A company's growth is limited by one of five constraints in a specific hierarchy. Leaders should diagnose them sequentially. First, ask if you have enough demand. If not, that's your only focus. Once solved, move to internal capacity, then external supply, then cash, and finally management attention.
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Overwhelmed entrepreneurs can clarify priorities by categorizing every issue as either a supply or demand constraint. A demand constraint is needing more leads and sales. A supply constraint is being unable to fulfill existing orders. This binary focus clarifies the company's single most important priority.
When planning growth, leaders often model sales capacity (hiring reps) but forget to model demand generation capacity. A plan to add eight reps is useless if the pipeline comes from non-scalable sources like VC intros, which can only support the first two reps. You must scale both simultaneously.
Management theorist Herbert Simon predicted that the primary constraint would shift from data availability to our ability to process it. For leaders, this means their limited, focused attention is the scarcest resource. How this attention is allocated determines the entire organization's performance and success.
To instill extreme speed, Sequoia's Doug Leone challenges founders by asking why their growth plan isn't 3x more ambitious. This forces an honest discussion about the true bottlenecks—the "rocks in the river" like funding or hiring. The board's job then becomes helping the CEO remove those specific obstacles.
Don't try to fix everything at once. Inspired by the Theory of Constraints, identify the single biggest bottleneck in your revenue engine and dedicate 80% of your energy to solving it each quarter. Once unblocked, the system will reveal a new constraint to tackle next, creating a sustainable rhythm.
When a business constraint like "Manpower" is identified, the solution is to re-apply the same diagnostic framework. Treat "acquiring talent" as a process and ask why you can't do more of it, revealing its own bottleneck (e.g., lack of hiring metrics).
When you identify your business's primary bottleneck, don't take incremental steps. The most effective approach is to overwhelm the problem by simultaneously reading books, watching videos, hiring coaches, and taking massive, relentless action until that constraint is completely resolved and a new one emerges.
Applying the Theory of Constraints, a startup's growth is limited by a single bottleneck in its factory (pipeline, sales, or delivery). Improving onboarding is useless if you have one sales call a month. All focus must be on solving that single constraint to make progress.
To identify your business's core constraint, start by asking why you can't simply scale your current successful activities. The answer will immediately point to the true bottleneck, whether it's a lack of metrics, money, manpower, or a flawed model.
If your business can fulfill current demand but you're worried about future capacity, always choose to generate more demand first. The influx of cash and urgency creates the necessary pressure and resources to solve supply-side problems like hiring and training more efficiently.