The pareto rule states that 80% of the wealth in most countries ends up being in the hands of about 20% of the population.
This concept has a life beyond it's original inception having been found to apply in areas such as the social sciences - to fields as arcane and difficult to understand as orginizational engineering (human factors I think it's called).
Most notably, (in personal experience), it seems to come to play in Non profit endeavors, where one can see that 20% of the workers do 80% of all the work.
I'm treading on ve y familiar ground here because the 'pareto mem' has been trumpeted very loudly by the 'four hour work week' guy, Tim Farris in his book & the blogosphere is all abuzz with the idea, repeating it ad nauseum.
Steve poins out how Mr. Farris reviewed his customers & found the ones who did 80% of the complaining and generated 20% of the revenue & he either worked out new arrangements or he parted ways with them.
While I find the process he went through interesting, I have to say that this is a standard business tactic: identifying the customers who require the most work & bring the least profit is done everyday.
Generally the 'parting of ways' comes during negotiations & everyone walks away justified - the client has separated from an 'unreasonable vendor' & the vendor has freed their capacity to serve more profitable clients.
Furthermore the process of client review fits nicely within any business that seeks to continually improve - not only profits but, also processes.
For the businessperson who honestly seeks to improve their business there needs to be periodic reviews of all the core functions. Any company that does not engage in this activity is not serious about itself. Just because ones Not an entrepreneur, does not mean one should not think like one at least once a week.
For now, i'll wait for Mr. Farris book & see if he can change my mind.
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quoth the raven 'Nevermore!'
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