Throughout my career, the Pareto Principle, the 80/20 rule, has been a profound source of insight. It has inspired one of my core business mantras: Fewer, Bigger, Better (FBB).
This principle emphasizes that focusing on the vital few, rather than the trivial many, yields the most significant impact. By improving through subtraction, removing what doesn't add value, we create leaner, more focused, and ultimately more successful operations.
In business, there's always a temptation to add more: more products, more markets, more projects, more processes, more gates, more bureaucracy...
However, true and significant value and growth often comes not from addition but from strategically taking things away. Here's how applying Fewer, Bigger, Better can drive effectiveness and profitability across different areas of business:
- Product Portfolio: The most successful companies aren't those with the widest range of products but those that dominate with a few exceptional offerings. By eliminating underperforming or non-core products, you free up resources to invest in enhancing your standout products. A smaller, focused portfolio enables you to refine, innovate, and deliver higher quality, strengthening your market position. The best products are those with the highest repeat rates and margins. High repeat rates are key drivers of profitability and sustainable growth.
- Geographic Focus: Expanding into every market is tempting but can lead to diluted resources and overstretched teams. Focusing on markets where you have the best chance to win and be profitable is crucial. By saying "no" to expansion into areas that don’t align with your core strengths, you can concentrate efforts where they'll have the most impact. Operating in fewer markets allows for deeper customer insights, more tailored strategies, and sustainable growth. Focus on markets where sales-to-cash conversion is higher. If you've been in a market and haven't become profitable within 3-5 years (depending on the product category), chances are you never will. Consider exiting such markets and concentrate on growing the profitable ones.
- Customer Base: Not all customers contribute equally to your success. The Pareto Principle suggests that roughly 80% of your profits come from 20% of your customers. By identifying and doubling down on your most valuable customer segments, you can enhance service, deepen loyalty, and boost sales. It's about saying "no" to chasing every potential customer and focusing on building stronger relationships with those who matter most.
- Organizational Structure and People: Complexity and overstaffing can cripple an organization's agility and effectiveness. Fewer, Bigger, Better means building a team of fewer, high-performing individuals rather than a large workforce. It's about investing in the right talent, those who are not just capable but also aligned with the company's vision. Streamlining your team structure by cutting unnecessary layers, roles, and processes results in clearer communication, faster decision-making, and improved efficiency. High-quality people deliver high-quality results.
- Risk Management: In investing and strategy, the pursuit of more can lead to unnecessary risk. Avoiding ventures that don't align with the company's strengths or involve excessive uncertainty is essential. By removing high-risk projects from your pipeline, you can concentrate on solid, proven opportunities that align with your strategic goals. Your long-term success is the sum of your short-term successes. So keep winning in the short term, and you'll be a long-term winner. Don't accept the rebranding of failed projects as long-term bets.
The 80/20 rule has shaped my belief in Fewer, Bigger, Better. By cutting away distractions and focusing on the vital few, whether it's products, markets, customers, processes or people, you can create a path to greater efficiency, effectiveness, and success.
Sometimes, less isn't just more; it's the strategic choice to be extraordinary.
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- Description: Learn how applying the Pareto Principle and the mantra "Fewer, Bigger, Better" can enhance efficiency, profitability, and success in various business areas. Insights from Lorenzo Delpani.
- Keywords: Fewer Bigger Better, Pareto Principle, 80/20 Rule, Business Strategy, Efficiency, Productivity, Leadership, Business Growth, Strategic Planning, Organizational Excellence, Risk Management, Customer Focus, High Performance Teams, Innovation, Business Philosophy, Success Mindset, Less Is More, Excellence, Lorenzo Delpani
