Entrepreneurs worship at the alter of imbalance. We proselytize the gospel of 80 / 20 and venerate our dear saint Pareto.

But is 80/20 ever the wrong tool?

I spent several hours last week working on a growth plan. My goal was to establish a list of things to focus on and anticipate decisions that would help grow the business. The parameter I put on the growth plan was that it wouldn’t be comprehensive, but a first iteration (V1 – shout out to last week’s https://knighterrant.co/version-done/ )

Or rather, a second iteration (V2), because I used a growth plan I developed several years ago from the program, “10,000 Small Businesses,” as the base.

After I worked on updating the plan a couple of days, I revisited my aim and smiled when I saw the parameter to avoid being comprehensive.

It amused me because growth plans are comprehensive. That is their nature. You need to suss out all the possible issues on paper and address them early, when they’re cheap and easy ideas and not later when they’re sunk costs.

80 / 20 thinking is inherently fragmented. You’re looking for specific pieces of a system that outperform. Because of this, 80/20 can miss interdependent effects.

For a growth plan, 80 /20 thinking might focus you on the financial model. The 80% benefit from the 20% financial model is in forecasting how investments will impact profit over time.

But businesses are whole systems. If you ignore the other aspects of that system, say the culture of the business, then you might have a financial model that should work, but doesn’t, because of turnover or low productivity.

This doesn’t invalidate 80 / 20 approaches. It just means that you need to be aware of when you’re looking at the whole, like in strategic planning, or when you’re examining a part, like in optimizing that financial model.

Featured image is the patron saint of entrepreneurs, Vilfredo Pareto. Used under public domain.