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The 80/20 Rule for Business Projects

At the beginning of a large project, the sheer size and scope of what’s ahead can be enough to give anyone nightmares. Where do I start? Who should I involve? Where is money best spent? How do I avoid wasting my time? These are all questions likely to enter your mind, sometimes all at once. This type of cognitive overload can cause you to make bad decisions. What’s the remedy to this problem? At Cyberlink, we believe in the 80/20 rule. To put it simply, the best path to a successful project involves 80 percent planning and 20 percent implementation.

If you’ve ever encountered the 80/20 rule before, you’re right to notice that our approach to the concept is a bit different. Traditionally, the 80/20 rule in businesses refers to the idea that 80 percent of problems come from 20 percent of causes. We recognize that it’s a minority of important issues that contribute most to project pitfalls which is why devoting a significant portion of your energy to planning is so crucial. While planning is not the same in every company, there are a few distinct phases to consider.

Pinpoint the Problem to Be Solved

All businesses face similar problems: not enough sales, lack of productivity, excessive costs, and high employee turnover. Unfortunately, these problems are too generic to be very useful in the planning process. What we really need to ask is “why?” Why are sales low; why can’t we meet the demands of our customers; why are we not make conversions? Answering these types of questions requires that you look beyond the surface symptoms and find the underlying causes. This is an area where getting as much input as possible is crucial. Often times, certain people get tunnel vision and lose perspective.

Let’s use a hypothetical mortgage lender as an example of how to pinpoint a problem. Company A began lending in the early 1980s and grew consistently year after year until the housing bubble in 2008. While many lenders have recovered since then, Company A has yet to match their previous success. Not only are there less borrowers, the borrowers they do work with complain about constant delays and miscommunication. After speaking with a few other professionals in the industry, an agent realized what was going on. While other lenders were adapting to the times with new tech, Company A had yet to fully take advantage of its existing LOS and available update. Management quickly discovered that a huge source of problems were being caused by using spreadsheets where they weren’t needed or incomplete implementation of some key software features.

Define Your Objectives

Knowing the exact problem your company faces makes creating project objectives a lot easier. In Company A’s example, our objective would be to find a way to fix the delays in the manual procedures, but how can they accomplish this goal? In this case, the company has several options. They can try to retrain employees on existing procedures, write brand new manual processes, or implement some type of technology that provides automation. Ultimately, they decide that implementing new loan origination software is likely to be the optimal solution. They will need to further define their objective by figuring out which LOS product best fits their goals. This will involve careful analysis of cost, features, support, and other technical details.

Identify Your Required Resources

With the problems and objectives now in focus, it’s time to figure out who and what will be needed to make change happen. Depending on the type of problem, the scope may be very expansive or strictly limited. There are four key areas where you can identify required resources:

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• Funding – Owners, management, or investors will need to decide how much money to invest in the project. If the expectations of those in control of the money aren’t managed correctly, the project could be halted in its tracks. Here’s where it’s time to carefully research expenses like software licensing, consulting services, or new equipment.
• Time – Many projects fail because the time required to finish is grossly underestimated. Rarely does every aspect of a project get completed without some kind of delay, so it’s important to be realistic about the time to complete your objectives.
• Personnel – If the project requires additional manpower, figure out where it’s going to come from. It could be from contractors, new employees, or temp agency workers.
• Space – New employees of consultants need a place to work, so you need to ensure you have the space for them. Contact the property owner to see if there is additional space to lease or make arrangements to rearrange the your existing office layout.

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The Build-Up Phase

You have a specific objective and realistic expectations about the resources required to accomplish it. Now comes the most intensive part of the planning process: actually assigning working and creating schedules. The build-up planning phase to the actual start of your project involves five distinct steps:

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1. Assemble your team. This flows directly from the personnel aspect of resource identification. If your current staff lacks the skills required for certain tasks, now is the time to get them on board. This may mean hiring new employees or working with consultants.
2. Plan assignments. Match your assembled team members with specific tasks that match their skill set. This requires detailed communication with each person.
3. Create a schedule. If you’re lucky to have the freedom to create your own deadlines, schedule each assignment for a realistic amount of time that doesn’t put undue pressure on your team. If you have hard deadlines, work backwards from the due date to ensure personnel have enough time to complete their tasks.
4. Host a kickoff meeting. Gather everyone involved in a project for a meeting to discuss assignments and schedule. Make sure everyone who has a question or concern is listened to and try to resolve any conflicts. The more open communication is encouraged during this phase, the more likely you are to avoid pitfalls.
5. Develop a budget. Break down your estimated budget into categories like staff, training, travel, supplies, licensing fees, or any other parts you may need. Consult with someone who has financial experience to see if you missed anything. Remember, your final costs are likely to deviate from your estimates.

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Getting the Project Going

As you can see, the 80/20 rule requires that you put quite a bit of work into planning. The idea being that planning helps you establish realistic expectations for each aspect of your project, reducing the chance of surprises preventing success. Of course, even the most carefully planned projects have hiccups, but your team will have the ability to shift and refocus when they have a solid foundation beneath them.