What are Bottlenecks? (Andy Grove)
(I’m currently stitching together my new book, The Bottleneck Rules, and every so often I’ll share some of the content. I particularly like this little example (which was first published the year before The Goal) - it gets the most important lesson from The Goal across quickly, using an everyday example most folk can relate to. Please share with your friends.)
What are Bottlenecks?
Eli Goldratt’s The Goal is about bottlenecks, as well as a whole lot of other stuff. I’ve found, over the years, that the other stuff is easier to understand when you already know what bottlenecks are. So here’s a simple example to get you warmed up.
Have you heard of Andy Grove? He was the CEO of Intel Corporation. Time Magazine named him 1997 Man of the Year. When Steve Jobs was considering returning to Apple, he called Grove for advice, saying he was someone he 'idolised.' In 1983 - the year before The Goal was published - Grove published a book, High Output Management, aimed at teaching middle managers some of the management principles Grove had learned during his time at Intel. He started his book with a deceptively simple manufacturing example that illustrates the idea and importance of bottlenecks—or limiting-steps, as he calls them.
Grove was a brilliant teacher, and his example was based on work he did as a hotel waiter while studying chemistry. He used the example of serving a breakfast made up of coffee, toast, and a three-minute boiled egg.
He starts by putting a simple schedule together so he can figure out two things: (a) the best sequence to prepare the meal and (b) how long it will take.
Here are his inputs. See if you can come up with a good schedule: It takes 1 minute to make the toast, 20 seconds to pour the coffee (from the pre-made pot), and 3 minutes (unsurprisingly) to cook each 3-minute egg. Once they’re all cooked, it takes another minute to serve them.
Most people decide to put the egg on first, then cook the toast and then pour the coffee while the egg is cooking. That’s what Grove did. He started his scheduling by looking for what he called the limiting step. In this case, it’s the longest step: the egg boiling. He places that step at the center of his schedule, then staggers the other tasks around it, doing work in parallel where possible. It takes 4 minutes.
Now, that’s great if you’re cooking one egg. But you’re not. You’re in a hotel, and you have to feed dozens of guests each morning. And most of them want eggs.
Grove asks a simple question: 'What would happen if you had to stand in a line of waiters waiting for your turn to use the toaster?' And then he answers it: 'If you didn’t adjust your production flow to account for the queue, your three minute egg could easily become a six-minute egg.'
In other words, in this scenario, the egg boiling is not the limiting step—it’s the toaster.
Let me make up some numbers here. Let’s say the waiters can easily boil up to 200 eggs an hour and they can easily provide 400 cups of coffee, but they only have capacity to toast 90 slices of toast each hour. That would be okay if the demand was, say 50 per hour, since that’s less than 90 slices, but clearly, given the queue of waiters, demand is higher than that.
So now we need a new diagram, one that shows the flow of Grove’s little breakfast factory.
That makes it clearer, doesn’t it? The toaster is the bottleneck.
So, back to Grove’s question, 'What would happen if you had to stand in a line of waiters waiting for your turn to use the toast?'
I can’t speak for you, but I’d buy another toaster.
However, that’s easy for me to say, since it’s not my money I’m spending. And for all I know, hotel toasters are unusually expensive (which could, I suppose, justify their excruciatingly expensive WiFi).
Perhaps a more sensible first step would be to see if they could squeeze a bit more capacity out of the current toasters.
Maybe, for instance, the toast would still be considered brown enough with 45 seconds of toasting instead of 60 seconds? That would give them a whopping 33% extra capacity for free, lifting their 90 slices an hour up to 120. Perhaps they could promote a waiter to be Chief Toaster, with the job of keeping the toaster working as productively as possible. If it were me, I’d leave copies of the Dr. Atkins low-carb diet book on the breakfast tables and instruct the waiting staff to greet the guests with a cheerful, 'Has Sir put some weight on since his last visit?' as they arrive. Perhaps that might reduce the demand for toast.
The point Grove makes is this: timings are important, but so is capacity. Rather than building their schedule around the egg boiling, they need to prioritise the toasting, do whatever they can to increase their toasting capacity, and stagger the egg boiling and coffee pouring around the toasters.
Now, on to the story!