059: Operations (II)

Season Two Feb 8, 2021

Here are my takeaways from Operations Management class: Five ways to keep your systems running efficiently, with less headache. Generalizable to most settings.

If you haven't read Part 1, start there 👇

058: Operations (I)
What exactly is “Operations Management”?


Click to jump ahead  📃

Identify bottlenecks
Expect variability
Preserve slack capacity
Beware overcorrections
Invest in people

1  Identify bottlenecks

A system's capacity is usually determined by its weakest component: A single pinch-point can reduce throughput overall.

Bottlenecks are everywhere: In roads, airport security queues, production lines, plumbing systems, supply chains, software architecture etc.

When inputs arrive faster than processing speed, buildups accumulate. Wait times increase. Performance suffers. By alleviating this constraint (or redesigning the system) its impact can be reduced.

  • Locate the bottleneck: Distinguish root causes and symptoms. Ask why, a lot.
  • Then, add capacity: Direct resources there.

2  Expect variability

Some changes are predictable. Others more random.

In either case, assume that things will go astray.

As Mike Tyson said: "Everybody has a plan until they get punched in the mouth". But a resilient system will help you land on your feet.


3  Preserve slack capacity

In services businesses, capacity utilization (X axis) and wait time (Y axis) have a non-linear relationship.

Simple example: If one waiter can serve up to 10 tables at once, a manager may be tempted to assume that she should always serve 10 tables. This creates vulnerability: Each customer who comes in after that will wait exponentially longer to be seated. Plus, if anything happens (someone spills ketchup, or changes an order), this maxed-out person has zero bandwidth to adapt.

The inverse is also true: By adding a bit of margin back into the system, you can quickly relieve pressure. A little "breathing room" actually makes a huge difference.

  • Go slower and be patient: Humans and machines need downtime. Slack capacity helps absorb shocks upstream.
  • Prioritize: Rest, when possible. There's value in trading some short-term output for long-term resilience.

More on this from Farnam St:

Efficiency is the Enemy
If you ever find yourself stressed, overwhelmed, sinking into stasis despite wanting to change, or frustrated when you can’t respond to new opportunities, you need more slack in your life. Here’s how slack works and why you need more of it.

4  Beware overcorrections

Why do people hoard toilet paper? Why do stocks pop 500% in one day? What makes soccer goalies dive on penalty kicks, instead of staying centered?

Short answer = Humans are emotional creatures!

We extrapolate meaning from noise. We react, instinctively. We over-correct. These tendencies get us into trouble (myself included).


5  Invest in people

Operations Management people love quantitative models. But no mathematical formula can tell you how to create a meaningful, authentic experience. These tradeoffs are as much art as science.

Beyond the heady concepts and jargon, my main advice =

  • Hire decent people.
  • Have a clear, motivating mission. And core values (real ones).
  • For common, predictable stuff: Create systems that enable good outcomes with minimal effort. Remove annoying hindrances where you can.
  • For everything else: Empower people to use good judgment.

Easier said than done!

What do you think?


Further reading👇

MBA - The Fire Jar
Business insights - without the jargon.