Practice Makes Profit

David is a dermatologist whose practice is not making the money it should. The physician meets a great accountant who is a TOC bottleneck specialist for all types of businesses, not just manufacturing. The accountant speaks and teaches his clients in a way that is easy to understand and can quickly implement the ideas. That’s the storyline of the very readable and accessible Practice Makes Profit by Graham Scott, our guest on this episode.

Interview Highlights

1. The gnarliest problem Graham Scott has ever solved involved – an avocado story
2. A shoutout to James in the forward of Graham’s book
3. Blackbelt in Thinking Courses
4. Getting to know David in the book
5. An explanation of wandering bottlenecks
6. Not a book only for business owners
7. TOC is not just for manufacturing professionals
8. Constraints and bottlenecks are not the same, according to Graham
9. The problem with budgeting and its slow monthly cadence
10. Mark’s favorite graph in the book
11. A story of not spending money to increase office efficiency
12. “I didn’t want my receptionist to be more efficient.”
13. Mafia offers and marketing bottlenecks
14. External vs. internal bottlenecks
15. A reference to Throughput Economics
16. Books mentioned: When McKinsey Comes to Town and The Management Myth

My Favorite Highlights

I enjoyed this short book on bottlenecks. Below are some of my favorite lines in the book.

In all those years he spent in medical school, the curriculum never included any business or financial training. Page 10 – Mark’s comment: so very true. Every physician should take at least one business class in medical school.

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“Where do you think your bottleneck should be?” Page 17 – Mark’s comment: I’ve never considered asking that question. I’m so focused on finding and optimizing bottlenecks. But I’ve never asked this question.

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In other words, managing bottlenecks requires being intentional about it. Page 20 – Mark’s comment: It sounds so simple, but it is so true.

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The lesson here is first to ensure the existing bottleneck capacity is full. Page 24 – Mark’s comment: Instead of filling capacity around the bottleneck.

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Unpredictability + Buffer = Reliable Outcome (page 35)

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Imagine if the pit crew manager didn’t like idle people and sent them off to clean the toilets or pick up supplies at the wrong time.” Page 51

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What we really want is the bottleneck being efficient and the non-bottlenecks being effective. And being effective means keeping the bottlenecks efficient, which can sometimes mean being idle. Page 52

By the time you finish this short book, you will understand the following (in Graham’s own words early in the book:

1. You will learn that your money on business improvements never seems to change the bottom line.
2. You will find out why business owners get stuck in a holding pattern.
3. You will find practical ways to use the Theory of Constraints
4. You will find out how to apply TOC in any small business.

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