Anyone who’s followed this site for long knows I’m a proponent of 80/20 or 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. While he was applying the results to differences in talent, the same things apply to your new products:
- 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
{ 1 comment… read it below or add one }
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