Where is your focus?

Maxim #26

Focus your effort on the critical few

maxim_26This maxim refers to the timeless principle of leverage and the 80/20 rule (also known as the Pareto Principle and attributed to Italian economist Vilfredo Pareto). It reminds us that the relationship between input and output is not balanced. There are many variations and applications of this principle. In most businesses there are many opportunities that require attention but with limited time and resources management must focus their energies on the critical few. They must identify and focus on the 20% of the opportunities that will generate 80% of the results.

Some areas a business in general might focus on include:

    • 20% of products that contribute 80% of the profits
    • 20% of customers that account for 80% of the business volume
    • 20% of the inventory items that make up 80% of the total inventory value
    • 20% of cost areas that make up 80% of total operating costs

Some areas a functional manager might focus on include:

    • Have sales reps concentrate on the top prospects
    • Have inventory managers manage the high usage value inventory items
    • Have purchasing agents find alternate sources for high value items
    • Have quality managers focus on the highest recurring/costly errors
    • Have production managers focus on the most common part shortages

Focusing your effort on the critical few is a very valuable skill. The real trick is making sure you have properly identified the critical few in the first place.