Love Your 80’s: Profitable Growth from the Critical Few

November 2019

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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
 

Testimonials from Wall Street

“The cornerstone of ITW’s Toolbox is known around the company simply as ‘80/20.’ What started out as an analysis of product profitability in the 1980s has become an essential management tool that today permeates every area and function of ITW and allows it to grow successfully and profitably while remaining decentralized.” – Press Release 2018, NYSE: ITW
 
“From our knowledge and experience with 80/20, its powerful tool can transform a business into a higher-margin and faster growth company in only a couple of years.” – Not Disclosed, Stock Analyst, NYSE