Could your new product development be 100 X more effective?

by Michael A. Dalton

80/20Anyone who’s followed this site for long knows I’m a proponent of 80/20 or results focused behavior. The  important takeaway being that a very small handful of activities drive most of your results.

Well, Bill Cabiro at Strat-Wise, a good friend and former colleague of mine has taken 80/20 to a level of understanding that I only hope to reach someday.  In a recent post (http://blog.strat-wise.com/2012/09/16/employees-productivity-and-pareto-thinking.aspx) he shared some things that should make anyone involved in growth & innovation ( be they R&D, Marketing, Product Management or executive management) sit-up and take notice.

The gist of the article is that it really pays to identify, hire and reward top talent because they can be orders of magnitude more productive than average performers. Thet may not do any more, but the things they do deliver more results. While Bill was applying the results to differences in talent, the same things apply to your new products.

Most folks know that the top 20% of your new products will deliver 80% of your results.  But embedded within the same 80/20 distribution are some less well known facts.

  • The top 5 % generate 50% of the results – wow!
  • The bottom 50% deliver only 5% of the results – ouch!
  • That means the top 5% is more than 100 times more effective than the bottom 50% – stunning!

Of course the question is always how do you know which are in the bottom and which are in the top before you start. That’s what a good assessment process is for.

If you’d like to learn more about 80/20, there are several suggested links below, but you might also want to consider taking Bill’s 1 hour self-learning module . I recently reviewed it and found it a great overview for anyone that wants to quickly learn 80/20 and how to put it to use.

Additional Resources:

The 80/20 Concept: The Secret to Achieving More with Less by Richard Koch

Like 80/20 on steroids for new products

The case for singletasking

 

 

 

{ 1 comment… read it below or add one }

Bill Cabiro December 17, 2012 at 12:05 pm

Mike, Thanks for the kind words.

While the Pareto Principle is widely known most companies do not exploit its power to increase profitability. Typically close to 80% of the business’ profits are generated by 20% of the company’s products or customers. And in the case of new products, close to 80% of future profits will come from only 20% of the current projects in your R&D portfolio.

Exploiting The Pareto Rule or 80/20 Principle to increase profit is not hard to do – It requires a slightly different thinking process.

Regards, Bill

Reply

Leave a Comment

Previous post:

Next post: