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While acting with a bias for action is a must, and we must all recognize that we’ll make mistakes along the way, starting your 80/20 journey without a plan is a recipe for disaster. As the adage says, “if you don’t know where you’re going, any road will get you there.” You add considerable purpose and efficiency to your journey when you have a plan (i.e., goals and objectives for how to achieve them.) The plan should acknowledge the business’ strategic imperative (e.g., grow revenue, expand margins) and establish one or two KPIs with which we will create improvement targets and monitor progress. It’s essential that the KPIs align with the business imperative and that progress against the target remains a guiding light across the journey. It’s also essential that, as we seek to grow, we accept the reality that complexity doesn’t scale and is one of the biggest barriers preventing growth today. To generate the capacity for growth, our plans must address the complexity in the business today. 80/20 helps us do that.

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80/20 tools and KPIs to consider with this principle

• “A” customer on-time delivery (OTD)
• “A” customer/“A” product growth
• Material margin and contribution margin
• Key ratio over prior 12 quarters
• Revenue per employee
• Year-over-year (YoY) incrementals/decrementals

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