80/20 Targeting

If you find yourself getting off track in trying to stay focused on a major project, then 80/20 targeting is a technique that likely can help you.

The Problem

Imagine you have a major project and you continuously find yourself getting sidetracked or, worse yet, so caught up in all the details of the project that nothing about it seems to be coming together. As a Part-time CFO or Controller I’ve experienced this and found that one thing seems to help more than all others and that is narrowing my focus. Simply put, the method I find most helpful is to identify the things that need to happen and then identify the impact those things can be expected to have. Then, using the concept of the 80/20 rule the 20% to 30% of items that stand to produce 70% to 80% of the results become the areas of initial focus. This is what I mean by 80/20 targeting.

An Example

I’ve used this example in some other blogs but not in the same context. Specifically, a number of years ago I obtain a new client that I soon learned was taking about two weeks each month to produce financial statements for the prior month. So, here is what I did:

  • Identified all the steps involved in the monthly closing process
  • Determined the amount of information provided by each step
  • Identified the steps that were always running late
  • Those steps were the focus and were probably only 10% of the steps
  • Identified the current source of information for those steps that were late
  • Identified alternative ways to get the information earlier
  • Implemented the alternative ways to obtain information

As it turned out, once this was done all the other steps essentially seem to automatically fall in place, and some of them even became faster. Additionally, after eliminating the bottlenecks that had been slowing the closing process and rectifying them, I could then see other areas where it was possible to perform some of the closing steps even before the end of the month.

Obviously 80/20 targeting is not a commonly used term, but it does reflect the concept well; that is, identify those approximately 20% of items or steps in a project that provide the most results for your efforts and focus on them. Many of the remaining items will fall in line automatically, and in some cases you may realize those other items are not even needed.

If you want to know more, contact AimCFO – Contact

As always, your comments are welcomed.

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