The five focusing steps, run on a whole company

If you’ve never read The Goal, I’d put it at the top of your list, ahead of almost every business book written since, because it’s one of the few management books that changes the way you see a company rather than just giving you a few new words for things you already knew. Eliyahu Goldratt, an Israeli physicist who’d wandered into manufacturing software, wrote it with Jeff Cox in 1984, and he chose to write it as a novel, which turned out to be a stroke of genius because the ideas land far harder when you watch someone struggle with them than when you read them in a list.

The story follows Alex Rogo, a plant manager who’s been given three months to turn his factory around before head office closes it, and who keeps bumping into an old physics teacher called Jonah, who refuses to give him answers and keeps asking him questions instead. I’ve always liked that detail, partly because it’s exactly how I think AI should behave in a company, which I wrote about in Why AJ asks instead of answers, and partly because Jonah is right that the questions are where the thinking happens.

This series is about the ideas that shaped Clearahead, and the Theory of Constraints is the biggest of them, so I want to start with the part of it that everyone quotes and almost nobody actually uses, which is the five focusing steps.

Herbie sets the pace

The scene most people remember from The Goal is a scout hike, where Alex is leading a line of boys through the woods and notices that, however fast the kids at the front walk, the troop as a whole can only move as fast as Herbie, the slowest boy, who’s carrying a pack stuffed with tins and a frying pan. The gaps in the line keep growing, the fast kids keep stopping to wait, and everybody is exhausted even though the troop has barely covered any ground, which, if you’ve ever run a company, should feel uncomfortably familiar.

Alex’s fix is to put Herbie at the front so the line stops stretching, then share out the heavy stuff in his pack so he can walk faster, and the whole troop speeds up without anyone else changing a thing. Goldratt’s point is that the system was never short of effort, since the boys at the front had plenty to spare; it was limited by one point in the line, and every bit of extra effort anywhere else was wasted, or as Jonah puts it, an hour lost at the bottleneck is an hour lost for the whole system, while an hour saved anywhere else is a mirage.

The five focusing steps, outside the factory

Goldratt later boiled the method down to five steps, and the reason I love them is that they put the steps in an order most companies get exactly backwards, so here they are, translated from the factory floor to a leadership team trying to hit a company goal.

1. Identify the constraint. In a factory you can usually find the bottleneck by looking for the pile of work in front of it, but in a company the pile is harder to see, so the question to ask is what’s holding the goal back right now, and the answer you want is a cause rather than a symptom, something like “prospects can’t tell what we do after the first call” rather than “we need more leads”. Getting this step right matters more than all the others put together, which is why the next piece in this series is entirely about how to do it, using Goldratt’s current reality tree.

2. Exploit the constraint. This one sounds harsh, but it just means getting the most out of the constraint with what you already have before you spend a penny, so if the constraint is that your one senior engineer reviews every release, you protect their time, you take the meetings off their calendar and you make sure nothing reaches them half finished. It’s nearly always cheaper than people expect, and it’s nearly always skipped.

3. Subordinate everything else. This is the hard one, because it means everyone who isn’t the constraint falls in behind it, even when that means doing less of their own work, and in a company that usually means stopping projects that are good ideas in isolation but don’t help with the thing that’s actually in the way. Nobody gets promoted for slowing down, which is why most companies never really do step three.

4. Elevate the constraint. Only now, once you’ve squeezed everything you can from what you have, do you spend real money or effort to lift it, whether that’s a hire, a new tool, a rebuild or a change of strategy, and the reason it comes fourth is that you often find you don’t need it once steps two and three are done properly.

5. Repeat, and don’t let inertia become the constraint. When the constraint breaks, a new one appears somewhere else, and the danger is that the rules you put in place to protect the old one quietly become the thing holding you back, so you go back to step one and ask the question again.

Most companies start at step four

Here’s what I see in almost every growing company I talk to, including the fifty CEOs we interviewed about why their goals weren’t met, which is that when a goal slips, the reflex is to jump straight to step four and elevate, so revenue is behind and we hire two more salespeople, delivery is slow and we buy a new project management tool, churn is up and we launch a customer success initiative. Each of those costs real money and real attention, and each one is a bet that the problem is a lack of capacity, which, in my experience, it almost never is.

Hiring two salespeople when the real constraint is that nobody can explain the product in a sentence just feeds more prospects into the same leaky first call, and buying a new tool when the real constraint is that priorities change every week just gives you a nicer place to watch the chaos. I made the wider case for this in Remove constraints, don’t add initiatives, and the five focusing steps are really the method behind that belief, because they force you to identify, exploit and subordinate before you’re allowed to spend.

Your constraint is probably a policy

The part of Goldratt’s thinking that matters most for anyone outside a factory is his observation that most constraints in organisations aren’t physical at all; they’re policies, measures and habits, and they tend to be invisible precisely because everyone has stopped questioning them. Goldratt also said, in a line I’ve never forgotten, “tell me how you measure me and I will tell you how I will behave”, and once you start looking you find measures quietly setting the pace of whole companies.

A sales team paid on new logos will ignore expansion revenue even when expansion is where the goal will be won, a planning cycle that only revisits priorities once a quarter will keep the team working on last quarter’s problem for eleven weeks, and an approval rule written after one bad contract three years ago can add a fortnight to every deal you close. None of those show up as a bottleneck on a dashboard, but every one of them is a constraint, and the good news is that a policy can be changed in an afternoon, which is far cheaper than any hire.

How the steps show up in Clearahead

When we designed Clearahead, the five focusing steps were sitting on the desk the whole time, and you can see them in the model if you know where to look, because every workspace has one goal at the top, the constraints holding it back sit underneath in the order your team will tackle them, and the moves that clear each constraint sit under that. Identifying is what happens when you add a constraint and AJ keeps asking why until you’re past the symptom, and exploiting and elevating are both just moves, with one owner and a due date each, which you can read more about in Planning moves.

Subordinating is where most tools give up, so we built it in by giving work that doesn’t ease a constraint its own home, called Other work, which means it can still happen, but everyone can see it’s not work on what’s in the way, and anything you might do one day goes into Ideas instead of cluttering the plan. Repeating is the loop itself: when a constraint clears it moves to Completed, AJ remembers how you cleared it, and the team asks the question again, which is the heart of A loop, not a plan.

If you want to see the steps applied to a particular kind of goal, the revenue growth planning and scaling a company pages walk through what the constraints usually turn out to be, and if you’re weighing this up against other methods, I’ve compared it honestly with Lean and Six Sigma, 4DX and EOS.

Why this still matters forty years on

You might reasonably ask why a book about a 1980s factory should shape how a company runs in the AI era, and my answer is that AI has made almost everything faster except the one thing that sets the pace, which is a team agreeing on what’s really in the way and deciding what to do about it. Speed up everything that isn’t the constraint and, as Herbie showed, the line just stretches further, so the companies that win this decade won’t be the ones doing the most; they’ll be the ones that know exactly where their Herbie is, and I’ll come back to that argument properly in AI is necessary but not sufficient.

Questions people ask

What are the five focusing steps in the Theory of Constraints?

The five focusing steps are: identify the system’s constraint; decide how to exploit it, getting the most from it with what you already have; subordinate everything else to that decision; elevate the constraint, spending money or effort to lift it if it still holds you back; and, once it breaks, go back to step one without letting inertia become the new constraint.

Does the Theory of Constraints work outside manufacturing?

Yes. Goldratt set The Goal in a factory, but the idea applies to any system with a goal, including a sales team, a product team or a whole company. Outside the factory the constraint is rarely a machine; it’s usually a policy, a habit, a missing skill or something the company has never agreed on.

What is a policy constraint?

A policy constraint is a rule, measure or habit that limits a company more than any physical resource does, such as an approval process, a planning cycle or a target that rewards the wrong behaviour. Goldratt argued that most constraints in organisations are policies, which is good news, because a policy can be changed in an afternoon.

What is the difference between the Theory of Constraints, Lean and Six Sigma?

Lean removes waste across a whole process and Six Sigma reduces variation, so both tend to improve everything a little. The Theory of Constraints says improvement only counts where it lifts the constraint, so it focuses effort on the one or two places that set the pace of the whole system and leaves the rest alone until the constraint moves.