Capacity and Margin

Before I ran Customer Success organizations I ran a professional services firm, and the two things I learned there that I have never stopped using are not frameworks. They are spreadsheets. The shelf's Operations section opens today with both of them, as instruments: The Capacity Model and The Project Budget, each a short manual with the workbook beside it.

A hundred projects on a spreadsheet

In 2010 I inherited the client services function of a small digital agency that was having real trouble scaling. The director before me had seen the answer — a capacity model integrated with the project plans, so that the hours a project needed met the hours the team had — and she did not have it wrong. She had not built it for scale, and a system like that comes apart somewhere around twenty or thirty concurrent projects. I rebuilt it for scale: five rows per person per month, every billable project cross-mapped against them, a weekly meeting that read the result aloud, and one rule, that nothing is accepted without a row. At its peak it carried more than sixty people across more than a hundred concurrent projects. It was, mechanically, a shared spreadsheet. It held because of the rigor around it, and it is the work that made me the firm's managing partner.

Price it to margin

The other sheet is the one the first one feeds. A project budget is hours by role by month, priced from a rate card at what the hours cost and what they sell for, with the margin on the first line — before anyone has said a number to the client. The rule is that no project is priced without one and none is accepted below the floor. Then the same grid becomes the run, with the hours actually spent typed in weekly, and finally the verdict: plan against actuals, the margin you really made, and the hours the project ate that nobody invoiced. The worked example in the template clears a sixty-four percent floor on paper and finishes under it, seventy-eight hours over in pieces no larger than twenty-four. That is how budgets die: not in the proposal, but in the fourth week, two days at a time.

Why they are instruments, and why they ship as workbooks

Neither says how an organization is built, and neither says what a person does on Tuesday. They say what to measure — hours available, hours promised, cost, sale, margin — how to compute it, and what to do with the answer: move, add, decline; invoice it, or eat it knowingly. That is the shelf's definition of an instrument. And because the instrument in each case is the spreadsheet, each entry carries two downloads: the manual, and the template, with sample people, sample roles, a worked project, and the formulas intact. The colleagues, clients and salaries that were in the originals are not; the method is.

I built the budget template again in 2025 for a creative agency that planned its time well and still could not see its margin — the hours, the rates and the costs lived in three places that never met. Fifteen years after the first one, the sheet's whole job was still to make them meet.