The Business Advocate - March 2024

Page 15

OPINION

THE 80 20 RULE: HOW TO STREAMLINE DECISION MAKING BY WESLEY FOUND

Children provide the pleasure of learning from movies that are played on repeat. To quote Grand Pabbie, the Troll King in Frozen 2, "When one can see no future, all one can do is the next right thing." While a business plan is invaluable, worth is often judged by the next right move. Like the movie, finding this can be transformative.

having a hard time framing the search query. Rarely are the results fitting.

My previous article in this magazine described how consumers are rarely consistent with their choices and you must set up your offerings to match how decisions are made. Business decisions suffer from the same problem. A lot more is at stake than a wrong purchase. Queue the dreaded decision fatigue.

EMPLOYEE MANAGEMENT: 20 per cent of employees account for 80 per cent of productivity. Lean on these employees like the business depends on it because it often does. Reflect this in employee management. Delegate the rest.

We are taught to navigate our surroundings with the scientific method. Using a controlled environment to objectively establish facts through testing and experimentation. Business does not have a controlled environment and it rarely knows the what ifs. Businesses trade off between opportunities and their risk rather than objective facts. This has created a business environment ripe with specialists foretelling a promised land where opportunity can be tested, and risk mitigated. While these skilled folks are needed, the tides are flowing away from the incredible value generalists create in our workforce. A generalist is a “jack of all trades but a master of none.” Sounds of little value but the other half of the quote is often left out – “though oftentimes better than a master of one.”

INVENTORY MANAGEMENT: 20 per cent of inventory accounts for 80 per cent of the cost. Efficiency triumphs completeness. Track the 20 per cent often and the remaining 80 per cent less frequently.

SALES MANAGEMENT: 20 per cent of offerings or clients produce 80 per cent of the revenue. Optimize pricing and employee management accordingly. Same goes with word of mouth. So, 20 per cent of offerings or clients may not be the largest or most profitable but are the lion share in referrals. Think through your business with this rule. There are numerous applications beyond these examples. I would argue 80 per cent of productive decisions in business that push society forward are made by the 20 per cent who embody this concept. I hope this helps put your business in a place of transformation to do the next right thing.

The economy is messy and information imperfect. Generalists understand perfection is the enemy of the good. The true value of business leaders is their ability to turn information into knowledge necessary for making quality decisions in an uncertain economy. The generalist decision toolkit can be taught. After all, we are born generalists who become specialized. A valuable tool in sifting through the imperfect world is the 80/20 rule.

SMALL DECISIONS: Small decisions make up 80 per cent of time spent and it should be 20 per cent. Are you 80 per cent sure that a decision will work? If the 20 per cent case happens, are you 80 per cent sure it will not be detrimental to your business? Then go for it! BIG DECISIONS: Spend 80 per cent on planning and 20 per cent on execution. This is often interpreted as spending the bulk of time gathering information. Instead, 80 per cent of the planning should be finding the right question to ask. Without this, gathering information is an impossible task. Think about trying to find information on the internet but

Wesley Found is president of Linborough Property Corp and an active community member of the Kawartha Region. MARCH 2024

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