In their hit song from the ‘70’s, the group, America, shares the insight that ‘Oz never did give nothing to the tin man.’ And, they follow it up with the phrase …. ‘that he didn’t, didn’t, already have.’
So true in life. Also, true in business. The answer is so very often hiding in plain sight. In fact, most everything we need, we already have. We simply need to be made aware of it. We need to know where to look. And, then know what to do with it once we find it.
So, for instance, if you’re trying to grow your business (and who isn’t?), try looking at your current business first. And, rigorously apply the 80/20 principle. I guarantee you’ll find hidden treasure.
Apply this rule to your customer base. Most likely, 20 percent of your customers account for a disproportionate share of your revenues and I suspect at least 80 percent of your profits. Implications? Obviously, go get more customers who look like the ‘golden 80 percent. And find a way to fix or get rid of the real losers.
But here is another more important implication that people generally miss. Question: Where are you most likely to find your best source of business? Answer: The ‘golden 20 percent.’ Get more business from them – either directly or thru referrals. This is a gold mine. At one level, most experienced businesspeople are aware of this strategy. But they simply can’t seem to organize themselves or their teams to execute on this amazingly simple concept. Institutional incentives and pressures, as well as human nature, simply drive them in the direction of shiny new objects – while overlooking the treasure trove in their backyard.
Similarly, with products. Typically, there is a product or set of products that represent approximately 20 percent of the items – but account for the majority of the company’s profits. I love a quote from the late former CEO of RJR/Nabisco, Ross Johnson. Reflecting on the decades of squandering capital on failed new products and misguided diversification efforts at the company, he said ‘More than one hundred years ago, some X*#@/expletive genius discovered the Oreo cookie and we’ve just been living off the inheritance ever since.’ The implications are obvious. Focus on the core!
And of course, there is also hidden gold in your team. That 20 percent of your employees who produce 80 percent of the results … or probably substantially more. As Bill Gates once said of the vast Microsoft organization numbering in the tens of thousands, paraphrasing he noted, ‘Basically when it comes right down to it, there are about 8 of us in this whole company who create all the value.’ So, if you want to grow your business, then spend your time nurturing and aggressively investing in those golden few. While of course additional support may be required, how much time is wasted and how much distraction in over investing in the bottom 20 percent – where the investment rarely if ever pays off?
So, coming back to the great quote from America – yes, ‘Oz never did give nothing to the tin man… that he didn’t, didn’t already have.’ And, most likely your business already has within its core, the key elements for growth.
So. as that great country and western song reminds us, let’s all agree to ‘Stop Looking for Love in All the Wrong Places.’ Let’s focus on the core – the golden 20 percent – our customers, our products and our employees – and execute strategies that achieve our full potential.