Should the theory of constraints change the way you sell?

In the mid-2000s, Eliyahu Goldratt, a consultant and author of the bestselling business “novel” The Goal, developed a framework to help individuals and organizations achieve positive change. The theory centers around using constraints within the system to answer three key questions:

• What to change
• What to change to
• How to cause the change

When applied, Goldratt’s theory was so successful that it prompted extensive studies. In fact, the Victoria University of Wellington concluded that organizations employing the Theory of Constraints experience substantial performance improvements, as visualized in this chart:

While most people think of the Theory of Constraints as applying primarily to manufacturing, the truth is that it can be applied effectively to any system–including sales.

Let’s take a look at how TOC could help your organization sell more effectively.

What is the Theory of Constraints?

The Theory of Constraints says that every system is limited by constraints–some people call them “bottlenecks”–that restrict the output of the entire system. Without constraints, systems would have infinite output, which we know is not true. TOC focuses systematically on identifying and managing the most significant constraints, and leveraging them to unleash substantially better productivity.

Think of it like a beaver dam in a river. If the beaver has done its job, the river’s flow is significantly constrained. You could make changes above or below the dam to increase flow, but if you don’t remove or manage the dam itself, those changes won’t have much impact. By removing or mitigating the effect of the dam, however, you unleash the river’s potential.

How do constraints apply to sales teams?

Constraints can occur at any level of an organization or system, in the strategy, process, people, or technology. Let’s take a look at some examples of each constraint.

Strategic constraints

At the strategic level, constraints may include:

• Poor messaging
• Poor positioning
• Poor go-to-market strategy
• Poor understanding of customer needs
• Product design
• New competitors that are poorly understood
• Company reputation

Sales process constraints

Constraints may be found at any point in the process or in the process itself. They may include:

• Lack of formal process
• A badly designed process
• Lack of alignment between the process and the customer buying journey
• Prospecting constraints
• Qualifying/disqualifying too early or not early enough
• Lacking or incorrect KPIs to measure progress and performance

By identifying where in the process constraints occur, you can drill down to gain insight into where the process can be most effectively improved. For instance, if not enough prospects are moving into the opportunity pipeline, you can drill down to discover whether salespeople don’t have the right skills, or are not working hard enough (low activity levels), or some other issue.

People constraints

People constraints can occur at the organizational or individual level. At the organizational level, common constraints include:

• Bad hiring process
• Lack of effective training
• Inadequate coaching
• Lack of effective sales enablement tools and content
• Ineffective methodology
• Poor internal collaboration

At the individual level, common constraints include:

• Lack of individual skills
• Wrong behaviors
• Poor job fit (personality and character)
• Not enough of the right behaviors
  (for instance, not enough calls or other activities known to be effective)

Once constraints are identified, you can drill down to figure out why. If an individual salesperson is not closing enough opportunities compared to their peers, you can drill down to look at what activities, behaviors, skills, and characteristics their peers have that they don’t.

Technology constraints

Technology should support the essential functions and the effectiveness of the sales organization. Instead, CRMs and other technology are often viewed as necessary evils. When the technology is not enabling greater sales effectiveness, it can act as a constraint on the entire system. The right technology provides accurate forecasting and pipeline visibility, supports salespeople in moving sales forward, provides coaching insights to managers, and does so within an easy-to-use interface that doesn’t weigh salespeople down.

Leveraging constraints to improve sales effectiveness

In order to find and leverage constraints, you must have a system in place designed for this purpose. If you don’t already have a formal sales process in place, establishing even a simple one will be an improvement that will free your sales to flow more readily and provide you with better visibility into where your other constraints are.

It’s important not to create a sales process and then put it on a shelf to gather dust. You’ll need the right tools to implement your process, and that give you the visibility you need to identify remaining constraints.

With a tool like Membrain, you can build a process that is as detailed or skeletal as you wish to gain the insight you need. For instance, if you have only a simple skeleton process that shows salespeople how to move through the stages of the sale, you can use the insights from Membrain to see that your salespeople are generating plenty of leads, but they’re not converting into opportunities. With that information, you can design a more detailed process within the qualifying process to see where the problems are arising. Once you’ve built in milestones, you may discover that your salespeople are not gaining access to the right individuals within the organizations they’re targeting. That information might then reveal that salespeople need more skills in identifying and reaching the right influencers and decision makers.

Once you’ve identified the constraint, then you can target the solution and create massive improvements in efficiency. Over time, you will get continually better at identifying each deeper constraint so that eventually your sales pipeline will become the raging river it should be.

I’d love to show you how to use Membrain to do this. Contact us for a custom demo.