In observing the unequal distribution of wealth in Italy of 1906, Vilfredo Pareto… an Italian… pronounced that twenty percent of the people owned eighty percent of the wealth. Since that time, the Paratto principal, as it has become known, has been used to describe many other 80/20 conditions.
· 80% of the food eaten at a buffet is consumed by 20% of the customers
· 80% of your complaints come from 20% of your customers
· 80% of your sales come from 20% of your products
· 80% of a manager’s interruptions come from the same 20% of the people
· 80% of advertising results come from 20% of your campaign.
· 80% of benefit comes from the first 20% of effort
· 80% of the traffic in town travels over 20% of the roads
· 80% of your annual sales come from 20% of your sales force
· 80% of your staff headaches come from 20% of our employees
· 80% of your website traffic comes from 20% of your pages
This is why we burn out and loose motivation. Let me explain.
In a meeting we use 80% of the time to discuss the 20% or the issues that will generate 80% of the revenue. 20% of the people leave that meeting 80% motivated to accomplish a project that can boost revenue 20% only to become 20% motivated after 80% of the project is complete. Since 80% of the challenges of the project come from the last 20% of it, we decide that there is another project that will generate 80% more results with just 20% of the effort of completing the last 20% of the previous project. However, you have just started a cycle of not completing a project. You are now failing at completing 100% of the last 20% of your projects. This hurts because it is the last 20% of the task that will produce 80% of the results.
And then we become 80% less motivated to start another project.
The key is in the small details. The detailed task items that take hours of focus to complete, keep getting pushed aside for tasks with more immediate results. This is why we never seem to get anywhere.
Here is a tip to get big results in your business. Decide today where your business is failing the most. It might be labor costs or lack of calls. It could be poor performing sales staff, or it might be your pricing. Whatever that is, it can give you the biggest return with the smallest effort – do it to completion.
It takes focus but even the biggest sufferers of ADD can focus when we practice discipline. I speak from experience. I chase a lot of shiny objects but I use my To-Do list to bring me back to task. The key is having a To-Do list.
I have learned that keeping my To-Do list simple makes it most productive. I can’t put down a task like “Fix low Gross Margin.” I have to break it out like this:
1. Compare completed jobs equipment cost to equipment cost used to build job price
2. Compare labor cost from completed jobs to labor cost used to build job price
3. Confirm that jobs were sold at established price
4. Write procedure for holding sales people accountable to job price
5. Collect latest equipment pricing for all job types and adjust job sale price if needed
Each of these tasks is simple. They take time but none of them are overwhelming. And all of them contribute to a “Low Gross Margin” situation. After completing these tasks, I will find more issues, or solve my challenge.
Each of these 5 items represents 20% of the fix. The challenge is not knowing which 20% will generate 80% of the results. Most managers fix one of the items and call it good. The result is that of the 80% of the time they spent on the issue, they may have only achieved 20% of the potential results.
Keep focused on the other 20% because that’s where 80% of the rewards are hidden.
I hope that is enough of a motivator for you.