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Hub You - Top Ten Business Uses of the 80 - 20 Principle
Recently a client asked how to help employees take more initiative, rather than wait to be told, or them come ask for how-to directions with every assignment. The manager admitted being too quick to tell. Now it was time to coach new behaviors.We came up with a good list of questions to ask when an employee needs direction, and you want them to take the initiative. Let's take an example of needing to prepare a briefing report for the "big boss." You know, and your employees know, the kind of person the boss is, what he likes to focus on, and how he likes information fed to him.This is not a new kind of project, but typically the employees would wait for your step-by-step direction, or at least an outline of where to go. You want them to take a stab at it on their own,
Project management
Management structures are being exposed as inadequate and worse. Many of the most energetic people in business, from chief executives down, do not really have a job. Rather, they pursue a number of projects.
Project management is an odd task. On the on hand, a project involves a team. It is a cooperative and not a hierarchical arrangement. But on the other hand, the team members usually do not know fully what to do, because the project requires innovation. The art of the project manager is to focus all team members on the few things that really matter.
Simplify the objective, 80 percent of the value of any project will come from 20 percent of its activities, the other 80 percent of the activities will arise because of needless complexity. Impose an impossible time scale, this will ensure that the project team does only the really high-value task, the 20 percent that will deliver 80 percent of the benefit.
Plan before you act, write down all the critical issues that you are trying to resolve. Decide w
Why do so many people post their resumes on the Internet when the rate of success is actually LOWER than finding a job with classified advertising in a local newspaper?Actually, according to the ever-popular book, “What Color is Your Parachute?” the success rate for sending out your resume randomly to employers (and getting a job offer) is actually higher than securing the position of your choice through an electronic resource. The rate is somewhat higher for IT-related positions.So, why do so many people spend their time, effort and money on a tool that offers so little reward? Well, it is a novelty. People can zip a resume into the job abyss and dream of someone finding it. Also, it is unbelievably easy. Click, click, click and you have posted your resume to a job board. A few more clicks and a couple of dollars a
Strategy
Using the 80/20 profit analysis, determine a segment strategy by dividing your business up into as many categories as are relevant to your business. Compare the profit and loss of each segment to find the 20 percent that are accounting for 80 percent of the profits and the 20 percent that are accounting for 80 percent of the losses. Redirect your efforts to the areas where you can gain the most benefit. Reduce your efforts in the areas where you are having the most losses.
Quality
Using the 80/20 principle to focus your efforts on the least 20 percent causing most of the problems, instead of trying to tackle all the problems at once. As the least 20 percent that are causing the most problems become resolved, reevaluate your list again and start over.
Cost reduction and service improvement
Simple is cheaper and better, make the simplest 20 percent of your products as high quality and consistent as possible. If something is complex, simplify it or eliminate it.
Marketing
Identify your core 20 percent of your best customers and do everything possible to keep them. Provide exceptional and outrageous service to them even if it has a short-term cost, the payback later will be worth it.
Selling
Have all of sales focus on the core 20 percent of customers in their business line. Resort to less expensive phone or mail support for the remaining 80 percent. The core 20 percent are the customers that are providing you with 80 percent of your business profits. Reward you best sales people and hire more with the same personality and attitude.
Information technology
Computer programs become more efficient when 80 percent of the processing time is used on 20 percent of the need. This results in functions that are used the most often, being faster and easer to use. Most advances in the last 50 years have been due to the 80/20 principle being applied to technology. There is no end to the refining processes that use of the 80/20 principle will bring to businesses relating to information technology.
Decision making and analysis
Since 1950, business has increasingly been blessed, or if you prefer plagued, by management, scientists, and analytical managers. Analysis has probably been the greatest U.S. growth industry in the past half-century, and instrumental in some of the greatest U.S. triumphs. But analysis has had its darker side: the escalation of corporate staffs that are only now being properly dismantled. The 80/20 Principle is analytical but puts analysis in its place.
Five rules for decision making:
Rule one. Not many decisions are very important. Only one in twenty will be important.
Rule two. The most important decisions are often those made only by default.
Rule three. Gather 80 percent of the data and perform 80 percent of the relevant analyzes in the first 20 percent of the time available. Then make a decision 100 percent of the time and act decisively as if you were 100 percent confident that the decision is right.
Rule four. If what you have decided isn't working, change your mind early rather than late.
Rule five. When something is working well, double and redouble your bets.
Inventory management
Stock almost invariably follows some sort of 80/20 distribution, around 80 percent of stock only accounts for 20 percent of volume or revenues.
Point one. Cut down radically on your unprofitable product.
Point two. Try to export the problem and cost of inventory management to other parts of the value-added chain, to your suppliers or to your customers. The ideal solution is for your stock never to come near your facilities.
Point three. If you must hold a certain amount of stock, there are many tactical ways to use the 80/20 Principle to cut costs and speed up picking and packing.
A word of caution, in repair related business, make sure that you are not hurting your business by cutting your part's department of parts needed for repairs. Use the 80/20 Principles to better manage these stocks. Stock higher assembles in place of hundreds of smaller parts.
Project management
Management structures are being exposed as inadequate and worse. Many of the most energetic people in business, from chief executives down, do not really have a job. Rather, they pursue a number of projects.
Project management is an odd task. On the on hand, a project involves a team. It is a cooperative and not a hierarchical arrangement. But on the other hand, the team members usually do not know fully what to do, because the project requires innovation. The art of the project manager is to focus all team members on the few things that really matter.
Simplify the objective, 80 percent of the value of any project will come from 20 percent of its activities, the other 80 percent of the activities will arise because of needless complexity. Impose an impossible time scale, this will ensure that the project team does only the really high-value task, the 20 percent that will deliver 80 percent of the benefit.
Plan before you act, write down all the critical issues that you are trying to resolve. Decide w
As the old adage goes, a good beginning is half the battle won. And when it is a matter of battles to be won in the corporate sector, a good start is an absolute must. It is important to have a good impact not only on your clients, but also your shareholders, your employees and also all the other people who are associated with your company in some or the other way.This holds true particularly for meetings and events of your company, which often act as the interface between the company and the various kinds of people associated with the company. To make your event or presentation have the desired effect on your guests, you need to pay special attention to the venue where you hold the meet. And it is due to this reason, almost every corporate player is choosing state-of-the-art business hotels for their corporate events.You
Simple is cheaper and better, make the simplest 20 percent of your products as high quality and consistent as possible. If something is complex, simplify it or eliminate it.
Marketing
Identify your core 20 percent of your best customers and do everything possible to keep them. Provide exceptional and outrageous service to them even if it has a short-term cost, the payback later will be worth it.
Selling
Have all of sales focus on the core 20 percent of customers in their business line. Resort to less expensive phone or mail support for the remaining 80 percent. The core 20 percent are the customers that are providing you with 80 percent of your business profits. Reward you best sales people and hire more with the same personality and attitude.
Information technology
Computer programs become more efficient when 80 percent of the processing time is used on 20 percent of the need. This results in functions that are used the most often, being faster and easer to use. Most advances in the last 50 years have been due to the 80/20 principle being applied to technology. There is no end to the refining processes that use of the 80/20 principle will bring to businesses relating to information technology.
Decision making and analysis
Since 1950, business has increasingly been blessed, or if you prefer plagued, by management, scientists, and analytical managers. Analysis has probably been the greatest U.S. growth industry in the past half-century, and instrumental in some of the greatest U.S. triumphs. But analysis has had its darker side: the escalation of corporate staffs that are only now being properly dismantled. The 80/20 Principle is analytical but puts analysis in its place.
Five rules for decision making:
Rule one. Not many decisions are very important. Only one in twenty will be important.
Rule two. The most important decisions are often those made only by default.
Rule three. Gather 80 percent of the data and perform 80 percent of the relevant analyzes in the first 20 percent of the time available. Then make a decision 100 percent of the time and act decisively as if you were 100 percent confident that the decision is right.
Rule four. If what you have decided isn't working, change your mind early rather than late.
Rule five. When something is working well, double and redouble your bets.
Inventory management
Stock almost invariably follows some sort of 80/20 distribution, around 80 percent of stock only accounts for 20 percent of volume or revenues.
Point one. Cut down radically on your unprofitable product.
Point two. Try to export the problem and cost of inventory management to other parts of the value-added chain, to your suppliers or to your customers. The ideal solution is for your stock never to come near your facilities.
Point three. If you must hold a certain amount of stock, there are many tactical ways to use the 80/20 Principle to cut costs and speed up picking and packing.
A word of caution, in repair related business, make sure that you are not hurting your business by cutting your part's department of parts needed for repairs. Use the 80/20 Principles to better manage these stocks. Stock higher assembles in place of hundreds of smaller parts.
Project management
Management structures are being exposed as inadequate and worse. Many of the most energetic people in business, from chief executives down, do not really have a job. Rather, they pursue a number of projects.
Project management is an odd task. On the on hand, a project involves a team. It is a cooperative and not a hierarchical arrangement. But on the other hand, the team members usually do not know fully what to do, because the project requires innovation. The art of the project manager is to focus all team members on the few things that really matter.
Simplify the objective, 80 percent of the value of any project will come from 20 percent of its activities, the other 80 percent of the activities will arise because of needless complexity. Impose an impossible time scale, this will ensure that the project team does only the really high-value task, the 20 percent that will deliver 80 percent of the benefit.
Plan before you act, write down all the critical issues that you are trying to resolve. Decide w
While the title insurance industry continues to streamline its technology with instant title searches and better transaction management platforms, there’s one simple gadget that remains a powerful tool: It’s the telephone.Today, many title agents, real estate agents and lenders are indicating a preference for telephone sales calls over face-to-face interactions, according to Renee Walkup, president of SalesPeak Inc. and a leading speaker and business consultant.During the 2007 ALTA Tech Forum on April 24 in Denver, Walkup shared several tips title agents can employ while using the telephone to close more business.“Some business people are more receptive to answering sales calls during certain times of the day,” Walkup said. “Discover when that is in your industry and plan accordingly. Also, keep in mind when custom
Decision making and analysis
Since 1950, business has increasingly been blessed, or if you prefer plagued, by management, scientists, and analytical managers. Analysis has probably been the greatest U.S. growth industry in the past half-century, and instrumental in some of the greatest U.S. triumphs. But analysis has had its darker side: the escalation of corporate staffs that are only now being properly dismantled. The 80/20 Principle is analytical but puts analysis in its place.
Five rules for decision making:
Rule one. Not many decisions are very important. Only one in twenty will be important.
Rule two. The most important decisions are often those made only by default.
Rule three. Gather 80 percent of the data and perform 80 percent of the relevant analyzes in the first 20 percent of the time available. Then make a decision 100 percent of the time and act decisively as if you were 100 percent confident that the decision is right.
Rule four. If what you have decided isn't working, change your mind early rather than late.
Rule five. When something is working well, double and redouble your bets.
Inventory management
Stock almost invariably follows some sort of 80/20 distribution, around 80 percent of stock only accounts for 20 percent of volume or revenues.
Point one. Cut down radically on your unprofitable product.
Point two. Try to export the problem and cost of inventory management to other parts of the value-added chain, to your suppliers or to your customers. The ideal solution is for your stock never to come near your facilities.
Point three. If you must hold a certain amount of stock, there are many tactical ways to use the 80/20 Principle to cut costs and speed up picking and packing.
A word of caution, in repair related business, make sure that you are not hurting your business by cutting your part's department of parts needed for repairs. Use the 80/20 Principles to better manage these stocks. Stock higher assembles in place of hundreds of smaller parts.
Project management
Management structures are being exposed as inadequate and worse. Many of the most energetic people in business, from chief executives down, do not really have a job. Rather, they pursue a number of projects.
Project management is an odd task. On the on hand, a project involves a team. It is a cooperative and not a hierarchical arrangement. But on the other hand, the team members usually do not know fully what to do, because the project requires innovation. The art of the project manager is to focus all team members on the few things that really matter.
Simplify the objective, 80 percent of the value of any project will come from 20 percent of its activities, the other 80 percent of the activities will arise because of needless complexity. Impose an impossible time scale, this will ensure that the project team does only the really high-value task, the 20 percent that will deliver 80 percent of the benefit.
Plan before you act, write down all the critical issues that you are trying to resolve. Decide w
If you don't have a plan for generating more traffic and sales in 2006, now is the time to create one.With Christmas just around the corner, business is slow for most business owners who sell to other businesses.However, in January, this will all change when Christmas shoppers start looking for extra ways to make cash to pay off Christmas bills.Below are three of my best tips for planning your promotion now.1. Write articlesIf I've said it once, I've said it at least 1000 times. Writing articles is an excellent way to increase your traffic and sales.After I first started writing articles, I noticed a dramatic increase in both my traffic and sales.When I checked my search engine listings with Google and Yahoo, I was blown away. Last January, my sites were listed in Google about 1,200 time
Rule four. If what you have decided isn't working, change your mind early rather than late.
Rule five. When something is working well, double and redouble your bets.
Inventory management
Stock almost invariably follows some sort of 80/20 distribution, around 80 percent of stock only accounts for 20 percent of volume or revenues.
Point one. Cut down radically on your unprofitable product.
Point two. Try to export the problem and cost of inventory management to other parts of the value-added chain, to your suppliers or to your customers. The ideal solution is for your stock never to come near your facilities.
Point three. If you must hold a certain amount of stock, there are many tactical ways to use the 80/20 Principle to cut costs and speed up picking and packing.
A word of caution, in repair related business, make sure that you are not hurting your business by cutting your part's department of parts needed for repairs. Use the 80/20 Principles to better manage these stocks. Stock higher assembles in place of hundreds of smaller parts.
Project management
Management structures are being exposed as inadequate and worse. Many of the most energetic people in business, from chief executives down, do not really have a job. Rather, they pursue a number of projects.
Project management is an odd task. On the on hand, a project involves a team. It is a cooperative and not a hierarchical arrangement. But on the other hand, the team members usually do not know fully what to do, because the project requires innovation. The art of the project manager is to focus all team members on the few things that really matter.
Simplify the objective, 80 percent of the value of any project will come from 20 percent of its activities, the other 80 percent of the activities will arise because of needless complexity. Impose an impossible time scale, this will ensure that the project team does only the really high-value task, the 20 percent that will deliver 80 percent of the benefit.
Plan before you act, write down all the critical issues that you are trying to resolve. Decide w
Automobile manufacturers have automobile dealerships to sell their cars. When you walk on to a car lot to buy a car, you expect it to be full of cars of a particular make, or maybe two makes, but you have a fairly good idea of what will be available. So you are neither surprised not offended when all the cars offered to you come from one or two manufacturers.A franchise broker markets the franchises of a specific group of companies. Like a car salesperson, a franchise broker gets a commission for every successful franchise sale. If you are seriously looking for your own franchise, you will eventually encounter a franchise broker.Broker Vs. ConsultantA franchise broker will be able to offer you a treasure trove of information regarding those franchise companies he or she represents. This information wil
Project management
Management structures are being exposed as inadequate and worse. Many of the most energetic people in business, from chief executives down, do not really have a job. Rather, they pursue a number of projects.
Project management is an odd task. On the on hand, a project involves a team. It is a cooperative and not a hierarchical arrangement. But on the other hand, the team members usually do not know fully what to do, because the project requires innovation. The art of the project manager is to focus all team members on the few things that really matter.
Simplify the objective, 80 percent of the value of any project will come from 20 percent of its activities, the other 80 percent of the activities will arise because of needless complexity. Impose an impossible time scale, this will ensure that the project team does only the really high-value task, the 20 percent that will deliver 80 percent of the benefit.
Plan before you act, write down all the critical issues that you are trying to resolve. Decide who is to do what and when. Re-plan after short intervals.
Negotiation
The 80/20 Principle adds just two points to the study subject of negotiation. 20 percent or fewer of the points at issue will comprise over 80 percent of the value of the disputed territory. Build up a long list of spurious concerns and requirements early in a negotiation, making them seem as important to you as possible. These points must, however, e inherently unreasonable, or at least incapable of concession by the other party without real hurt (otherwise they will gain credit for being flexible and conceding the points). Then in the closing stages of the negotiation, you can concede the points that are unimportant to you in exchange for more than a fair share of the really important points.
Second, don't peak too early, wait until the deadline looms. 80 percent of the concessions will occur in the last 20 percent of the time available.
Impatient people don't make good negotiators.
Suggested reading: The 80/20 Principle, by Richard Koch, ISBN 0-385-49174-3
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