I usually talk about 80/20 in terms of lost opportunity. But never forget, it’s also a super powerful lens for identifying WASTE.

My good friend Bill Harrison forwarded this to me from Len Bertain, author of three books:

The Tribal Knowledge Paradox – Tells the story of a worker who discovers “The War on Waste”
Tribal Knowledge Innovation – Explains the terms, phrases and concepts used in the War on Waste
Tribal Knowledge Paradigm – The ultimate outcome of the War on Waste paradigm.

Len trumpets his most powerful concepts very concisely. You can put these to use instantly:

No Blame – I trademarked this in 1997 because it is the foundation of getting people to put ideas into play without reprisal.  Trust me, it is necessary.

5/67 Rule – It says 5% of customers generate 67% of revenue; 5% of employees account for 67% of healthcare costs.  Leverage is 13 to 1, as compared to the 4 to 1 of the 80/20 rule.

120/20 Rule of profits: 20% of customers, products or salesmen account for 120% of profits. As you move into the region of customers below the top 20%, you start losing money. Amazing.

World Record Reports – use measurement to keep people focused on continuous improvement. Continually strive to break the previous world record.  Very powerful tool.

War on Waste Process – Find $100,000 of waste that can be fixed for less than $2,000.  50 to 1 ROI. I don’t always get that, but one study of 23 companies got a 38 to 1 ROI average for over 300 ideas.

High Velocity Innovation – We make employees get their idea into play by the end of the 4th week of training – about 20 hours of work – and implement it by the end of 8th week.

If there’s anything I hope everyone could ‘get’ about 80/20, it’s this: It’s infinite. Even in a finite universe or on a finite project, there’s an infinite number of 80/20s, and if you honor enough of them, the system makes more.

^{Photo by Tax Credits cc by-sa}

About the Author

Perry Marshall has launched two revolutions in sales and marketing. In Pay-Per-Click advertising, he pioneered best practices and wrote the world's best selling book on Google advertising. And he's driven the 80/20 Principle deeper than any other author, creating a new movement in business.

He is referenced across the Internet and by Harvard Business Review, The New York Times, INC and Forbes Magazine.