Peter Vander Wall explains the theory of constraints using a lemonade stand where labeling bottles at five cups per minute is the bottleneck. Founders waste time improving non-constraint parts like squeezing or mixing. Find your actual bottleneck, whether it's operations, hiring, or marketing, and fix that instead.
Chapters
You ever work on something for, like, six months? It's like all you've been thinking about for forever, and then you get it finished, and you suddenly realize, I've been working on the wrong thing this whole time. Welcome to lessons business school didn't teach you. Today we're talking about the theory of constraints. So imagine you've got a lemonade stand, and you can squeeze 10 lemons a minute. You can mix lemonade up in one minute, and then you've got your little brother labeling the cups, but he can only do five cups in a minute. So at this point, you can only sell five. Five cups a minute. And if you start squeezing lemons faster at 20aminute, you're still stuck only selling five because your little brother is the constraint. And so you need to either fire your brother and get somebody faster, or you need to hire another person to help him out. So you can get up to 10aminute and then 20aminute, and eventually your constraint's going to be something different entirely. But if you just work as hard as you can on squeezing lemons faster and mixing lemonade faster, you're just going to end up with a bunch of lemonade sitting there waiting to be labeled. And it's getting warm, and flies are flying all around it, and it's getting stagnant and gross. And this is what happens to founders a lot of the time is they focus on the wrong thing. You work on marketing for, like, six months straight, but then you realize, like, oh, I can't even handle more customers if I wanted to, so I need to go work on operations to be able to hire the right people. You work on hiring and operations for, like, six months straight, and now you've got this awesome team, and you're paying them great salaries, but you don't have enough customers coming in to feed these people. But if you just would have looked at your business through this lens, you would have known, oh, marketing and sales is actually my main thing I need to work on. You spend six months working on that, and suddenly that's not your constraint anymore.
