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Inward & Outward Facing 8020 (3of4)

March 18, 2015
manageprouser

The 80/20 Curve is U Shaped

Have you ever asked 3 or 4 individuals in a company what the 20% that will generate 80% of the results is from their perspective? I’m guessing that if you do, you’ll get answers that point in very different directions. Here’s the question, “Is that good or bad?” Should everyone be working with the same definition of the “20%”?

You might think so at first reaction, but the accurate answer is that there should be some overlap, but not a lot. That question leads us right into the 2nd tip for applying the 80/20 rule, which is that the 20% any one person should be working on varies, depending on where they sit in the organization. In any business there should be very different conversations going on about what represents the top 4% and top 20% of action generating results, because it depends on whether you are stipulating inward facing or outward facing 20%. What do I mean by that?

I mean that there’s a natural (and needed) differentiation between what creates the most results/value, and that differentiation is based on whether you are looking at internal efficiencies and processes, or drivers for business sales and growth. I term these as inward and outward facing 20%.  Inward and outward or customer facing 20% aren’t the same, and shouldn’t be. And in fact, the majority of the people in any organization are going to have a much clearer line of sight on inward facing 80/20 then outward facing. So take a look at this crude graphic that I’ve constructed to represent a combination of inward and outward facing 80/20 rules, and let’s talk about a couple of implications:

          1. Inward vs Outward Facing 80/20. One easy way to think about this, is to view the inward facing left side as measuring the ability to “do things right” and the right side of the curve as the ParetoUCurveFrontLinetoCorpability to “do the right things.” Depending on whether you are addressing inward or outward facing curve, the 80/20 rule is going to require you to target different issues, different actions and certainly different results. This is over-simplistic, but think of corporate officers as being primarily responsible to address the outward-facing curve (ex. do we grow through acquisition, change in product mix, etc), while the closer you get to your front line, those individuals should be focused on the inward-facing results (ex. quality, consistency, efficiency, customer satisfaction).

            To accurately apply the 80/20 rule you need to have both inward and outward facing 20% operating at the same time. To some extent everyone should have agreement or alignment on some of the core inward and outward facing areas. You see that in statements like, “everyone should be selling.” e.g. everyone should as part of their 4% the orientation to build and deliver a product that customers would want to buy and a company that the customer would want to buy from. And yes, just in case you were wondering, mid-management gets stuck with managing both sides the most. The fact that the 20% varies based upon where you sit in an organization is not meant to mean that you don’t need to be precise about what the 20%, and even more the 4%, is. You do, otherwise you’ll get swamped and wonder where the day has gone and feel like you didn’t accomplish what you really wanted to, e.g. the 4%.

          2. Stuff naturally falls to the bottom. Gravity effects us all, and if you think of the 80/20 curve as a container, then left to our own devises and attempts to “manage it all,” you see that most of the work effort fills up the bottom with relatively low results generating activity. In order to get big results you need to push the focus to the sides. ParetoUCurveFallstotheBottomThis is a bit like pushing water uphill. It takes ongoing effort and if you relax, it falls to the bottom again. That’s the bad news. The good news is that you can combat that. Let’s talk about how clarity can help you with this tendency.

            You see if someone isn’t clear on what the 20% is that adds the most value, much less what the 4% is, what do you think they are going to do? Well they’re going to do one of two things: 1. They are going to respond to whatever or whomever is making the loudest demands, or 2. they are going to do what their brain preference naturally orients them to do, e.g. what’s inherently satisfying. See my blog on brain preferences. And no, neither of the two options above or being organized or chaotic actually predicts that out of 100 things that could be worked on next, that an individual is working on the right 20%. So its imperative that everyone has clarity and line of sight on their 20% and its results.  This should be one of your 4% items if you are in management.

 

 

Bottom Line:
The 80/20 rule applies to everyone, but the exact definition of what the 20% is for any person depends on what their role is in an organization. At the same time, every organization needs some shared inward (how we do things here) and outward facing (how we sell to what customers want) 20%, otherwise there’s a lack of alignment and effort is self defeating. What’s often missing, is clarity about what the 20%. Clarity creates a happier, more aligned and more productive work force, not to mention better results as you apply the 80/20 rule. One more tip in the next blog, see you there.

 


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