May 2023
What’s your focus: How to differentiate the vital from the trivial in your business By Stan Pohmer

As a leader, of all the things you do, only 20% really matter -- and these produce 80% of your results.

Productivity isn’t necessarily about how many things you get done every day, but rather how many of the right things — the things that add the most value to your customers and your business — that you accomplish. Considered in a slightly different way, sometimes what you don’t do is just (or more) important than what you do!

The reality is that we live in a world where almost everything is worthless, and a very few things are exceptionally valuable. Some things we do yield very little benefit, while others produce huge results. The whole concept of differentiating the “trivial many” from the “vital few,” prioritizing those few projects or tasks that truly will make a difference is both challenging and refreshing. It forces us to identify and focus on those things that are essential, eliminating or deferring those that are non-essential, and then committing the time and other resources to accomplishing those that are truly beneficial and of significant import.

I think there are a few things we can all agree on:

  • We never have enough resources (time, money, energy, effort) to accomplish everything we want or need to
  • We can never finish everything we have on our to-do lists.

It’s human nature to focus our attention on the things where we don’t have to invest a lot of resources, just to say we’ve accomplished something. And it’s the same thing with our to do list — we tend to go to the simplest tasks on the list, the low-hanging fruit, because we like the sense of accomplishment that we get from scratching the item off the list. But is this the most effective use of your limited resources, and will this give you the results you want and need?

Pareto’s Principle

Back in 1906, Italian economist Vilfredo Pareto identified that 80% of the wealth of his country was controlled by just 20% of the people. Using these findings as the basis for further study, Joseph Juran, an innovator of the Total Quality movement and the Six Sigma concept, published a universal principle in his 1951 book, “The Quality Control Handbook,” that he called the “vital few and trivial many.” Juran’s observation was that, in almost everything, a few (20%) are vital and many (80%) are trivial, a concept now widely known as the Pareto principle.

It’s likely that you’ve heard this 80/20 rule applied to many different things and, if you did the research, you’d likely find that it has a lot of credibility. Consider how this applies to your life and your business:

  • 80% of your sales are generated from just 20% of your customers.
  • 20% of the items in your assortment provide 80% of your profits.
  • 80% of the work done in a company is performed by 20% of your employees.
  • 80% of the results of a project are generated in just 20% of the time expended on it.
  • 20% of your marketing generates 80% of the results.
  • 20% of the key words and search engines drive 80% of the traffic to your website.

Maybe the ratio in your business isn’t 80/20; maybe it’s 60/40 or 90/10, but I think you’ll find the Pareto principle concept rings true; there’s almost always a disproportionate result from the resources invested. The trick is to learn what makes up your 20% so you can invest your resources accordingly in maximizing your results!

Determining What’s Important

How can you make the Pareto principle work for you? First and foremost is identifying which results are most important to you, both personally and professionally and recognize those activities that are more vital than trivial. Some might simply call this a prioritization process, but it really goes deeper than that. And then you need to do the heavy lifting, identifying the 20% of the items in your assortments, the high achievers on your team, your VIP customers, etc., that produce the 80% of your desired results.

Once you have these identified, make sure that you invest a disproportionately higher share of your limited resources (time, budget, effort, attention, energy) into the 20% that give you the lion’s share of benefit.

The next step is more difficult because you have to have the discipline to stay the course on those things you identified as vital — and not get distracted from all of the other things in your business and life.

As a leader, for example, of all the things you do, only 20% really matter, and these produce 80% of your results. Identify and focus on this 20%, and when the fire drills of the day begin to sap your time, remind yourself of the 20% you need to keep focus on. If something on your schedule or to-do list has to slip, if something isn’t going to get done, make sure it’s not part of that 20%.

On inventory and assortments, make sure that the 20% of the items that generate 80% of your sales are always in stock and in the most saleable condition. And look at your stock levels on the slower selling items (80% of your inventory) to help maintain balance and avoid overstocks, markdowns and shrink.

If 80% of your sales are generated by 20% of your employees, make sure that you are recognizing and rewarding that 20%! That’s not to say that you should ignore the other 80% of your employees and stop trying to get them to be more productive, but it’s important to keep and motivate your high producers.

If 80% of your sales come from 20% of your customers, focus disproportionate attention and resources on maintaining their loyalty and strengthening your relationships with them. Yes, all customers are important, but these 20% are REALLY important and investing in them will pay huge dividends!

The Pareto principle isn’t an ironclad law or a panacea for success, but it is an excellent tool to help keep you focused on the things that are the most productive and beneficial that offer the highest paybacks and returns and driving your resource investment strategy.

For an enhanced reading experience, view this article in our digital edition.

Stan Pohmer

Stan Pohmer is president of Pohmer Consulting Group in Minnetonka, Minnesota. He can be reached at [email protected] or 612.605.8799.