In 1895, the Italian economist, Vilfredo Pareto, first wrote about the 80/20 rule, which later was also known as the Pareto Principle. It’s the concept that many business and management experts rank as one of the top time and priority management tool available, that has changed the way they focus on growing businesses, teams and performances.

Essentially, what Pareto started observing was that there’s this natural law around everything. For example:

  • 80% of the land is owned by 20% of the people.
  • 20% of the pea pots in his garden contains 80% of the peas.
  • 20% of the party guests brings 80% of the food.
  • 20% of the other party guests eats 80% of the food!

The 80/20 rule stood the test of time, and though sometimes the numbers can go as high as 90/10 or as low as 70/30, Pareto’s observations still hold true today.

In business:

  • 20% of your clients will result in 80% of your profits.
  • 20% of your staff is responsible for 80% of the group performance.
  • Another 20% of your team is also responsible for 80% of the medical leaves!

So it’s proven that the 80/20 rule is there. The question is, how can you use it to you, and your team’s advantage?

 

1. They must first see it

You’ve seen the 80/20 rule, and understood it. Now, it is your people’s turn. You can use this short video as a little intro before the actual brainstorming activity.

2. They must first relate to it.

Just like the example in the video, it would be good if you allow each team member to see which areas of their personal life where the 80/20 holds true. It’s usually found in their daily/weekly to-do list, or shopping list. Ask them questions like “Which hypermart/market do you do most of your shopping at?”, or “What kinds of food occupy most of your diets?”

 

3. Take stock of the past and present.

Once they have that “ah-ha” moment for their personal lives, switch gears to business. Ask them to focus on specific areas of their roles, and list out situations where the 80/20 rule applies. A few areas I can suggest are:

  • Cost allocation (spending)
  • Sales and marketing channels
  • Customer segmentation
  • Profits and Billings
  • Processes and operational systems

 

4. Consolidate and Strategise for the future.

Now that the team recognizes that certain activities create more results than others, get them to focus 80% of their time and resource on it. The remainder of activities that took 80% of the time and generate less than 20% of the results, well, time to either eliminate or outsource them.

For example, let’s say the team realizes that clients from industry A contribute to 80% of the profit for the last year. Then 80% of the team efforts should be to target clients from that industry. Only 20% or lesser should be spent on the other industries.

 

5. Test for feedback.

Set a time limit to test this new, consolidated strategy. Depending on the time it takes to notice results, set a milestone around it. In the above example, let’s say if your typical sale cycle is 45 days, then get the team to have check-ins every 5 days for the next 9 weeks. It’s important to set aside enough time for the results to show, before analyzing the data too early and coming to a premature conclusion.

 

6. Continue refining the 20%.

So now your team have a solid strategy that is designed for maximum impact. With the feedback you’re getting in Step 5, continue improving the process to make it more lean, more efficient.

 

7. Look for other areas to apply the rule on.

Why stop at only one area of business? Use the same principle and apply it across different metrics and areas, and watch as your team 10x the results by the end of the quarter!

 

CONCLUSION

So there you have it. A simple intro to a powerful business concept, and a practical 7-step plan for you to implement it. If you want to see how our team development consultants can incorporate this activity into your next company meeting, let’s talk. We can arrange for them to walk you through the process, and wrap a memorable team building experience around it too.

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