I was listening to a podcast this week from Tim Ferriss, author of The 4-Hour Work Week. The episode reminded me of this truly shocking truth: firing some of your clients can actually be more productive than going out and winning new clients.
This podcast episode consisted largely of an excerpt from the book’s chapter on the 80/20 Rule, otherwise known as the Pareto Principle, a staple for Lean and Agile enthusiasts. The 80/20 Rule suggests that approximately eighty percent of the effects or outcomes come from twenty percent of the causes. This means twenty percent of your hobbies provide eighty percent of your enjoyment. Twenty percent of the book you’re reading provides eighty percent of your insights from the book. In Pareto’s garden eighty percent of his yield came from twenty percent of the plants. The applications are endless.
But it’s not always about the positive. Eighty percent of the value your teams are producing comes from 20% of their backlog. If your teams are dividing their attention between five projects, can you identify which project is producing 80% of the value? Can you identify which project is producing 80% of the problems?
As a leader, it’s your responsibility to (1) identify the priorities that are going to produce the most value, and (2) give your teams the support they need to focus, to give them the authority to say ‘no’ to work that distracts from this top priority. Your teams’ backlogs should be lean, and the items at the top should be giving you the biggest bang for your buck. The bottom of the backlog should be constantly pruned (not a graveyard for bad ideas that you’re not allowed to say ‘no’ to).
Once you’ve gotten used to evaluating where the most value is coming from, it’s easy to flip the script and evaluate where the most problems are coming from. Eighty percent of your breaks and customizations are from twenty percent of your product line. Eighty percent of your client complaints are coming from one or two clients. Don’t just de-prioritize these products and clients– get them out of there! Fire the client, cut the product. Even if you’re making sales and getting money from these sources, they’re costing you more in the long run. Put your focus into the most valuable work and cut out the work that’s creating waste. (For a great example, look up Steve Jobs’ approach to turning around Apple in 1997.)
Agile is all about maximizing value and optimizing flow. When you are pointing the teams at the highest value, defending their focus, and ruthlessly cutting out the problem-producing work, you’ll see exponential benefits. When your most precious asset is time, focus that time on the things that are actually paying off.