70-20-10 Rule

One of the revered concepts in business is the 80-20 rule. The notion that 80% of the ‘output’ gets delivered by 20% of the ‘input’. It is akin to several other concepts in business and economics like ‘pareto optimal’ and ‘exponential decay’. At its core lies the critical concept of ‘diminishing marginal returns’. In other words, your few biggest things deliver the lion’s share of the value.

70-20-10 is really just an extension of 80-20, but cleaves off 10% from the original 80% to introduce an important third element or consideration. I’ve liked the concept of 80-20. It is an important concept to really grasp in order to perform the key business process of prioritisation.

However, too many things in business come in threes. I guess the typical human ‘buffer’ is three items and so people will tend to conceive and express their priorities in threes. Sometimes the three key objectives or strategies have equal weight. But, more typically one predominates.

I first expressed my thinking on ‘key sales drivers’ in terms of the 70-20-10 balance and the articulation really resonated with people. Since then, I have noted countless further examples of things whose importance have lined up roughly along the lines of 70-20-10.

What it is really saying is that…

  • · 70 – the top thing is more than twice as important as the next one.
  • · 20 – the second thing is a small portion of priority (1/5th)
  • · 10 – the third thing is half again as important as #2

In short, after the top thing, things drop off pretty quickly. Now, ‘20%’ and ‘10%’ is not nothing (pardon the double negative) and together make up nearly a third of the ‘priority’ so they warrant mention, consideration and attention, but all in due prioritisation.

I decided to start this blog (my fourth after Leadership and Management / Turning Adversity to Advantage, Dynamic Work, Maldives Complete) to share the many examples of this ’70-20-10 Rule’ I come across on a regular basis.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: