The Seduction of the Pareto Principle

— February 7, 2018

All of us know, often talk about the Pareto Principle. It’s the 80/20 “rule.” an observation we apply to lots of different things. For example, 20% of our sales people produce 80% of the results. Much of the “data” suggests this is conservative, that far few sales people produce a larger percentage of the results.

Often, though, I think we misunderstand this. We tend to treat the Pareto Principle as a law of nature of physics, thinking it is what it is. We feel happy, when we beat it by a little, maybe 30% of our people producing 80% of the results.

But we need to approach this differently (whether it’s 80/20 or some other proportion). We need to carefully examine that 20%. What is it about them, what are they doing that enable them to deliver the results?

  • Is it something about their skills, competencies, experiences, behaviors, attitudes?
  • Is it something about how they sell or who they sell to?
  • Is it something about how they engage, how they create value, how they differentiate themselves?

Rather than accepting 80/20 as a foregone conclusion, we need to look understand what these top performers are doing and who they are.

Once we understand this, then we have to reproduce it in the remaining 80%.

  • Are we recruiting people that have the same skills, competencies, experiences, behaviors, and attitudes as the “20?”
  • Are we the 80 selling to the same types of customers in ways similar to the 20?
  • Are they engaging, creating value, differentiating themselves in ways similar to the 20?

The more we can replicate what the top performers are doing, the more we can get the rest of our team to perform at the level of the top performers, the more we will drive success and growth.

See the magic is, not shifting the denominator of the 80/20 rule, it’s shifting the numerator! Do the math. If 20% of our people are producing 80% of our revenue, and we can get the remaining 80% to be as successful as the 20%, we actually can drive a 400% revenue increase!

That’s the real magic of not accepting your version of the pareto principle.

(If you need help with that math, reach out, I’ll give you the secret decoder ring. It’s not magic, and too often we miss this real opportunity).

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Author: Dave Brock

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