The 80:20 rule in times of uncertainty

As many of you have certainly experienced already, there are a lot of managers who expect to have a plan thought to the end – including a business plan. Especially when it is about presenting to a Board of Directors for budget approval. There is nothing wrong about this. I would just like to highlight some caveats that this approach might bear.


During my business strategy lectures @HEC we have worked on several cases like Dell, Patagonia or the Cola Wars case. Those cases sound “logic” and looking backwards all pieces come together in a meaningful way. We then talked about gaming theory, aka how to anticipate moves of competition and understand the impact of psychology on own decisions. We looked at the Ryainair case for that. In many examples we could literally compute the changes in willingness to pay (WTP) by looking at the numbers given in the cases. But if you go beyond airlines and apparel and enter the space of digital, this becomes more and more difficult. And still: the Professor was talking about such things as “intuition” when thinking about strategy. And finally there is the time factor, typically decision makers don´t have infinite time to come up with conclusions. The more uncertain predictions are the more blurry is the future. Many executives react with the task to try harder to come to a concrete case.


Everyone knows the Pareto rule with 80% of the effort  needed to get to the last 20% of the result. This perfectly applies to our context. Instead of insisting on getting the last 20% right, there must be a clear decision on how much time and effort to invest to get more certainty. Given the dynamics of the markets and the role of technology there might be the moment to listen more to those who have a good intuition.


Right brainers are intuitive, left brainers aren´t. Left brainers even instinctively fear intuition because it makes them feel uncomfortable. Most companies are managed by left brainers. So you can imagine what role intuition is playing when deciding issues. This results in lengthy planning processes and a lot of discussions. This hurts the 80:20 rules and doesn´t always give an adequate answer to current challenges. But – what is much worse – intuitive people don´t feel appreciated in this kind of environments. Going 80:20 means listening to them. Are you really sure to want to invest 80 % of your time to get to an anyway blurry 100% before making your decision? Your stakeholders might have an opinion on this…