How The 80/20 Addiction Leads to Business Failures

When people talk about the 80/20 Rule, they are most often referring to the idea that 20% of an effort produces 80% of the desired results. And that by focusing on enhancing that 20% you can optimize your business. However, there are a few problems with this concept and its intended business applications.

1. For starters, the commonly shared, watered down version of this business axiom has left out a few keywords that are critical to business.

The ACTUAL 80/20 Rule states that, for many events, roughly 80% of the effects come from 20% of the causes.

The “for many events” part is left out of the equation and its a game changer. The principle is clearly not meant to apply to every event or business issue. It is stated as “many” events. The term “many” is unquantifiable, unverifiable, subjective, and useless – in many cases. How many is “many”? By default, this makes the 80/20 Rule feel less concrete and scientific. It starts to sound more of a fuzzy and alchemic concept.

2. The 80/20 Rule assumes you can identify which 20% is doing all the heavy lifting.

Many organizations large and small do not have the data to be able to determine this. Instead, they just guess. The guesswork invites, even more, bigger and bolder guesswork.

3. The common practice of rationalizing a lax business effort with an “80/20” response is a misapplication and complete warping of the rule and key concept. 

The echo-chamber of business media have translated the 80/20 Rule and business axiom to somehow mean you can put in a tiny amount of effort to reap the majority of the possible benefits. This might be true if you knew which 20% was doing all the work. But you have to put in work first before you can identify it.

People often cite “80/20” at the beginning of a project or initiative, as a rationalization to accept a half-measure, because it’s almost what you wanted or expected. Almost is assumed to mean good enough and fit for duty. But, many times, almost or good enough does not cut it. Further, simply saying “80/20” before or after doing a poor job doesn’t improve the effort, nor does it make the person sound any smarter or more virtuous.

Referring to the 80/020 Rule doesn’t make things magically better. You may as well use the power of The Secret to guide your business efforts.

Even if you believed the warped 80/20 rule definition:

  • 80% of a properly cooked rare steak is just uncooked meat.
  • 80% of a jet aircraft probably won’t fly.  
  • 80% of your work in a complete/not scenario is a fail.
  • 80% of the truth – does not result in the truth.

Now don’t get me wrong. You can’t wait until things are perfect, but misapplying the 80/20 Rule in this way encourages a race to the lower and ultimately lowest common denominator in terms of effort.

4. Derivative application of the 80/20 Rule is a recipe for disaster.  

Encouraging or putting in “the 80/20” effort into of an already 80/20 project is a resulting 64% effort. Quality diminishes quickly as it travels through multiple people or applications.

When you start calculating the impact of multiple 80/20 inputs, it is a very few, short steps shy of complete failure. And on the quest for good enough, people are using the 80/20 rule to get almost there – missing the point entirely. If it all sounds wrong and outrageous – it’s simply because it is. But the 80/20 Rule mindset is thriving in work culture.

Almost good enough, by definition IS NOT good enough.

And this is the ultimate impact when the 80/20 Rule is misapplied.

In a pass/fail scenario, almost doesn’t count. Using 80/20 rationale is like saying something is “mostly there” or “close to almost there”. And the almost mindset really kills your productivity and work product – here’s how.

The common reference to the 80/20 Rule is inherently derivative to mean settling for what is almost acceptable.

  • Your product/service almost delivered on the promise made to your market. 80/20.
  • Your report was almost acceptable. 80/20.
  • Your ad campaign was almost decent. 80/20.

The term “almost” often gets swapped with “pretty good”, which is a gateway drug to embracing an inferior, sub-par, or mediocre effort.

Then the concept goes viral. At every stage of the creation and operation of your business, someone misses the mark, complacently fails to uphold the standards you set for the brand, and the results are usually half-baked half-measures. The odds are the quality of your work is eroding.

I can’t tell you how many consultants and advisors from the so-called top business management firms encourage instituting the 80/20 Rule and then failing to correctly define it.

Here’s the REAL linchpin to successfully using the 80/20 rule – Focus on identifying the 20% rock-star efforts

If you can’t put your finger on the right 20%, the inputs that are producing the 80% of your positive results, the 80/20 rule is utterly useless. And this leads to all too common oversimplification and business application.

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