Changing From Struggling Co. To Success Co.?

Are you a strategic company (20%) or a struggling company (80%) There's a saying, work smarter, not harder? For instance, a student gets 65% marks after studying his entire syllabus while another student who reads only high probability questions gets 70% marks. Who acted smart? The second one, right?

Because he set the strategy and focused on the questions with high chances of appearing in the exam. This is how the 20/80 rule works. It is the secret of most successful businesses out there. These rules state that high achievers focus on tasks that can give great rewards instead of shedding their blood sweat for some minor rewards. In many cases, 80% of output derives from the 20% input that possesses a huge impact.

These numbers draw a thick line of difference between a strategic company and a struggling one. A strategic company targets tasks and customers(20%), giving maximum outputs(80%), whereas struggling companies indulge in efforts(80%) to gain rewards(20%) that are negligible. By implementing these rules, a company can think strategically with a clear vision and concentrate on the things that can lead them towards the path to success. Every business looking for a strategic solution instead of working day and night for a reward that is near to negligible found these rules effective. Now, let's dig up what the 20/80 rules mean and how these rules can help your company climb the ladder of success.

What is the 20/80 rule or the Pareto Principle:

Vilfredo Pareto, an Italian economist, introduced the Pareto principle to the world in 1848, also known as the 20/80 rule. Pareto observed that in Italy, 80% of the land belongs to 20% population of Italy whereas the rest of the 80% population only owns 20% of the land.

Even he noticed that most of the healthy pea pods in his garden were rising by 20% plants. By observing these facts, he propounded a theory named the Pareto principle.

Pareto concluded that, in many cases, 80% of the output gets derived from 20% of the input. Here, the input refers to the cause, and the output is the effect it has. He stated that instead of focusing on the tiny fishes, a business should target a few big sharks giving them benefits to a great extent. This method is simply a cause and effect. It gets used to determine the causes having maximum effect.

In simple words, if a business generates 80% profit from its 20% customers and the rest of the 80% customers gives only 20% profit, then a business should target the customers giving the maximum value. Although these numbers are not numerically accurate, most companies implement these principles in various sectors for strategic development. These rules suggest you prioritize your customers, problems, and projects according to their input ratio.

This principle also gets used in companies for determining the problems causing severe impacts on their various business operations. After analyzing the cause, assign a number and score to each problem according to its; impact. These scores let a company focus on problems having much effect.

The Pareto principle got applied after 40 years of its introduction by Dr Joseph Juran, a management consultant regarding quality control in business production. He realized that 80% of product defects arose from the 20% part of the production methods. Thus, if these 20% production problems can be treated or reduced, a business can improve its production quality.

How the Pareto principle benefits businesses:

Nowadays, these principles have become the basis on which many businesses rely for their strategic development. These cause-and-effect rules get used in around 70% of business sectors and organizations, such as analyzing problems in the department causing huge impact, decision making, quality control analysis, management, and prioritizing tasks or customers. Generally, this method gets adopted by managers and business owners to find the best solution for problems restricting their company's growth.

Let's dig out some primary benefits of Pareto principles:

1.   Problem-solving:

The Pareto principle gets used to determine the root causes of problems in various departments of your business. You may be facing customer complaints, conflicts among workers, poor product quality, or a lack of time and resources to complete tasks. For instance, maybe your software is the root cause behind the bugs in your system. Maybe your customer support lack skills in providing resolution. The 20/80 rule can help to identify the root cause of a problem having the potential to cause a high impact.

First, determine the problem, then the causes. After analyzing the causes, prepare a list and assign each a number and scores according to their impact. Lastly, start finding a solution for the problems having the highest score.

2.   Time management:

These principles help prioritize projects or customers; which gives great rewards. Determining the projects or customers generating maximum profit or making the most sales helps save your time on a task that consumes a lot of time and gives negligible returns. Instead of shedding your blood sweat on a task that is not giving much value, focus on the big ones. In this way, you can provide the best service to your customers and improve efficiency at work. The time you will save can get used to relaxation, and self-improvement to recharge your batteries.

3.   Productivity:

The Pareto principle helps you identify the most productive and efficient team members. While managing a team, you may find out that 80% of the task get done by your 20% of team members. These 20% members of your team are your precious assets. Analyze their skills and traits, and assign them the essential task. By finding the most productive one, you can determine the week links of your team. Provide the proper training and room for development to improve your overall team productivity and efficiency at work.

Final Words:

The 20/80 rule gives you a clear vision of things obstructing or contributing to climbing the ladder of success. Apply these rules and plan your business strategically instead of working hard and struggling to achieve your goals. These rules can change your life for the better if implemented in the right way.

Ask yourself, are you a strategic company aiming at 20% or a struggling company at 80%.