April 13, 2022 Knowledge Center

What is the Theory of Constraints, and why should I care?

Reading Time: 4 minutes

Any business owner or high-level executive knows that sourcing the right vendor for a service or supply is not so different from comparison shopping for any major purchase. You’ll do your research, ask probing questions of the sales team, kick the (metaphorical) tires, and evaluate prices and offerings and sales pitches against your business’s budget and needs.

But what do you do when you wind up with several strong contenders, and you’re at the point where it feels like you’re comparing apples to apples?

If you’re working with a managed service provider (MSP) to handle your organization’s IT needs, you’ve probably had to consider all of the above, and might have found yourself wondering how to determine what that final deciding “it” factor will be. Maybe one MSP promises all-hands-on-deck 24/7 support, while another can’t be beat on its white-glove customer service, and yet another has the best pricing options.

When it comes to SUCCESS, however, it’s easy to articulate what truly sets us apart: an operational philosophy called the Theory of Constraints.

So what is it?

If you’ve ever identified with the idiom “a team is only as strong as its weakest player,” you’re already part way to understanding the Theory of Constraints (TOC).

The theory originated with a business management expert in the ’80s, a physicist by training who spent the early part of his career in manufacturing.

The basic premise of TOC is that every company has a finite capacity to deliver, that they have a constraint somewhere in their system. By focusing resources on and around the appropriate constraint in your process you can achieve a higher level of performance, productivity, and ultimately profit.

“The beauty of Theory of Constraints is that once you identify it, you can manage the entire operation around that constraint, and it becomes a huge focusing lens and leverage in which to accelerate both profit and revenue without actually working harder,” says SUCCESS President Bruce Lach. “It’s a method of actually managing your business more simply, by recognizing the constraints within your business.”

But how does it apply to IT and MSPs?

As you evaluate which vendors to hire for certain business services over the years, you’ve probably heard any number of excellent packages and sales pitches, which hopefully lived up to their promises.

Say, for example, an MSP promises their customers a returned phone call within 30 minutes, any time of the day or night. Imagine they always delivered on that promise, so much so that suddenly their phones were ringing off the hook—not with service requests, but with interested potential customers. If all of these new clients signed contracts and expected that level of service, that fast turnaround, but the MSP didn’t adjust its staffing levels to accommodate—it’s pretty easy to imagine what would come next. A staffing deficit, a lag in service, and a whole slew of unhappy customers. A constraint.

“If you think of the ways we deliver services to our clients, we do it in three primary ways,” Lach explains: projects, services that require field visits, and remote services. “Each of those represent unique value streams for our clients, and each of them have their own constraint. We can only deliver so many projects at a time, we can only provide so many field visits on a given day, we can only answer so many phone calls in a given minute, hour, or day.”

At SUCCESS, the most demonstrable example of how TOC is employed is through excess capacity. For each of its teams assigned to those three key deliverables, SUCCESS leadership has built in much more than enough—more than enough time, resources, and talent, meaning an all-hands-on-deck security breach for one client won’t result in a service blackout for all of the others. You can imagine the disaster that would result if two clients had a cybersecurity breach simultaneously, and the security response and recovery teams had to be completely diverted for any length of time.

“You can’t have ‘just enough’,” Lach says. “Theory of Constraints has us having excess capacity in our delivery teams—other teams as well, but predominantly delivery—which means we can be more responsive to our clients. We can ensure delivery on time.”

If it’s so great, why isn’t everyone doing it?

It’s a question Lach has fielded often, and the answer is surprisingly simple. Theory of Constraints diverges from the standard way of doing business, and change is hard.

“If the way you differentiate yourself is by having a belief system so different from the current one, it’s hard for people to follow because they have to abandon what they believe,” Lach says.

For SUCCESS, though, adopting a TOC approach has only led to more opportunity.

“Because we have excess capacity, it allows us to do things other companies that are more lean can’t do,” Lach says. “We can adopt more services. We can bring more services to market. We can implement internal tools faster than others can.”

When it comes to SUCCESS customers, employing TOC means “We can say yes to their needs,” Lach says. Whether that’s a request for additional field visits as a client enters a busy season or the ability to jump in and augment a client’s staff when a regular employee leaves, the excess capacity following TOC affords allows SUCCESS to deliver the consistent, high-quality, responsive service that our clients have come to expect.

“We’ve been adopting this for many years,” Lach says. “It’s been a clear differentiator for us—not just for us as a company, but for our clients, as recipients of that value.”