Harnessing the 80/20 Mindset
Imagine you harvest fruit from an orchard, and you notice that just 20% of the trees produce 80% of the fruit. This surprising result demonstrates unequal distribution, and it likely occurs day after day in your business. You can follow the 80/20 principle to identify areas where your business could improve, and then use that data to streamline operations and optimize the organization to create profitable growth.
Also known as the Pareto principle, its namesake, Italian economist Vilfredo Pareto, did not envision that his principle would recur across so many different industries. A century later, the 80/20 distribution has been studied in a wide range of fields, from sales to human resources and betting odds to computing coding, and even in which clothes get picked from the closet.
Data reinforces the 80/20 principle, and it yields powerful insights about the profitability of a business. This approach can highlight many issues, such as variability in profit levels for different customers, products and services. It also provides insights about where to develop and retain talent, invest in digital transformation and improve organizational effectiveness. Harnessing these insights to inform strategic decision making helps to better align an organization’s precious resources and focus on goals that drive profitable growth.
Download our guide to learn more about how to effectively apply 80/20 to your business, including:
- Effective ways to identify profitability
- How to make sure you’re treating customers differently
- Engaging your company’s culture with the 80/20 approach
- Growing organizational effectiveness