Data, no matter if it is called big data, gives the user information on inputs and outputs, causes and results, efforts and rewards. From that we can analyze the numbers with the intent of drawing useful conclusions and implementing actions. So far, so good.
Uncovering Secrets in the Data
As I reacquaint myself with the 80/20 Principle, I am digging deep into the work that Richard Koch did on the subject and he addresses the data issue this way: typically, the majority of the inputs, causes and efforts have little impact, but a small minority have a major dominant impact.
Where I think the difficulty with the huge amounts of data now being made available is the ability of the users to find that small minority. The more data found the more the imbalance that will always appear. The Principle provides a framework for the analysis, but even that has its limits, especially as you mention in the final paragraph – taking a leap and taking risks.
How 80/20 Can Help
Once again Richard Koch has seen a deeper aspect of the observational framework of the Principle. He breaks down this down into 2 parts: 80/20 Analysis and 80/20 Thinking. The former is precise, quantitative and provides facts. The latter is fuzzy, qualitative and provides insight. The facts are only that; the insight is what’s needed to see through them to innovative ways to act on the data.
I’ve recently completed an 80/20 analysis of a customer’s customer sales data showing them the sales generated by the top 20%, the top 4% and the top 0.8%. From that came the idea to create focus groups of each of those categories to find out how the company could meet their needs more completely getting them to spend more.
But a deeper insight was to realize that the members of the focus group could also provide input on not just products and prices, but also store ambience overall, store layout and convenience in shopping, customer service, specific issues with some employees and management. Since that group has been identified as valuable customers, they may feel very comfortable bringing shortcomings in the operation to our attention.
80/20 Thinking is Key
80/20 Thinking is about pulling away from the data, pulling away from numbers and linear analysis and finding the time to simply contemplate in order to find the truly important inputs, causes or efforts. It is finding the needle in the haystack of data. The goal is some sort of behavior change, whether it be customers or employees or the organization as a whole.
Modern managers and data analysts in particular have to find the time to pull back and allow what has been called “the still small voice” inside us to come forward. That is where the remarkable happens, where insight is uncovered and real change can begin.
(Originally published in Pulse on LikedIn, March 31, 2015)