The 80-20-100 Rule

You know the 80-20 rule, right?

Ever since reading Richard Koch’s book “The Natural Laws of Business” in 2001, I have seen the rule everywhere.

But as I’ve journeyed into fractional CMO work, I discovered a dimension of it that I previously didn’t appreciate.

The rule, known as the Pareto principle, states that 80% of consequences come from 20% of causes.

The simplified result is that by focusing on the 20% of your causes that lead to those 80% of outcomes, you can prioritize resources to address what matters.

It’s one of those equations that’s like the image of the Fibonacci sequence proportions. You keep seeing it pop up everywhere, and it feels like it can be infinitely applied.

I’ve been thinking about it way more since launching FOAF: Fraction of a Fractional Execs a year ago. Can the FOAF model endure?

Not everyone thinks it does. I got on a call recently with a prominent voice and organizer in the fractional CXO space, and they were so skeptical about the FOAF value proposition that they told me I was giving fractionals a bad name.

Naturally, I loved that.

The model is also based on experience where even working with some clients an hour or two a week on a fraction-of-a-fractional basis, you can become part of a team over time and then pitch in more as needed.

A big reason it works is that it isn’t just the 80-20 rule at play, getting 80% of the value of working with someone for just 20% of the time.

The numbers themselves need to be adjusted for the FOAF model – it might be more about getting 50% of the value for 5% of the time.

The reason any of it works is that no matter what portion of time you hire someone for, you get 100% of their experience. Their insight. Their wisdom. Their network.

You might not get all the output. Someone isn’t going to build and run a department for you in a few hours. A lot of output takes time.

But expertise? You can get 100% of that. And if you can harness it well, that makes all the rest of the output more effective.

This is why there’s so much upside to the fractional workforce that hasn’t been fully realized yet. And it’s why models like FOAF that make it more accessible to buyers and sellers alike are only starting to communicate the value.

We’ll never get 100% of the way there, but if we even get a fraction of the way, it will make big strides in transforming organizational value.