The Leaky Bucket Framework
Close your eyes for a moment and imagine 4 metal buckets.
The buckets are connected to each other by straws allowing water to flow between the buckets.
As you pour water into the first bucket and it starts to fill up, some of that water flows through the first straw filling up the second bucket.
As the water fills up the second bucket some of it will flow through the next straw filling up the third bucket and so on and so forth eventually filling up all the buckets simply by pouring water into the first bucket.
Now what would happen if we took an ice pick and stabbed a hole into the 3rd bucket Mafia-style?
All the water would pour out!
And not just from the 3rd bucket, but from all the buckets since they’re connected.
This same process plays out in all of our lives, but in manufacturing, it’s known as The Theory of Constraints
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The Theory of Constraints
In the 1980’s, Israeli entrepreneur Eli Goldratt started developing software to help factories optimize production.
The problem was that despite the software finding great ways to optimize, managers weren’t able to implement the suggested changes due to the existing systems and staff habits.
Frustrated by this, Goldratt spent the next 13 months studying these manufacturing systems and eventually published a book called The Goal which outlines his Theory of Constraints:
“The Theory of Constraints states: any system with a goal has one limit and worrying about anything other than that limit is a waste of resources.”
In other words, at any point in time, a system only has one constraint/bottleneck which dictates the output.
Executive coach, investor, and author, Taylor Pearson, illustrates this well with the following example:
“If a factory has an assembly line with three machines and those machines can produce 50, 100 and 150 units per hour, then the total output of the system will be 50 units.“
In this example, despite two of the machines being able to produce 100 and 150 units respectively, the output of the assembly line is only 50 units because it’s constrained by the limit of the first machine.
This Theory of Constraints is the leak in the Leaky Bucket Framework.
No matter how much water you pour into the buckets, it will be wasted if you don’t find which of your buckets has a leak and fix it.
I see this so often in people, and once you learn to look for it you’ll begin to spot it everywhere
I’ve seen new entrepreneurs struggle with this just as much as 7 figure founders and industry thought leaders.
Here are a few examples of how this can play out in different parts of your life:
Let’s say that during COVID you gained some extra weight (who didn’t?) and want to lose it.
There are several levers you can pull on:
😴 Sleep (recovery)
In this scenario, people will often start exercising, but at some point, they stop seeing results.
That’s because the output is being constrained by their lack of sleep and diet.
To build a successful business you need a lot of ingredients, but roughly summarising them into three categories we can say that what you need is…
Marketing (attention from blogging, ads, content, etc)
Sales (page with sales copy)
Product/Service (something to sell)
The exact same thing plays out in this scenario:
I see tons of people spend years “building a business” and complain about how nothing is working.
A lot of the time the problem isn’t that nothing is working…
It’s that they continue to pour more water into the same bucket when the others have leaks.
They focus all their attention on marketing (a common one with creators) and yet give little attention to sales and products.
Another common pitfall is spending all your time creating the “perfect product” and hoping to see more results, without realizing that what’s holding you back at that moment isn’t the quality of the product, but a constraint in sales and marketing.
How to Fix Leaky Buckets
At this point you may be wondering, how do we fix this?
Well, bad news… you’ll never be able to completely remove constraints!
It’s kind of like a game of whack-a-mole…
You will fix one problem in one bucket, only for another problem to pop up in another bucket. You solve one constraint only for another to appear.
That’s just life/business… It’s never done. It’s an infinite game.
But with each solved constraint, you will be moving forward and leveling up.
And you’ve likely already taken the first step…
As you read this post, did anything connect with you?
Looking at those graphs do you have any ideas about where your constraints are AKA what buckets are leaking?
I find it helpful to draw this out on a piece of paper and see if I can generally identify where the constraint is.
Once you know what your current constraint is, and remember you can only really have one at a time, it becomes relatively easy to find solutions for it…
Not enough attention? → Create content, run ads, manual outreach, etc
Do you have enough attention, but still not enough revenue? → Do you have a product/service? If not, that’s your roadblock and you should solve that before you do anything else.
Step 2 is to create SYSTEMS!
Once you create a patch for a leak, systems are what keep that patch there while you focus on the next one.
Another way you can visualize this is as moving the hole in your bucket up the side of the bucket.
Sure there’s still a hole, but if you can move that hole far enough up the side of the bucket it will eventually reach the water line and either no water will flow out or only a little bit will pour out until the waterline drops below the hole.
I can write a lot on creating systems alone (and will in the future if you’re curious) but generally, I like to organize systems into 3 categories:
Automate - using something like Zapier or Make to take care of the process
Outsource - hiring someone to own the process on Upwork
Habit - establishing a habit around the process (Atomic Habits is my go-to resource for this)
One habit you will absolutely need to build around this is to review your constraints on a regular basis.
Sit down and draw out the diagram and ask yourself where your current constraint/leak is and what you need to do to solve it.
I suggested doing this at the start of every quarter - Jan 1, April 1, July 1, and October 1 and focusing on solving one constraint per quarter.
This one simple habit will put you ahead of 90% of people!
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