Manage-Wise

80/20 thinking

Habits are what we repeatedly do, consciously or compulsively. When it recurs with increased frequency, it shows a behaviour pattern. They are deeply embedded in our psyche. We hardly realise that they possess us in all our choices: eating, drinking, gambling, playing, dressing, touching, cuddling, working, performing, and most importantly thinking.

Strong habits lead to obsessive-compulsive behaviours which degenerate into disorders, e.g. not honouring commitments made about returning phone calls, submitting home grocery bills in reimbursements claimed from company for actual expenses incurred for entertaining clients at home, using company stationery for personal use, procrastination, and what have you. Excesses deteriorate into addiction, like drinking, and gambling.

Effective leaders seriously apply the 80/20 principle. It has become their second nature.

The Italian economist Vilfredo Pareto originally enunciated the 80/20 principle in 1897.

It is self-evident that 80 percent of the results come from 20 percent of the causes. The distinction between the “vital few” and the “trivial many” is abundantly clear.

Richard Koch, former consultant with The Boston Consulting Group, wrote in The 80/20 Principle (2002), “To become effective or happy, realise the importance of just a few people or things. If you concentrate on the few things that work best for you, you can get what you want.”

Intel’s Andy Grove said, “No matter where you work, you are not an employee. You are in business with one employer—yourself—and in competition with millions of similar businesses worldwide. Nobody owes you a career, you own it as sole proprietor. And the key to survival is to learn to add more value every day.” This means, one must apply the 80/20 principle, as the effective sole proprietor does, to the chain of activities from resources to results. There are no short cuts to value creation, except artful use of one’s personal resources, i.e. You & Co, your skills and attitudes, your intelligence, emotional, and spiritual quotients—IQ EQ and SQ. Together they make you resourceful.

Ideas and individuals matter. Winston Churchill, said, “The emperor of the future will be the emperor of ideas.” That future is here, now. We have to apply the 80/20 rule to ideas and individuals, to power the “now,” to shape the future. Bill Gates made a profound observation, “Take away our 20 most important people, and I tell you we will become an unimportant company.”

The Chicago Philharmonic went from a mediocre orchestra to world class one, when a new conductor took over. Peter Drucker found out the secret. The conductor had noticed the gap between excellent people and others whose average was constant. He concentrated on the top performers to raise their standard, which automatically led to overall improvement.

The principle is the same: concentrate on the vital few to make a significant difference. The focus and efforts have to shift to opportunities. A creative leader spots opportunities when he finds gaps in asset utilisation. The leader moves forward to provide the missing link, uplifting the skill levels and group synergy, spiced with his presence and motivating communication.

The 80/20 rule is being gradually applied to all other industries. The asset utilisation is being fine-tuned to the principle, “Less is More.” As much as excess body flab has to be trimmed down through workouts and a healthy diet, organisations have to maintain their fitness by applying the principles of effectivity.

Flair for observation

The other important attribute in improving effectiveness, is a keen sense of observation. One does not learn everything in one’s academic career. In fact, all management education is driven by volume consideration, not value. Our science and engineering graduates do not have much liking for arts and literature, which results in their stunted growth. And the demand for thought leaders with integral knowledge is on the increase; supply woefully short.

Walt Disney had the idea of family theme parks from observing his daughter on the rides, while he just stood by twiddling his thumbs. He saw a reflection of his boredom in the eyes of other parents. He also noticed the badly maintained parks and the squalor all over. That keen observation led him to build a well laid-out and beautifully maintained theme park for family entertainment.

The adept observer’s curiosity constantly scans the environment for details that lead to big ideas. If it does not, then the potential to turn that ability into something much more meaningful remains unutilised. Details inspire them to be creative. Curiosity under-girds observation.

What others find ordinary is extraordinary to skilled observers, because it leads them to produce something new that suits their purpose. It is the art of mixing, and churning new value-added concepts, products and services, that gives them the artist’s satisfaction.

The advertising icon Leo Brunnet said, “Curiosity is the secret of great creative people.” In creative observers one finds constant reference to the question “Why?” After his discussion with Hitachi of Japan, Sudheer Tilloo, Managing Director Hinoday, Pune said, “We had to use Hitachi Metals’ ‘know-why’ and our ‘know-how’ to optimise the Indian resource mix. We need technology knowledge, ‘know-why’... let them pass it on to my executives. The ‘know-how’ has to suit local conditions.” (Pandit, S, 2001).

When one sees the ICICI Towers at Mumbai, or the Infosys campus at Bangalore one is awestruck by the sheer beauty of the layout, the decor, and interior design. It creates a soothing ambience for productive work. The architects, the designers and many craftsmen must have contributed, but Kamath and Murthy’s observer skills played a significant part in these prestigious creations. Attention to minute details or important whispers around, is important for modern business development. This skill helps them analyse people, events, and problems.

Problems invite attention, which snaps energy because where attention goes, energy flows. In practice it means listing things that need to be done but more importantly noting what discomforts them. It leads them to think of new alternatives and what they can offer to resolve the dilemma, whether it is a customer complaint or rearrangement of space in the store. Their combinatorial thinking skills provide unique clues.

Annette Moser-Wellman states that a ‘seer,’ an ‘observer,’ an ‘alchemist,’ a ‘fool’ and a ‘sage’ are the five faces of a genius, whose creative thinking styles succeed at work. She says, “The observer brings you closer to your creative genius. By selectively slowing down, you encounter the mystery that brings meaning to work. Honour your curiosity and your questions. These are the gateways to the creative life of a business artist.”

Napoleon Bonaparte said, “Men of genius are meteors destined to burn themselves out in lighting up their age.”

Jamshedji Tata, one such who laid the foundation of enlightened management in a hostile, colonial atmosphere said, “Adversity, I believe, conspires to turn ordinary men into talented performers. But genius is that in whose power, man acts as a tool.”

Excerpted from 80/20 CEO by Shrinivas Pandit. Price: Rs 99. Reproduced with permission © 2007, Tata McGraw-Hill Publishing Company Limited. E-mail: vishwanath_mum@tatamcgraw-hill.com