In business, the 80/20 rule means that 20% of your time should be spent on the business areas which create 80% of your results.
This ratio can help you become more efficient and more profitable.
By identifying and focusing your time on the most important areas, you can achieve higher growth and better results.
Most successful firms tend to direct the 80/20 rule to their clients – they switch the balance round and rather than focusing on the 80% of the clients generating 20% of their profits, they spend more time on the top 20% of their clients that bring in 80% of their profits…
But the 80/20 principle can be applied to all aspects of your firm, not just to clients. It can be relevant to meetings, human resources and training…
Or, as in the case of Interface, Inc., the products and services you sell…
In Richard Koch’s book, The 80/20 Principle – The Secret of Achieving More with Less, he tells a great story about a modest company in Georgia, USA, called Interface, Inc. They sold carpets and made average profits.
They applied the 80/20 principle in their business and turned their company from an also-ran into a winner.
Interface sold carpets mainly to business premises. They realised that 80% of the wear and tear occurs on only 20% of any carpet (the walkway areas, the areas under desks and by doors).
So, they altered their business model.
They now lease carpet tiles, so customers no longer need to replace a whole carpet when 80% of it is still perfectly fine.
Their customers lease carpet tiles from Interface, and Interface frequently visit their customers, inspecting the carpet and replacing any worn tiles.
This application of the 80/20 principle has transformed the success of the Interface business, which became a £500m success while at the same time lowering costs for the customer and securing their future loyalty.
Are you applying this same logical 80/20 thinking to your firms?
Click here to start looking for 80/20 wins in your firm – there will be more than you think…