First published in The Economist in 1955, Parkinson’s Law says, “Work expands to fill the time available for its completion.”
C. Northcote Parkinson was a British naval historian, later elected a research fellow at the University of Cambridge. Parkinson’s Law evolved from his observation of the propensity of the British Crown to hire more and more people to achieve the same results. He wondered what happened to the “free” time now available to those who were responsible for the results before the new hires?
Parkinson discovered they were just as busy as before. Although economic output had not increased, everyone found ways to expand the work and remain busy. He observed the continued increase in the number of employees at the Colonial Office while the number of Colonies decreased. As the Colonial Office reached the greatest number of staff, it was folded into the Foreign Office because of a lack of colonies to administer.
When Jack Welch took over GE he knew that Japanese manufacturers had improved quality and could compete at lower prices. To remain in business, GE would have to change. Welch understood Parkinson’s Law and cut GE’s bureaucracy. Business leaders reported to senior VPs, who reported to executive VPs, all of whom had staffs of their own. Once completed, only 14 business leaders reported directly to three people, Welch succeeded using this simple law and you can too.
The 80/20 Rule asserts that a minority of causes leads to a majority of the results and was discovered by Italian economist Vilfredo Pareto while measuring patterns of wealth and income in England. Pareto found that most of the wealth went to a small percentage of people and soon postulated that the world wasn’t just unfair, but predictably unfair.
Pareto found the same pattern everywhere. Twenty percent of workers did 80 percent of the work. Twenty percent of customers produced 80 percent of sales. Twenty percent of sales produced 80 percent of profits. This is true in your organization and the world today.
In 1951, Joseph Moses Juran identified quality losses as stemming from only a small number of causes. Although Detroit was not interested in being retrained, Japan embraced Juran’s hypothesis and became the giant that decimated the American automobile industry applying the 80/20 Rule.
In the early 1990s, Corning began turning away customers. Business was down, yet they were turning it away. That strategy restored Corning to profitability while others failed. How could that happen?
Using the Pareto Principle, Corning found that half of their 450 products contributed 96.3 percent of their sales. The other half grossed less than 4 percent and actually lost money. They had 1,000 suppliers, but only 200 provided 95 percent of the company’s materials. Corning eliminated more than half its product line and it cut its suppliers to a few dozen.
Like Welch, by using Parkinson’s Law you can identify and eliminate busy work. Like Corning and Juran, using the Pareto Principle you can find that 20 percent, that valuable minority, which bring you 80 percent of what you want. May 2013 bring you even greater success as you apply this simple law and principle.
Questions for discussion:
• What busy work have we created and how can we eliminate it?
• What 20 percent of products, services or activity gives us 80 percent of what we want?
Joe Murtagh is The DreamSpeaker, an international keynote speaker, meeting facilitator and business trainer. For questions or comments, contact Joe@TheDreamSpeaker.com, TheDreamSpeaker.com or call (800) 239-0058.