80/20 Analysis

I am virtually certain that you have heard about the 80/20 rule also known as the Pareto Principle. Just in case you are not, it is the theory that 80% of a given output is created from 20% of the causes. There is tremendous power is identifying the actions creating the 80% outputs in your life or company. Not all outputs are desired.

To being this process, you to do the following

  1. Identify and list
  2. Determine the root cause of the problems. This might be the hardest part of the whole process. At a technical level, It involves Root Cause Analysis and other Lean Six Sigma tools. But more intuitively you probably have pretty good idea what is causing most of you issues. Perhaps it a couple of problem customers.
  3. Score Problems
  4. Group problems together
  5. Add score for each group
  6. Take Action to solve

If you don’t want to do the intense work, schedule a time with me so that we can attack it. After determining more precisely what we are looking at, we can determine pricing for the project.

If you are looking for general idea of what is causing the 80/20 relationships in your life, trust your gut on some of it, and then see if you can back into a way to see if the numbers match your expectations.

Some should be pretty evident. In sales, the top 80% income earnings will typically come from 20% of the sales force. Sometimes all you need to to look for the anomalies. The key is start thinking about which actions are taking me forward the most toward my goals.