The 80/20 rule – A corporate reality check

Every so often, we all need to take a step back to look at the how their businesses are performing. Are our operating processes performing as planned? Are there things we could be doing better? Businesses are evolving, fluid organizations, made up of countless components that are constantly in motion. The natural tendency is to give the most attention to those areas that are considered problems or that are trending in the wrong direction. This is, of course, a smart thing. However, time, the most valuable asset we have, is at a premium. Problems by definition require time to resolve and because they represent issues that require attention, there is no alternative but to take the cycles necessary to resolve them. But, just because something is not flagged as a “problem” does not necessarily mean that it does not deserve or require attention.

The old 80/20 rule suggests that twenty percent of our customers, products, etc., take up eighty percent of our time. Although this is largely true, that does not mean that we should ignore 80% of our business just because it isn’t causing a problem at the moment. Most, if not all, of our profits are being generated by this portion of our business, but that doesn’t mean that they could not perform better if more thought and attention were directed their way. Sometimes we tend to get complacent with our “winners” which can lead to reduced performance and falling profits, forcing our stars to become problems. For businesses to remain successful, attention needs to be paid to everything, whether it is screaming for attention, or quietly delivering the profits we work so hard to achieve. All good operators instinctively know that, but no one can be everywhere, which defaults us to the 80/20 rule.

RSMS Consulting Services specializes in handling the screamers as well as the strong silent winners. We can provide the reality check that you may not have time to deal with. At RSMS we specialize in both ends of the spectrum. We can perform the analyses you may not have the time to do, with the apparent and not-so apparent issues. Our emphasis on innovative reporting allows managers to do performance analyses on all areas of your enterprise with easy and direct access to the underlying details that will allow you to uncover the reasons for those problems and discover ways to increase the profitability of your winners.

Call us to find out how we can help you to make the most of your time and make sure your business is firing on all cylinders.