When I started my first company in the early 2000s and began studying online marketing, in particular how to build a lifestyle business, I really identified with the 80/20 Rule.
I loved this concept because it showed how by choosing a few key activities I could excel at my business objectives (for more on this read my original, but very old blog post – What Is The 80/20 Rule And Why It Will Change Your Life).
The 80/20 Rule has become popular with entrepreneurs and startups, with countless business books and productivity articles explaining the virtues of focusing on the vital few tasks that make the most difference.
There’s another concept however, that you may not be quite as familiar with but I consider equally important.
I say this, because this concept help solve one of the biggest problems I have with the 80/20 Rule – How to figure out which are the right few tasks to do and in what order, especially to grow your business.
This concept is called the Theory of Constraints. Let’s take a look at it now…
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 Constraints, 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 — to determine what to do to complete a project and grow your online business.
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 of activities won’t have a big impact, hence you should focus on the few things that matter most, but what are they?
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 focus on should “open up” the constraints, or put another way — to solve the most important problems and thus generate significant progress towards your goals.
This might sound confusing, so I’ll explain how I do it with my businesses…
How I Apply The Theory Of Constraints
For any change I want to make in my life or business there are three key steps –
- Gain clarity about what I want (a specific, tangible, quantifiable outcome, with a process to get it)
- Comprehend the system I am going to use to get it (demystify the overall process I’m trying to complete)
- Execute the system in the right order of steps (solve each constraint, in the appropriate order)
People are usually good at step one, at least in a simple sense.
For example, if you know you want to make $5,000 a month from an online business so you can quit your job, that’s a fairly reasonable goal, but it’s missing components.
The revenue number itself is not enough. You need to set a goal that includes building a process that produces the income. You need the cause and the effect.
For example, here’s the same goal, but with a system to produce the revenue included in the goal:
I want to earn $5,000 a month from publishing content to my blog and email newsletter that then sells my freelance writing course.
See how this makes your goal more tangible and specific, with both an outcome and a process you complete to make the outcome happen. It’s still simple and broad, but it’s a lot more useful as a goal because you stated that you will complete a process and build something specific to reach that goal.
The next step is to research how to achieve this goal by studying how the process (system) you are going to build works.
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.
Using the example I gave above, you would study how to publish content to a blog, how to then use that blog to attract people to subscribe to your email newsletter, then how to use these tools to sell your course.
This might sound complicated, but like most things in life, other people have done these things before and have created learning materials you can study to demystify the process, to give you clarity and action steps. This is exactly what the training inside my Laptop Lifestyle Academy is designed to do — help you replicate my business systems.
If you don’t know what system or process you want to complete to reach your goal, then you’ve just discovered your first constraint. You have to research your options, study the methods you could use to achieve your goal, then decide which is the best to test first.
The third step is to implement the process you have decided to complete after gaining the necessary broad understanding of how it should work (at least in theory!), starting with your first constraint (the first step needed to make the system come together), then the next, and next, until you have your desired result.
Easy right? Well, not quite.
Let me explain with some examples from my life…
Example: Conducting An Online Product Launch
Many years ago I made the decision to release my first online training program using a process known as a ‘product launch’. I explained how I came to make this decision as my main goal in this article.
The online launch process is similar to how movies are released. You build excitement in anticipation of the release of your product, then open the doors, offering bonuses and other incentives to get people motivated to sign up.
You’ve probably already been exposed to launches online, because most companies will use them to drum up sales of their products to coincide with new releases, special events, or just as a marketing technique to boost sales.
My plan was to sell my first ever digital training product (a series of written lessons I would sell under a subscription model) and I would use the launch formula as my process to get my first customers.
I initially studied the online launch process because I had watched many other marketers use it, including people like John Reese (who launched his course Traffic Secrets), Mike Filsaime (Butterfly Marketing), Stompernet with SEO training and the original Product Launch Formula course by Jeff Walker.
By watching these launches (receiving the emails and seeing what resources they released for free in the lead-up to the product release) I was able to get a good grasp, at least conceptually, of how the 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 the case for my first ever launch I wrote down what I believed was necessary to succeed. Here’s the list:
- 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 launch the product
- Email sequence to deliver the product
- Affiliate system to capture affiliate details and distribute promo tools like images, 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, graphics, etc
- Copywriter for the landing page and sales page
- A shopping cart that has been tested, including making sure affiliate commissions are tracked
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 creating these things, otherwise I would never actually launch my product.
So, how does the Theory of Constraints come into this?
I created a checklist of what I had already done and what needed doing still. The Theory of Constraints comes to play because certain things must be developed before others.
For example, to have affiliates ready to promote my launch, I needed a software solution that gives them their affiliate tools and tracks their sales. I need this before I can start recruiting affiliates because I have to send them somewhere to sign up.
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 I needed my tech person and designer to set all of these things up for me.
Hence, the first steps (or constraints to solve) are to find a designer and tech person and assign them these tasks.
This is a simple enough example of just one component of the launch system I was planning to execute to reach my goal.
There are many interdependencies between each process that makes up the system and there is a most-efficient sequence to set everything up in. The first time you do something like this, it takes the longest because you make the most mistakes and do things in the wrong order. This is why it’s a smart decision to get educated and get help from mentors — two things you can get from my Laptop Lifestyle Academy!
As time went by I continued to do more online launches. Each was easier and quicker than the previous because I knew what I was doing. I had many of the tools and people I needed to help me already in place. I gained confidence and was able to execute what I knew 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. I was applying the Theory of Constraints.
Another Example: Gaining Muscle Mass
There are so many goals in life where the Theory of Constraints can help.
Take for example, building muscle mass, a goal I set for myself in my late 20s.
In order to gain muscle mass, you have to lift heavy weights to the point your muscles fail. This stimulates growth. I learned this by studying what other people were teaching about weight training and body building.
One of my goals was to get bigger biceps, however I noticed when I did barbell curls with my arms, my forearm gave out way before my actual bicep did. This meant I couldn’t work my bicep to failure, at least until I built up my forearm supporting muscles.
This helped me to understand that my muscles were an interconnected system. If I wanted a stronger body I needed 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 are.
The Theory of Constraints is about finding points of failure, or points of weakness. These are problems to be solved, before you can move on to the next problem. To build my bicep muscle, I needed to build my forearm muscle first. The growth of one was constrained by the limitation of the other.
This may seem like an overly simplistic example, but I like it when things are simple. If you can break down complex processes into simple steps, and keep working on incremental improvement each day (remember the Kaizen concept from Japanese manufacturing), your goal becomes achievable.
Look At What REALLY Stops You
The sometimes harsh truth is that we often know what our main constraint is, yet we choose to ignore it and do other less important things because it’s too challenging to take on the problem we really need to solve.
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 how to grow an online business, people usually face two big failure points –
- Putting a lot of energy into a topic or business model that will never deliver the result you want
- Failure to build an audience and sell what you sell
Unfortunately a lot of people who are new to business decide to focus on something just because they see other people succeed in an industry or with a certain type of business, without first considering if it’s a good fit for them.
The other key challenge is marketing and sales. So many people fail to grow an audience because they are scared to put anything out there. They fear failure, judgement from others or just lack the confidence to even try.
There are so many resources online to learn how to grow an audience and how to market a small business, that lack of knowledge is not an excuse to not try. There has to be another reason why, and it’s probably got a lot more to do with some kind of limiting belief that stops progress.
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 to help gain clarity about what you need to do and why you haven’t yet.
I introduced the concept of a Why Train, or a sequence of asking why over and over again to really drill down to the cause of a problem, 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 can be applied to discover your constraints.
You should already know the big picture problem you face, for example a lack of new customers, or a lack of visitors to your website, or a lack of a tech person to help you build something, 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 start your online business, then you need to figure out how to solve this problem and really come to terms with why you haven’t yet (you can apply this to anything you have yet created but want to).
Let’s ask why…
Why don’t I have a website?
Because you don’t have the technical skills or time to build it yourself, so you need to hire help.
Why haven’t you hired help?
Because you haven’t devoted any time to look for a tech person.
Why haven’t you looked for a tech person?
Because you’re not sure where to begin your search, you don’t know how people find good tech help, and you’re afraid of waisting money/getting ripped off.
Even with just these few why questions you can see how the constraint became clearer. You don’t have a website is a problem and a goal to achieve, but the constraint is not knowing how to find the person to build the website for you and a fear of choosing the wrong person and thus waisting money.
From here you can move on to solve this particular problem (eliminate the immediate constraint). In this example, you may ask anyone who has a website you like where they hired their web designer, how they built their website, how much they paid, etc. This knowledge will then give you the confidence to begin your search, or you may even find a good referral just by asking others for help.
Unfortunately many people get paralyzed because they only look at problems at the macro level, where they tend to appear hard and confusing to figure out. Fear then kills progress.
As you drill down by asking why, your next step becomes clearer, simpler and easier to achieve, and you will discover any limiting beliefs or fears you need to eliminate through education. This all makes you far more likely to take action.
Problem Solving For Today
The Theory of Constraints helps you to focus and drill down your big picture goals into small problems you can solve.
It helps you understand what you can do today, so you are ready to solve tomorrow’s problems tomorrow.
It helps to create a sense of moving forward on a daily basis, yet also helps you gain clarity on how each problem is interconnected with the big problems you are trying to solve.
I hope this introduction to the Theory of Constraints can help you in similar ways.
If you combine this concept, with the 80/20 Rule and Kaizen, you have an amazing toolkit for getting the right things done in the right order and keep you on the path to achieving your goals and growing your business.
I find these concepts especially helpful when I’m feeling lost and not sure what to do next.
P.S. If you want to dive deeper and get video training from me on these kinds of ideas and also roadmaps for how I make money with content, email marketing and build businesses online, you should join us in the Laptop Lifestyle Academy.