Business Mind Hacks » 80/20 Principle http://businessmindhacks.com Thinking about business on another level. Fri, 14 Nov 2008 03:16:50 +0000 http://wordpress.org/?v=2.3.3 en Microsoft and Complexity http://businessmindhacks.com/post/microsoft-and-complexity http://businessmindhacks.com/post/microsoft-and-complexity#comments Sat, 07 Jul 2007 21:47:01 +0000 Alex http://www.bizpsychq.com/post/microsoft-and-complexity A report from CNN serves as yet another reminder that my observations about Microsoft from a recent post are correct: Microsoft can’t buy a winner no matter how much money they trow at it (and their maintenance diet of oft-delayed Windows and Office upgrades doesn’t count).

The XBox 360 and other devices division (think Zune, etc.) is hemorrhaging money and just had to take another $1 Billion charge due to extensive hardware problems with the XBox. You’ll love this: "… the Xbox 360 return problem was getting so severe that the company was running out of ‘coffins,’ or special return-shipping boxes Microsoft provides to gamers with dead consoles."

That’s on top of the fact that no one cares about their Zune MP3 player and iPod "competitor", and that the Nintendo Wii and its disruptive innovation approach is running circles around the XBox and Sony Playstation.

Why am I bothering to highlight this for you? Two reasons: 1) There is a law of complexity that in essence states that complexity in an organization is directly related to its size. 2) Even mighty Microsoft cannot escape the logic of said law, regardless of how much money they throw at a problem.

(more…)]]> http://businessmindhacks.com/post/microsoft-and-complexity/feed What you don’t know about the 80/20 Rule… http://businessmindhacks.com/post/about-the-8020-rule http://businessmindhacks.com/post/about-the-8020-rule#comments Sat, 05 May 2007 16:24:31 +0000 Alex http://www.bizpsychq.com/post/about-the-8020-rule The 80/20 Rule, or 80/20 Principle, or Pareto’s Law (or Rule), or "law of the vital few", or law of factor sparsity, or any of the other names that this idea has been named, is often quoted yet little understood when it comes to really thinking about it and applying it in depth.

Just for some light examples: 20% of the carpets in your house will receive 80% of the wear (this is probably the most quoted), 20% of your friends will drink 80% of your booze, 20% of people on Match.com will go on 80% of the dates, and so forth. The imbalance of input to output that the principle predicts holds surprisingly well across pretty much all contexts.

By the way, here is the first important thing to get about the 80/20 rule: The exact ratio of the imbalance could be more or less than 80% to 20%, the point is that there will be a distinct imbalance away from 50/50. Most often it seems to range from about 65/35 up to 95/5, and overall it averages out very conveniently around 80/20.

Richard Koch has written a number of seminal books about it, and if you haven’t at least read his "The 80/20 Principle", you really should get started soon.

More recently, it was brought to people’s attention in Timothy Ferriss’ book "The 4-hour Workweek" during his PR blitz through a number of major internet marketing players’ virtual interview rooms. (more…)]]> http://businessmindhacks.com/post/about-the-8020-rule/feed