Home > Leadership, The Monday Musings Column, Useful Tools > Useful Tools – Pareto and the 80:20 Principle

Useful Tools – Pareto and the 80:20 Principle

“We couldn’t get our heads out of the trench for long enough to see which way the bullets were coming from”. The speaker was one of the many people I worked with; in my younger days, almost all of my male colleagues had been in the armed services. I thought that the expression was wonderful and much better than not seeing the wood for the trees. Over the years that I have been at work it has been very apt because, so often, people are fire fighting  the small stuff so much that they can’t work on the things that would deal with the cause of all that small stuff.

My colleague’s problem would have been solved by what we call in management speak the helicopter view, but it is one of the reasons why the military always like to capture the high ground; they can see what is going on and that makes it so much easier to manage.

In business we have that dreadful expression “If you can’t measure it, you can’t manage it”. I say dreadful, because I’ve heard it parroted so many times by people who want to spend so much time measuring and pondering over the results that they rarely ever get round to managing anything, but the expression is true. The trick in making it work is in what we mean by measuring.

If you are under constant fire you don’t have enough time to do the job properly let alone start producing all sorts of statistics, but measurement doesn’t always have to be so formal. Try this as an example: Walk into one of the working areas at your firm and just stand to one side for two or three minutes. What do you see and hear? Is it quiet and calm, or are people looking harassed with ‘phones ringing and high levels of noise? Is it tidy or is there stuff piled all over the place?

What you have just done is measure with your eyes and ears and you will have formed a pretty accurate assessment of that team. This may well be one that you would not have got from their numbers, because the performance statistics may well show that the chaotic team are hitting their targets, but observation is every bit as powerful a measurement tool as the graphs that come off the computer: There is nothing wrong with measuring by rule of thumb.

If you are a young manager wanting to make things work better then start by using those eyes and ears that you got as standard equipment when you came into the world. Even when you are under terrific pressure there will be information that you can use to help you. You will know where your biggest problem area is, so think a bit about why. Pareto’s 80:20 principle suggests that 80% of your problems come from 20% of what you do, so try putting that to work. Say you are getting 10 calls a day from Finance about invoice queries. If you can put that one thing right that could mean those 10 calls stop, and then you suddenly have that time free to look at another problem. You won’t solve every one, but if you can start to give yourself time to stick your head up and have a look around you are on the way to gaining control.

And if your boss is into formal measurement, just tell them that you are working to the Pareto principle, the 80:20 rule. Pareto is a probability distribution, but also works as a rule of thumb.

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  1. January 9, 2012 at 9:18 am

    A very good Monday Musing!
    What you have written reminds me of the danger of human logic and statistics. Using our eyes and ears can be far better than statistics.
    For example you could conclude that if a shop with one entrance turned over £50,000 per week that you could double that with a second entrance. Your eyes would tell you whether or not people were able to get access or were put off coming in sheer assumptions are dangerous.

    There is the old story that if you put a 1000 chimps into a typing pool eventually they would create a masterpiece like Shakespeare. It’s simply odds. It’s simply rubbish! But human logic says yes the correct combination of keys could be hit in the right order if given enough time!

    Keep up the good work.

    Roland

  2. January 12, 2012 at 4:26 pm

    Thanks Roland. Wisdom as always. I think that I’ll start a campaign for good old fashioned commons sense!

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