How An Italian Economist Can Help You Transform Your Business...

During our recent 'Understanding The Numbers Workshop,' I happened to mention Pareto’s 80/20 rule. The discussion that followed proved to be so popular with the delegates, that it got me wondering how many other business people have never considered applying this rule within their businesses.

Vilfredo Pareto (1848-1923) was an Italian economist who essentially showed that 80% of the land in Italy was owned by 20% of the population. He later went on to show that 80% of the peas in his garden came from 20% of his peapods.

The principle was then further developed by Management consultant Joseph M Juran and he suggested a link between cause and effect, roughly 80% of effects come from 20% of causes.

The interdependent effect between cause and effect can be applied to all areas of life and business:

·         20% of the clothes in your wardrobe are worn 80% of the time.

·         20% of the tools in a toolbox are used in 80% of tasks.

·         80% of work absence is due to 20% of staff.

So how can you apply this principle to your business? Questions you might like to consider:

·         Which 20% of staff generate 80% of new customers?

·         Which 20% of staff delight 80% of customers?

·         Which 20% of staff deserve 80% of bonuses paid?

·         Which 20% of staff account for 80% of poor attendances?

·         Which 20% of suppliers account for 80% of the late deliveries?

·         Which 20% of products or services generate 80% of sales?

·         Which 20% of customers generate 80% of sales?

·         Which 20% of customers generate 80% of complaints?

·         Which 20% of customers generate 80% of overdue accounts?

·         Which 20% of equipment generates 80% of your repair costs?

·         Which 80% of fixed costs are capable of a 20% reduction, without affecting day to day operations?

·         Which 20% of your sales team produce 80% of your sales?

If you would like a more in depth list and an action plan get in touch.

Just imagine what difference it would make to your bottom line and your stress levels if you were to carry out and 80/20 on your business?

Sadly as the principle states 80% of you will do nothing with this information yet the 20% that do will produce 80% better results!

Thoughts:

“Doing less is not being lazy. Don’t give in to a culture that values personal sacrifice over personal productivity.” Tim Ferris

“20% of management theories are responsible for 80% of results. That’s assuming the Pareto Principle makes the cut.” Ryan Lilly

“Chuck your to do list, make a not to do list.” Richard Koch