The Unconventional CEO – Apply the 80/20 rule relentlessly

The Unconventional CEO

Chapter 56 – Pareto Analysis, which is a method for choosing the most important changes to make, is not a new concept. It is widely ignored, even though it is a very relevant measurement. You have limited time and unlimited opportunities. How does one choose well?

Start with your resources. Are your people spending time in Pareto? Reverse the question. What takes up 80% of their time? Eliminate this and the rest will expand. Is it easy? This is why the elbows are freed for better manoeuvrability. With more resources available, you may start pursuing the way forward.

Many describe such moves as strategy, but perhaps it is just sound business. As with farming, you have to live by Darwin and keep trying for a better way forward.

The best way is to improve the way things are done. Repackage things in simpler and more usable formats for your customers, and innovate by adding incrementally to what you can offer. The history of commerce is littered with fantastical disasters, with people stretching too far beyond the basics which they could properly grasp.

Not everyone can run Apple. Only a few can understand the single-minded concept of selling third-party items that will only work on their own devices. It was never about Jonny Ives’ brilliant execution of Steve’s hardware ideas, but an iTunes and App store that rolls in the billions, with the buyers always spending more and more on hardware.

Microsoft hasn’t had groundbreaking ideas since launching Office in 1990. It has tried relentlessly to reinvent itself. The original, since improved, juggernaut may keep driving it forward for a decade or more. What then?

Pareto again. Where’s the margin? Where’s the growth? On which product lines? It is wishful thinking and time-wasting to push hard in a direction that is not profitable. Stay on course and treasure your 80% margin contributors, your sales guys bringing in 80%, the industry where 80% of your sales comes from, the regions that generate 80%, and so on… Analyse.  Understand. Learn and focus on every possible Pareto and then make Pareto-inspired investment decisions.

The Unconventional CEO offers succinct, compelling advice from one successful CEO Mario Pretorius, to you The Cape Messenger reader.

The book is also available to purchase in full from the Amazon store.

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