80/20 Is About Cutting Costs
80/20 Is About Focused Growth 80/20 is about resource allocation to our most significant areas of growth. Cost reduction might be a byproduct, but only because we’re focusing on what matters most to the business and deploying resources to move that needle.
80/20 Doesn’t Matter For My Department
80/20 Involves And Impacts Every Part Of The Business
80/20 is a holistic business methodology. If implemented correctly, it can significantly impact every team, from finance and operations to engineering and product management to sales and marketing.
Eliminating Quad 4 Means Getting Rid Of A Bunch Of Customers
The Goal Is To Eliminate The Complexity From Interfering With Quad 1
Eliminate if you can; don’t if you can’t (i.e., too profitable and can be shielded from “A” product on dedicated machines). Evaluate your quads to identify and address complexity in a manner that’s appropriate for your business. Price up Quad 4 product to the point that it either becomes worth it for the overhead to support (i.e., becomes an “A” product) or goes away. Keep in mind that price is but one of the “Magnificent 7” (Mag 7) simplification actions. Choose the right tool for your business!
People, Things, And Customers Can Be 20s, And You Don’t Have To Care About Them
Ultimately, you have to ask: what business are you in? How do you compete, and why do you win? How does that translate to your priorities? If it’s not at the top list of your priorities, then decide if it is worthy of being someone else’s top priority. If it is, make it one of their 80s. It’s all a frame of reference. Would Filtration Group be an 80 if it was sitting in Walmart? I don’t consider our wonderful business a 20. It’s all a matter of perspective.
80/20 Adds Reporting Complexity/Bureaucracy
80/20 Decentralizes Madison’s Already Decentralized Model
80/20 brings a level of “local” authority and entrepreneurialism that is, quite frankly, a much more fun and dynamic operating environment.
80/20 Is Anti-Customer
The changes that result from 80/20 help make us better partners/suppliers for our “A” customers and ultimately lead to better experiences for “B” customers who can receive more attention from one of our distributors.
There’s Only One Way To Implement 80/20
Every Implementation Is Different Some tools and principles apply across all businesses. But each journey is entrepreneurial in the way we implement and find more 80 customers on which we can fanatically focus our teams to grow.
More Customers/Products = More Money
Lots Of Low-Impact Customers/Products = Less Money
We don’t need to retain every customer. Some 20s actually cost us more in the long run due to their disproportionate needs. More focused product offerings give us more time and capacity to innovate and drive growth.
Small = Bad
Small Often = Niche, Which Also Often = Differentiated Margin
Excelling in small niches is a competitive advantage for many of our businesses. The key is to resource appropriately for the growth those segments are entitled to, no more and certainly no less. What is a reasonable share we can achieve in those niches? Are we truthful about whether we need to put our resources towards a different niche?