making the change.

Here’s one way to abolish risk.

FYI: What he’s really talking about is managing risk, but that sounds boring compared to abolishing it.