pareto's rule

Relational Leadership and Pareto’s Rule

The Pareto principle is one of the most common axioms I hear leaders describe when considering outcomes. It is also commonly known as "the law of the vital few" in which 80% of the effects we experience comes from 20% of the efforts being given. bag-and-hands

I experienced this with a client who was having a difficult time getting motivated setting goals for the year. He had completed an analysis of his business and noticed that of his 165 or so clients, only 13 of them provided 80% of his business The other 150 or so clients  made up the remaining 20% his business. He knew he had to call on all of his clients, but felt like "what is the point".  If this was a straight college grading scale , he could get a “B” with the 13 clients without even trying, and the thought of trying to motivate the other 150 was overwhelming.

This client happened to be in sales. However, the analysis he provided is really about leader and follower relationship. Sales are the result of the relationship with the follower, or in this case we call them clients. Those of you who lead churches for example may not think in sales terms, you may have other metrics you measure. No matter the metric, if you lead people, it is about the investment in quality relationships that matter.

The client and I decided to make a game out of motivation by saying, “OK let’s NOT think about this year”. He is 32 and I challenged him to think about where he wanted to be in his career when he was 60. He said he had no idea, and I was reminded of the children’s classic, Alice in Wonderland. Alice was walking along the road and when she came to the fork was puzzled on which way to go. The Cheshire Cat looked down out of the tree and said, “If you don’t know where you are going, any road will get you there”.

[Tweet "Leadership lesson: 'If you don’t know where you are going, any road will get you there.'"]

Developing yourself as a leader requires that you know where you are going. So I had him write a narrative, a story of about 1 page that is descriptive in nature, of what he envisions doing in his sixth decade of life. I challenged him to be descriptive and emotional in his writing of this one page novel.

This writing of your personal narrative can be quite freeing as a leader. If you are feeling stuck in your goal setting, write a picture of what you want your goal attainment to be and then work backwards to create the steps that are needed to get you there.

Now that my client has identified what he wants his story to be, he must work to turn it into reality today. We took Pareto’s rule and continued the game by putting his customers in three buckets, then describing what his emotional connection is to them for the year. Next, we applied what we all know about top performers: that if you stretch and care for them they will produce even more. Notice there are two important facets here:

  1. Stretch them. Give them bigger goals, bigger targets. Believe in them, really show them that you think they can do it.
  2. Care for them. Support them. Give them resources. Encourage them along the way. Top performers will do great things for you if you support them.

Here is what it practically looks like:

  • In the first bucket are the 13 who provide 80% of his business. His connection to them is one of nurturing He wants to support them, and provide for them so they continue to grow. The idea is to give them the support they need to reach their full potential. However 13 is probably too many for him to fully invest in without ignoring the other 150.
    • From these 13 in the first bucket, he now chooses 5 who have the potential to make his vision a reality. We called them Drive with 5. He picked 5 clients that he wants to be more assertive with in their development. He wants to be intentional about getting more business from them, and really give them a lot of his emotional energy and time. The development with these 5 is where the stretch comes in. Give them bigger goals. Give them more of a chance to have breakout kinds of success. Invest in these leaders. Spend more time with them and give them coaching and encouragement.
  • His second group of clients are the 150 or so customer that make up 20% of his business. The question to ask about this group is: "Who has potential to rise into the first bucket?" He is having a dating relationship with them. Getting to know them better and deciding for next year which one or two of them will become part of his Drive with five.  What are their strengths? How can he capitalize on their strengths so they can become more self-aware of what their potential really might be?
  • The next segment is those still in the 150 group we call Future Harvest. This is the balance of your universe of relationships. This pool will always be there for you in small capacity. They are important because they make up your world of relationships and potential. They are important for stability and support. You need them, so do not ignore them. Love them and treat them well.
  • Last, my client sent me his narrative, as well as the names of his Drive with 5 and his dating list. We are going to discuss them on every coaching call. Accountability is another key to making your dream come true. Even Alice in Wonderland had the Cheshire Cat to hold her accountable!

I believe this process can work whether you are in sales, a minister in a church, an IT manager, or a company president. We all have a finite number of relationships we engage with that make up our 100%. The question is, which ones are you going to invest in to make your life goals a reality? Keep in mind that this leader I was working with had over 100 clients and so the narrowing to 13 and then to 5 to really invest in made sense in relation to his overall numbers. If you have 60 in your sphere of influence you may only want to invest in 3 or 4. If your sphere is smaller you might pick one or two. The actual number becomes less important when you are starting. The most important question is, besides yourself, who are the leaders you are going to invest in to make your leadership vision a reality?

[reminder]What are your thoughts about breaking down the important relationships in your life like this? [/reminder]

[callout]I have seen this process work time and again to help people analyze relationships for leadership investment. I believe it will work for you to think about who in your sphere of influence you should be intentionally developing to allow your leadership vision to become a reality. Click here to download a free pdf tool that will walk you through these three steps to help you analyze your relationships.[/callout]