In a process improvement workshop this week, we were talking about the Pareto principle (80-20 rule) and the importance of finding those elusive 20% of all problems that contribute 80% of the pain. By extension, 20% of the ideas to improve a process will provide 80% of potential gains. As I spoke, I was struck by the inverse of that: probably 80% of the ideas we generate without analysis will likely only provide 20% improvement. That’s sobering stuff.
And yet, it feels accurate. The process at hand has a capacity that has basically been unchanged for a year. The team who uses this process has been measuring productivity out of this process, and because it’s important to them, they’ve brought a lot of energy and creativity to improving the process. I don’t think there was anything wrong with any ideas that were applied –we have some very good minds working on the problem. But if we fix a problem that contributes only incrementally to the overall output, then we can only be disappointed.
It also caused me to think about how working in a management role entices you to believe that because of your role, your ideas are great – you have the experience and technical knowledge to solve problems quickly. Decisive problem-solving is seen as a hallmark of a good manager, so we reward and respect this behavior. And yet – how many of these decisions concern that 80% that contribute 20% gain? That perspective is certainly humbling for any manager.
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About
- Dionne Dumitru
- My career and life are shaped by my many interests and love of learning and solving problems. I also like making things; the best part is playing with ideas. This blog is part of that outlet.
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2 comments:
I'm not sure that the inverse applies in a directly proportional way, and the upshot of that is even more alarming to some extent. That is, in this analysis, 80% of an organization's decision-making, idea generation, and overall activity could rather be seen as something akin to background noise and not especially contributory to any gain at all. What we're left with is that 80% of what we do at work contributes in less than a 1 to 1 relationship of effort versus positive outcomes to the overall picture, while 20% contributes at a greater value than 1 to 1, and this just to maintain the status quo. Hmm. It is in fact a interesting thought. The trick is, as I surmise that you also surmise, to find processes that help identify ahead of time which ideas etc. belong in which group. On the other hand, if indeed Pareto's Principle represents a set of conditions in the world which yields this ratio on a fairly reliable basis, the beginning point in the exercise might be to see if you can figure out what mechanisms are at work in the particular environment under study that produce outcomes approaching the Pareto percentages.
Alarming indeed; I hadn't thought of applying the principle to overall activity. I think your comments illustrate what drives the differentiation between a high-performance company and one that is not. Companies that perform extraordinarily well in their market typically have a heightened awareness of those 'mechanisms at work' and how to leverage them.
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