According to the “Pareto principle,” 80% of life’s results come from 20% of life’s efforts. The principle – as observed from nature, economics, business, and human organization – is sometimes also called the “80–20 rule” or the “law of the vital few.”
Observant business leaders have seen the Pareto principle at work in their efforts:
- 80% of profits coming from 20% of time spent
- 80% of profits coming from 20% of customers
- 80% of complaints coming from 20% of customers
- 80% of defects coming from 20% of processes
- 80% of sales coming from 20% of the product line
- 80% of sales coming from 20% of the sales team
As can be observed in these several examples, the Pareto principle shows up both in the top line and the bottom line of business. The activities that achieve a company’s revenues are not evenly distributed; some activities are far more profitable than others. A business’s cost centers are not equally valuable; some costs achieve more for the business than do others.
Many efforts have become quite refined and specialized in addressing (or capitalizing upon) the Pareto principle. For large manufacturing organizations as well as hospitals, six sigma processes, kaizen, and lean disciplines in general are nearly universally utilized. Smaller organizations also can be found in pursuit of one or another of the “black belts” in lean process that can be earned from competing certification bodies, though smaller organizations typically use less sophisticated approaches to find savings and to leverage assets.
The point of all of this is that organizations are always paying attention to more things than they should. Organizations are always doing the things that create profitability, that bring value to customers, and that establish and sustain brand and reputation. And, organizations are always doing other things, unnecessary things, wasteful things, error-prone things, and distracting things.
The obvious question to ask right now is this: Why would an organization do the things that make it profitable, WHILE doing other things that rob it of profitability? This question is not hard to answer. Organizations do both kinds of activities precisely because they are not sufficiently clear about which activities are valuable, and which activities are not. They know that the sum total of all they do adds up to the sum total of all they achieve. However, they suffer from blindness as to which specific things matter more.
It’s quite easy to say, “Make and keep first things first.” It’s not an easy thing to do what this statement demands, however. This is true for two reasons, both of which are challenging (though they are challenging for different reasons):
- We must find out what the first things are. What are the 20% of our activities and efforts that produce most of our results? We must inquire, investigate, measure, test, question sacred cows, and ask outsiders for input. We are prone to self-blindness, is the short way to explain this. We are good at understanding the activities of others (and judging them), but lousy at understanding what lies within ourselves (and being honest with ourselves). Humility is required to learn the truth about things that are absolutely near and dear to us.
- We must act upon what we learn. The fact that 20% of our efforts account for 80% of our results, and that 20% of our processes account for 80% of the drag on our efforts, usually points to people. Some people are not contributing, and we must caringly deal with them. They need to be placed into new roles, or guided out of our organization toward a kind of work that is better for them. Some activities must decrease, so other activities can increase. Again, this fact will often point to people. Pet projects, “the way we do things,” and other sacred cows will need to be tucked into bed. Moral courage is required to do the things that we have discovered are right to do.
Humility to learn the truth, and courage to act upon what we learn: making and keeping first things first comes down to these two exercises of great character.
Most lean enthusiasts know that this work is important, but most do not know (fully) why. Six Sigma gurus know that significant costs and waste can be eliminated from an organization through such discipline. And they are correct about this. What I find is less understood, especially in western society’s application of lean disciplines, is the human gain that this work can achieve. Yes, costs are eliminated, which is critical, right, and good. But, even more importantly, human beings are honored. That is to say, human beings can be honored in this process.
The key to this last point is that we must understand that our people are our greatest treasure (the second of our five must-do’s to win workers’ hearts). Applying lean processes while devaluing people produces an unexpected result; greater cost savings and diminished productivity. This can be very frustrating to the mechanically-minded manager.
However, applying lean discipline while treasuring people produces cost savings and increased productivity. Why? Because human beings detest having their efforts wasted, just as organizations suffer when efforts are wasted.
Lean processes, married to a true appreciation for people, elevate the dignity of the people in the organization. Making and keeping first things first declares that a human being’s time, skill, ideas, training, and effort are highly valued by the organization. Eliminating waste, and “majoring in the majors,” dignifies human work, dignifies human beings, and elevates the human spirit in and for your growing enterprise.