agency production bottlenecks

Are Your Agency’s Production Bottlenecks Making You Hire Too Early? 3 Points to Consider

by | Feb 25, 2023

Are Your Agency’s Production Bottlenecks Making You Hire Too Early? 3 Points to Consider

by | Feb 25, 2023

Marketing agencies (and service businesses in general) can learn a lot from manufacturing companies. Specifically, marketing agencies can learn a lot by analyzing their production bottlenecks. Everyone has bottlenecks, but many don’t realize they’re missing a critical point about finding them and dealing with them in a way that makes the agency more effective. Before we get to that critical point though, some background on bottlenecks.

In Eli Goldratt’s fictional business fable The Goal, the main character (Alex Rogo) is a factory manager desperately trying to improve performance, because his factory is rapidly heading for disaster. We follow Alex through trials and tribulations as he learns to manage the various resources in his factory toward “the goal.”

This book has several key takeaways that can immensely help service businesses:

  1. There is always a bottleneck in every process. You have to manage the process based on the bottleneck.
  2. The goal is not to reduce cost, but to increase throughput. This has huge implications because nearly everyone is focused on reducing costs.
  3. Making an employee work and profiting from that work are two different things. Not all work leads to making money. Much work is wasted.

Let’s put these points into the context of a service business.

First off, what is a bottleneck?

A bottleneck is any point of congestion in a process that causes delays in the desired workflow.

It turns out that for services companies, there are two types of bottlenecks:

  1. People-Based Bottlenecks: This is a person or team who is the bottleneck in getting work done. This does not mean the person or team is necessarily underperforming, but instead that the person or team is under-resourced. The solution could be outsourcing the work to expand capacity or hiring more people to expand capacity (Source Asana).
  2. System-Based Bottleneck: Basically this is a system that’s the bottleneck. Likely old software or old equipment or both. The solution here is upgrading the systems. (Source Asana).

For the purposes of this post, we’re only concerned with performer-based bottlenecks. The majority of marketing agency expenses are people, so understanding people-based bottlenecks is key.

How Bottlenecks Occur at a Marketing Agency

The key to understanding the throughput of your organization is dependent on identifying bottlenecks and investing into those bottlenecks. Once you identify a bottleneck, you need to consider investing into it to solve your throughput issues.

Here’s a basic example:

Let’s say you’re a small agency, 10 people total and that you have one website developer on staff. Right now the web developer is currently building one website and has two more website projects waiting in line for them to start. The website development work backlog is starting to pile up because the one developer isn’t clearing the all website development work off their plate fast enough. We know from the book that “The area with the biggest amount of inventory piled up, waiting to be used, is usually a sign of a bottleneck.”

The obvious bottleneck here would be the developer right? We know from above that we need to invest into bottlenecks in order to increase throughput. So if you wanted to get more websites developed, just hire more developers right? Wrong.

Wrong?!? Why?

Here’s the Thing: Marketing Agencies Tend to be Scrappy, Which Sometimes, Hurts Them.

So here’s the thing. Most marketing agencies are small and scrappy. They pridefully talk about everyone “wearing many hats” and that everyone likes to roll up their sleeves and get dirty, or whatever. But this has an unexpected consequence…

Their bottlenecks are spiking in the wrong place. There are hidden bottlenecks they don’t see.

Because here’s the deal, let’s ask that developer (who wears a lot of hats at the scrappy agency) what they do daily, and they might say:

  1. Build websites
  2. Test websites
  3. Make design tweaks on websites
  4. Write copy to fill in areas where it’s missing on the site
  5. Send the client project updates on PM software

See what’s going on there? The developer is an artificial bottleneck because they are writing copy, doing client communications, and even working on design. None of that should fall on the website developer, those are different jobs entirely. On the face of it, it seemed like the best thing to do is hire another developer, but when you dig just a little deeper you can see that bottleneck is spiking in the wrong place. This is the problem that agencies have.

The First Task Is Not to Identify the Bottlenecks, It’s To Make Sure the Bottlenecks Are Occurring in the Right Places

In the example above, we don’t need to hire another web developer. We need the project management to fall on the project managers and the copywriting to fall on the copywriters. When all the work is actually being performed in the right place, then we can correctly gauge bottlenecks because they are true bottlenecks. Once we’re confident in the true bottlenecks, we can invest into them appropriately. It might turn out that you don’t need to hire anyone at all, you just need the right work to land in the right place.

You production capacity might look like this when the bottleneck is hidden:

  • Development Team: 120% Capacity
  • Project Management: 65% Capacity
  • Copywriting: 75% Capacity

Right? On the face of it, the numbers are clear that you need to hire more website developers to expand your throughput capacity. But once you re-allocate the project management and copywriting off of the development team, you might find your new capacity looks like this:

  • Development Team: 85% Capacity
  • Project Management: 80% Capacity
  • Copywriting: 85% Capacity

In which case, you don’t need to hire anyone.

The Right Work Needs to Land in the Right Place

And guess what, the copywriter is probably faster and better at writing copy than the developer so it’s also more efficient. While it may have taken the developer an hour to write copy for missing sections on the section, it may only take the copywriter 30 minutes, so the work is more efficient when it lands in the right place. Same deal for project management tasks, the PM will be better and more efficient at that. This is backed up by this key learning from the book: The goal is not to reduce cost, but to increase throughput. This has huge implications because nearly everyone is focused on reducing costs.

Or the scenario might look like this:

  • Development Team: 85% Capacity
  • Project Management: 80% Capacity
  • Copywriting: 105% Capacity

In this scenario, it looks like your website developer was actually doing a ton of copywriting, hiding that copywriting bottleneck, and what you actually need to do is hire another copywriter. And that’s the crazy thing, in the first scenario we were about to hire a new website developer when really, what we needed to hire was a copywriter, or just get the work on a copywriting who is more efficient and therefore we might not even need to hire one to handle the increased copywriting work.

Making an Employee Work and Profiting From That Work Are Two Different Things. Not All Work Leads to Making Money. Much Work is Wasted.

A key quote from the book: “Just about everyone is working all the time, but we’re not making any money.”

This is why you need to get your bottlenecks to spike in the right place. We need things to bottleneck, just in the right places so then we can then make the correct investments. That’s where the efficiency is. Having a developer write copy is wasted work, and it is unprofitable work. It’s wasted and unprofitable because developers are generally some of the highest paid professionals at an agency, and are likely bad/slow at writing copy, so it’ll take them longer and cost more per hour, double whammy.

This is why you need to have clearly defined roles at your agency. Yes, you may be a scrappy agency where your people wear a lot of hats, and yes you might like the flexibility that your website developer can knock out copy as well as code, but in the long run that scrappy flexibility is going to cause you to make wrong and expensive hiring decisions for staff you may not need (and the copy probably won’t be great). When we don’t get the bottlenecks organized into the correct places, we then invest into solving the bottleneck problem incorrectly, and often in a way that is more expensive than it needs to be.

How to Fix This at Agencies

Agencies need to have clearly defined roles for positions and do away with overlap between positions. When you’re a small agency it feels like flexibility is the key, but when you grow that flexibility is a silent wrecking ball. Make sure you’re checking your team to ensure they’re spending time on their key job role, map out what extra job roles various employers do (try the Delegate and Elevate exercise), you might be surprised once you start writing it all down.

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