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What Is The Theory Of Constraints And How It Can Change Your Life

When I first started an internet business and began studying online marketing, and in particular lifestyle design and productivity, I came to identify myself with the 80/20 Rule.

You can read my original post explaining how the 80/20 Rule came into my life here – What Is The 80/20 Rule And Why It Will Change Your Life.

Another principle I later applied, which is the perfect companion to the 80/20 Rule, is the Theory of Constraints.

The Theory of Constraints is very relevant for building a blogging and information publishing business, or really anything in life. I thought it was about time I explained how I use this principle and how you can apply it in your life and business.

What Is The Theory Of Constraints?

Let’s start with a definition from Wikipedia:

The theory of constraints (TOC) adopts the common idiom “A chain is no stronger than its weakest link” as a new management paradigm. This means that processes, organizations, etc., are vulnerable because the weakest person or part can always damage or break them or at least adversely affect the outcome.

The analytic approach with TOC comes from the contention that any manageable system is limited in achieving more of its goals by a very small number of constraints, and that there is always at least one constraint. Hence the TOC process seeks to identify the constraint and restructure the rest of the organization around it.

The full Wikipedia entry goes on to explain steps to apply the Theory of Contraints, in particular to large scale manufacturing, which is where it can be especially useful (it’s great for improving efficiency of systems made up of many people and processes).

I like to apply the Theory of Constraints on a smaller, more personal scale, in terms of what I need to do to complete a project. It’s particularly helpful when determining the order of priority to get things done.

The 80/20 Rule states that only a few things are responsible for most outcomes. The majority doesn’t have a big impact, hence you should focus on the few things that matter most.

The Theory of Constraints helps you figure out exactly what those few things are because it forces you to look at what you are trying to achieve and what is stopping you from doing so. The activities you should do are about eliminating or “opening up” the constraints, which thus become the 80/20 jobs – those responsible for the greatest return.

How I Apply The Theory Of Constraints

For any change I want to make in my life there are three key steps –

  1. Gain clarity about what I want
  2. Comprehend the system I am going to use to get it
  3. Execute the system in the right order of steps

People are usually good at step one, at least in a vague sense. Often we don’t understand exactly what we want until we go after it, and realize we wanted something else, or we changed what we want as time goes by and we grow.

For the purposes of this article I’m going to avoid the personal development discussion this line of thinking opens up and stick with a more simple principle of knowing what you want.

For example, if you know you want to make $3,000 a month from an online business so you can quit your job, that’s a fairly reasonable goal, one that has tangible outcomes you can measure and one that many other people have done, so you have examples to learn from.

The next step is to research how to achieve this goal, figure out your options and choose the best one for you. From there you study the system so you understand it in principle and comprehend how all the pieces go together, even if you have never actually done it before and don’t know all the tiny details. You are looking to form a macro or birds-eye understanding of the system you are going to build. Then you just follow the steps until you have what you want.

Easy right? Well not quite.

This is where the Theory of Constraints can be really helpful. You can use it to ascertain what is missing in order to move through each step. Your job is then to go as far back as necessary to solve the problem that is stopping you from completing the next step, and so on and on.

Let me explain with some examples from my life…

Example 1: Conducting A Product Launch

When I was going to release my first information product I had a lot to learn. I knew what I wanted to do: launch my product and get as many people to buy it as I could. I wanted the income of course, but I was equally as keen on the experience and seeing what having my own product would do for my business and brand.

The next step was to gain a better understanding of what I wanted to do. I followed a lot of online launches in the internet marketing space at this time. This was during the very start of the “Big Launch” period that took over the internet marketing space from about 2005 onwards. I dissected the launches completed by guys like John Reese (Traffic Secrets), Mike Filsaime (Butterfly Marketing), Stompernet and of course, Product Launch Formula by Jeff Walker.

By watching these launches, buying a couple of the products and receiving access to review copies, I was able to get a good grasp, at least conceptually, of how a launch of an information product should go.

Knowing the big picture is a good start, but it then needs to be broken down into individual components. You have to get practical and actually create the pieces of the puzzle needed to execute your plan.

In this case for my launch I wrote down what I believed were necessary at the time –

  • A large enough audience to promote to (my email list and blog readership)
  • A free resource like a report to give away
  • Landing page to send traffic to
  • Sales page to sell the product
  • The product people get for their money
  • A membership site that delivers the product
  • Email sequence to deliver the product
  • Email sequence to launch the product
  • Affiliate system to capture affiliate details and distribute promo tools like banners, emails and articles
  • Email sequence to make sure affiliates are promoting at the right time and often
  • An affiliate manager to work with and recruit affiliates
  • Tech person to make sure the servers and websites are all good to go
  • Designer to create my web pages look and feel, logos, banners, etc
  • Copywriter for the landing page and sales page
  • A shopping cart that has been tested, including making sure affiliate commissions are tracked

…and so on and on.

This list continued to grow and grow as I thought of more things I could do, more items I could include, or give away during the launch and more people I could connect with. Eventually I had to just stop and decide to get busy, otherwise I would never actually launch my product.

From this point forward I started to checklist what I had already done and what needed doing still. The Theory of Constraints comes to play here because certain things must be developed before others.

For example, for affiliates I need a software solution that gives them their affiliate tools and tracks their sales, and I need this before I can start recruiting affiliates. First I need to install the software, then I need to fill it with promotional tools, then I need to invite affiliates to sign up. Plus of course I need the tech person and designer to set all of these things up.

Hence, the first jobs are – find a designer and tech person!

There are many interdependencies between each element and there is a most-efficient sequence to set everything up. The first time you do it, it takes the longest because you make the most mistakes and do things in the wrong order.

As I continued to do online launches, each was easier and quicker than the previous because I knew what I was doing. I had many of the tools already in place and I wasn’t doing as much testing, I was simply executing what I knew already worked from previous campaigns.

At the time I called what I was doing simply “problem solving”, but I was actually doing more than that. I was solving problems in an intelligent order, looking at what was the constraint that had to be solved first before solving the next problem, and so on. Combining this with the 80/20 Rule and some clarification of what I really wanted from an online business, led to a very lean and desirable system, one I began calling the “2-hour work day” (read more here – The Real Secret To A 2-Hour Work Day).

Example 2: Meeting People And Getting Dates

One of the other aspects of my life I have worked on to change previously where the Theory of Constraints has been helpful, is how I met girls to date, and with my social life in general.

I was frustrated for much of my high school and university days with how I met people. Thanks to a combination of being very shy and entrepreneurial, meaning I didn’t meet people through work or work related functions, I wasn’t having the kind of social experiences I wanted.

When it came to dating, I was basically relying on meeting friends of friends, which can be a great way to meet people, but very limited, especially when your friends are in steady relationships and pretty much spend all their time with partners. I was lucky if I had one social outing to go to each month that actually had new people I didn’t already know.

I decided to do something about it.

First I identified what exactly I wanted. Meeting girls I’d like to date was the big picture goal, but I wasn’t sure exactly what context this could happen in. As a result, I gave myself the goal of experimenting with different types of social environments to meet people to see which I enjoyed and which resulted in meeting the types of girls I was interested in. I did some research to learn more about my problem and how other people had solved it. I also began to look for events I could attend.

As I turned my focus on this aspect of my life I came to a challenging realization – one that I had known for a long time but was too afraid to confront.

My constraint was me.

I had no problem seeing girls I’d like to meet, it was the “meeting” part that was hard. I realized what I needed to work on was my shyness. Not being able to talk to people was the constraint that stopped me from moving forward. No matter what the context, if I didn’t work on me first, I wasn’t going to get dates.

I could write a whole book on my process of becoming more confident approaching and talking to the opposite sex, but I don’t have the space for it here, and plenty of people have already covered this topic elsewhere online. What I can say is after improving my ability to talk to strangers, I opened the door to more and more constraints.

For example, even if I could start conversations, that didn’t necessarily lead to getting contact details from a girl. Then even if I got contact details, that didn’t mean I could get a date. There were a lot of constraints to work through, but without solving that first initial problem of being to afraid to talk to strangers, in particular pretty female strangers, I would not get any further.

The Theory of Constraints in this situation was helpful because I could become very singular with my focus. Once I knew that shyness was the problem, I worked on that. Once I was more confident in that department, I started working on conversation skills, then how to ask for contact details from someone and build enough rapport so asking for a date was not a painful process for either party. I also had to get used to things like being rejected and not attaching myself to a specific result, skills that help in all aspects of life, but are perhaps most helpful in dating and in business.

More Examples

There are so many examples where the Theory of Constraints is prevalent.

Take weight training.

I notice when I do barbell curls my forearm gives in way before my actual bicep does. I could work the bicep using a focused machine, but by using freeweights I build up all the supporting muscles as well. If I want a strong body I need to make sure the weakest muscle in every muscle group is developed or that is the point where I will fail, no matter how strong the rest of my muscles.

I’m using the Theory of Constraints right now in my startup, CrankyAds.com. We have certain assumptions about our business model we need to test, however before we can test them, we need a critical mass of users. To get a critical mass of users, we need key features of our software to be functional.

Presently we have only one full time developer, my co-founder Walter, working on the software. It’s a slow process with one developer, so we need to hire more. To hire help, we need the funds to pay them adequately. To raise funds to develop our software, we need investors. To convince investors, we need contacts and a pitch. To make contacts and construct a pitch, I need to attend events and study how to raise funds.

Phew! …That’s a long trail back to one constraint, our lack of experience raising funds, which is the constraint I am personally working on right now.

Take A Look At What REALLY Stops You

The sometimes harsh truth is that we often know what the main constraint is that is stopping our success, but because it is hard, or we don’t like the job that needs to be done, or we are afraid, we put it off. We then blame all kinds of things for stopping our success, even when we know there really are just one or two things that need to be done to start the ball rolling.

In my experience coaching students how to make money blogging people usually face two big failure points –

  1. Putting a lot of energy into a subject that will never deliver the result you want (typically a stable income)
  2. Not being very good at marketing what you are doing

Unfortunately the challenge of reconciling a passion with a profit is often very difficult. There are times where no matter how much you love a subject and are prepared to do the hard work, it won’t ever be a money maker for you. Of course you can’t know this for sure until you try.

The other key ingredient, which is a mandatory requirement, is traffic – or really marketing – an ability to get enough people to pay attention to what you are doing. This is where most people fail and I would suggest is where I would begin your quest to find your big constraint – it is probably a lack of audience.

Of course a lack of audience is a big concept and not the real constraint. The real constraint is what you are not doing right now that would bring you an audience. There are so many resources to learn how to drive traffic or how to market a small business that knowledge is not an excuse. There has to be another reason why, and it’s probably got a lot more to do with some kind of limiting belief.

I looked deeply at why I think people fail in this article –

What Is The REAL Reason People Do NOT Succeed Online?

After reading that article you will have an insight into identifying the real constraints stopping you because almost all of them will relate to how you feel about doing something. A knowledge or skill gap is usually not a constraint, or at least it’s not one that lasts very long because you can easily hire help or learn how to do something. The real constraint is whatever emotional condition is stopping you from getting the job done.

I faced a lot of fear about doing a product launch, which led to a lot of procrastination. I spent almost a year “preparing” an ebook that I never released. Why? Because I was comfortable writing my blog and making a “good enough” if not life changing income from it.

Once some mentors came along and gave me enough of a shake to point out the huge opportunity I was missing, I finally committed to releasing my own product. From that point it took me less than six months to create and launch a membership site, which ended up delivering over $15,000 a month income to my bottom line.

Why did I finally do it? Because I decided that I was ready and I realigned my expectations to make it possible for me to get it done. I decided that I would do it for the experience, regardless of the financial outcome. I committed, knew the big picture of what I wanted to do, and ate the elephant one bite at a time, spending time on the project every day until I launched my course.

Break Down Your Constraints

In order to make the most of the Theory of Constraints you will need to ask a lot of “why” questions.

I introduced the concept of a Why train, or a sequence of asking why in this article – How To Develop A Crystal Clear Understanding Of Your Customer – which focused on gaining a true understanding of the motivation behind why your customers make decisions.

The same principle should be applied to discovering your constraints. You will know the big picture problem you face, for example a lack of traffic, or a lack of a profitable topic, or a lack of a tech person to help you, but understanding the true constraints means you need to dig deeper.

For example, if you do not have a website, and you know you need one to have an online business, then you need to figure out how to solve this problem.

Why don’t I have a website?

Because you don’t have a tech person to build it for you.

Why?

Because you do not know how to find one.

Why?

Because you haven’t dedicated the time to research where to find a tech person.

Why?

Because you choose to spend your time reading articles because it’s easier and makes you excited about your potential to build a profitable online business.

See the constraint here? It’s a productivity issue based on how you use your time and how you link your motivation to what you are doing. The problem is a lack of a website, which leads to the constraint of a lack of a tech person, which then leads to the true constraint, you not making the time to find a tech person.

There are all kinds of hidden constraints that you won’t discover until you really take a drilled down approach to each problem you have.

Problem Solving For Today

In my experience, the Theory of Constraints helps to focus and drill down your big picture goals into small problems and then guides you towards step-by-step solutions to solve these problems. It helps you understand what you can do today, so you are ready to solve tomorrow’s problem tomorrow.

The Theory makes me think about only the one job I need to work on now, knowing that job is a crucial piece of the puzzle to realize the big goal I am working towards (even if that goal is far away at this point). It helps me create a sense of moving forward on a daily basis, yet also helps me gain clarity on how each problem is interconnected with the big problems I am trying to solve – especially the one main problem my business is meant to help my customers solve.

I hope this introduction to the Theory of Constraints can help you in similar ways.

As a next step, I recommend you read my article on the 80/20 Rule. It’s old, but with over 600 shares on facebook, it remains one of the most popular articles ever published to Yaro.Blog.

What Is The 80/20 Rule And Why It Will Change Your Life

Yaro Starak
Theorizing

Photo courtesy of Nina Matthews Photography

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