· Flow · 2 min read
Stop Focusing on Utilization. Start Focusing on Flow
Optimizing for 100% utilization creates inventory backlogs and hidden waste. Why Theory of Constraints thinking — find the bottleneck, subordinate everything else — is the smarter path to organizational throughput.
Click image to open full sizeDoes it make sense to aim for 100% utilization across the organization? Is that efficient?
Whether it’s an ad agency, a factory, a product development organization, or any organization - it has a constraint.
The constraint/bottleneck should be optimized, but other areas of the process shouldn’t aim for 100% utilization since that would create waste and overload.
For example, let’s say client approvals are the constraint. If everyone else aims for 100% utilization, tons of “inventory” would be waiting to be approved.
Instead, the Theory of constraints (which was born in the manufacturing world but its principles apply for knowledge and creative work) would say to find the constraint and focus on it - by subordinating other steps to its pace, helping it, and eventually elevating it.
For example, we could make it easier for the client to approve, choose easier clients to work with and use slack in other areas to deal with this issue.
One good way to apply this thinking is to manage end-to-end flow (via something like a Kanban board) across functions and disciplines.
But first, you have to learn to see flow.
In agencies, tracking the flow of client deliverables is often a good place to start.
And back to utilization—one nice trick is to move from optimizing utilization of people/teams to optimizing utilization of deliverables—minimizing the amount of time the deliverable sits as idle inventory waiting to be worked on. (This is also known as Flow Efficiency.)
Here’s where you can start then:
Identify the 1-2 key business processes you want to focus on optimizing/fixing
Decide what will be flowing across the value stream (e.g. Deliverables, Customers, Projects, Requests, Campaigns, Plays, etc.).
Tip - This isn’t necessarily the day-to-day tasks - it’s often work that will flow end to end in a few weeks. YMMVMap out the key steps in the flow
Create a Kanban Board where you will see and manage the flow as part of your regular management cadence across whatever functions/disciplines/people are involved. Look for bottlenecks and constraints and focus your improvement conversations around them.
Measure Flow Times and other flow metrics and look for interesting patterns.
About Yuval Yeret
Yuval is a rare practitioner who has shaped the agility path of dozens of organizations and influenced the frameworks used across the industry. He helps product and technology leaders move from agile theater to evidence-informed, outcome-oriented delivery that creates better value sooner, safer, and happier.
