The secret of 80/20 in IT Due Diligence

Which is better a $10,000 or $40,000 return for the same investment?

 

In the past, there have been ideas that were ahead of their time. So far ahead, that they were quickly forgotten. Then “re-discovered” decades later. An example would be Chaos Theory (1969) and the Pareto Principle (1941). At their core, both these concepts have their roots in the work of Vilfredo Pareto who first pointed out the 80/20 correlations in 1896. In 1941, Joseph Juran described the rule saying that “…80% of problems are caused by only 20% of causes…”. This has led to business axioms like:

    • 80% of Sales are made by only 20% of the sales team.
    • 80% of company purchases are made by only 20% of customers.
Topics: Due Diligence IT Due Diligence Technical Advantage 80/20 Strategies Pareto principle Investment Banking Mid-Market

Strategic Business Development - 80/20 Strategy

Often businesses focus their attention on new customers in a business development strategy, even though they have the highest acquisition cost.  By instead focusing on current customers, sales happen more quickly.

The problem we run into is that not all customers are equal. Statistically, we estimate 80% of customers drain 80% of organizational resources.  Yet we know that only 20% of the customers provide 80% of company income. 

In an 80/20 strategy, we delineate our present customers to identify the 20% providing 80% of the income and the 80% providing 20% of the income.  We then develop customized plans to sell more solutions to the top 20%.

Topics: Business Development 80/20 Strategies Strategy

Strategic Business Networking - Leveraging Mavens

The most active and win-win providers of the three personality types of networkers  for Connectors and Rainmakers are Mavens. While there are extroverted Mavens, there are probably more introverted than extroverted mavens. This is valuable because they are very good at understanding complex and counter-intuitive problems. 

During events Mavens will be friendly, but most likely to the point.  They won’t be enjoying the social aspects of the event as much as the introvert.  This often means they are very focused on the reason for attending the event. They are likely to "get in and out" to maintain emotional energy.

Because they are counter intuitive, their audience will take a while to catch on.  Unlike the Rainmaker or the Connector, the Maven needs the most time to develop a great rapport and reputation. 

Topics: Business Development Business Networking 80/20 Strategies Executive Outlier Building a Professional Network Strategy