The 80/20 rule (also known as the Pareto principle) states that roughly 80% of results come 20% of the causes.
The 80/20 rule (also known as the Pareto principle) states that roughly 80% of results come 20% of the causes.
Vilfredo Pareto, the economist behind the Pareto principle, discovered this unequal relationship between inputs and outputs.
Applied to the business world, I’d suggest that 80% of your customers probably come from only 20% of your market area, or 20% of your employees are responsible for 80% of the work. Yes, I know that as an owner, you probably account for 60% of the work just by yourself!
Here at Party Center Software, we like to use the 80/20 rule in a slightly different way. We see it as a tool that can be used to inspire intrapreneurship.
In an effort to sustain and continually grow our business, we encourage 20% of our employees' work time to dictated by the employee. Our team gets to choose the task or activity that brings the best value to not only PCS, but also to our customers.
How can you apply the 80/20 rule?
Well, imagine giving your employees the opportunity to choose one task a week that takes a few hours. They have the ability to choose it based on what they know needs to be done, and what they feel would bring the most value to your business or your customers.
Chances are, the task they choose will be wildly different than the one you would have selected as the boss. But does that make their choice less valuable?
Of course, they may sometimes choose tasks that aren't in their (or the customers') best interest, or ones that don't work out, but this is all a part of learning.
Over time, your staff will begin to realize which tasks bring the most value.
Have you ever overheard an employee talking to a friend, or even a customer, as if they owned the business themselves?
When I hear my team say "our business", I can't help but feel pride.
In that moment, they have gone beyond just working a job and are now seeing that, no matter what role they have, they are critical to the success of the business.
As business owners, we're always trying to improve "our" business. But, what if we flipped this around?
What if we helped our employees feel like it was their business and we asked them to decide which tasks would be most beneficial to work on to improve the business?
It's all about encouraging intra-preneurship!
This next month, I'd like to challenge you to employ the 80/20 rule in your business.
Gather a few key staff members and let them know they will receive a few hours (or whatever time period you think works) to do whatever they think would bring the most value to the customer or to your business. It may help to brainstorm with them to get some ideas flowing, but ultimately, let them choose.
See if it will lead to something revolutionary.
Are you going to take us up on the challenge? Let us know if you do and how it goes in the comments below!
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