Alex Rogo is the manager of a struggling manufacturing plant. He’s under pressure to turn things around or corporate will shut down operations. While leading a hiking trip for his son’s scout troop, Alex has a breakthrough insight observing a slow-moving, unathletic scout named Herbie. As troop chaperone, Alex’s goal is to keep the group together, but with nightfall setting in, he needs to quickly address the bottleneck created by Herbie’s glacial pace and get the troop to the camp site. After attempting multiple scenarios, Alex discovers that the best solution is to redistribute the heavy contents in Herbie’s backpack to the other scouts and put Herbie at the front of the line to set the pace. The bottleneck is identified, elevated, and optimized to create the ideal outcome.
34 years ago, Eli Goldratt published The Goal, a book that Time Magazine lists as one of the 25 Most Influential Business Management Books. The book introduces the Theory of Constraints(TOC), a powerful methodology identifying that processes can only move as fast as its slowest element; therefore, success is relegated to the pace of the bottleneck. The book contains lessons on everything from lean process management to relationships with mentors and spouses. Although Goldratt’s fictional story is set in manufacturing, it holds piercing insights for businesses in every industry.
In many wealth management firms, “Herbie” is the founding advisor. As the industry has evolved from solo practicitioners to ensemble leaders, the volume and gravity of responsibilities has increased dramatically for founders. Bottlenecks surface as team-based complexity places incremental demands on leadership, often requiring a new set of skills.
In addition to the rainmaking/client service responsibilities, the founder must lead cross-functional prioritization, organization, management, and implementation. Compounding the problem is the increasing average advisor age where many founders are downshifting their energy and overall engagement in the day-to-day operations. The combination of a trend-toward-teams and the aging founding advisor results in an industry increasingly filled with constraints.
Problems surface when the organization’s senior leader is also the organization’s biggest bottleneck. Qualitative symptoms of a founder bottleneck include:
- Frustrated staff
- Declining morale
- Operational challenges
- Misdirected resources
These internal issues can bleed into external areas of the business, most notably the client experience. Eventually, one glaring, quantifiable metric of the founder bottleneck is revealed: stagnant organic growth.
Ask and you shall receive.
Staff members possess intimate knowledge on key areas to “lighten Herbie’s backpack” or more explicitly, opportunities to increase organizational throughput and/or decrease organizational pain. When the founder strategically engages staff, they are effectively acknowledging their Herbie-bottleneck and empowering the team to lead change.
The impact of this strategy can be significant. A comprehensive analysis published in the International Journal of Operations & Production reported a 39% increase in revenues for companies who adopt the Theory of Constraints methodology. In addition to increasing revenues, an energized staff feels appreciated and empowered, two key ingredients to sustainable, long-term success.
When asked, staff can easily identify the headaches that limit productivity and detract from the firm’s progress. By empowering staff with the tools to identify constraints, then enabling the authority to implement, the founder is taking the necessary action to mitigate the bottleneck. Delegation is Herbie’s kryptonite.
Four steps to get started on your organizational bottlenecks.
- Ask the staff to identify three pain points in any operational process.
- Meet as a team to discuss the pain points.
- Select one priority pain point to focus on as an organization and set a timeline to remedy.
- Rinse and repeat.
The Goal has sold over 6 million copies worldwide. As wealth management continues to transform with changing demographics and technological advances, senior leaders need to demonstrate strategic leadership and uncover the “Herbie(s)” that limit their organization. For many, the first place to look is in the mirror. Empower staff to lighten the load and take a step toward designing a more successful, sustainable business.
Monday Morning Joe