Each problem has hidden in it an opportunity so powerful that it literally dwarfs the problem.
― Anonymous
A 2,000 percent solution is any method of accomplishing
what your organization does now with zero-to-four percent
of the current time and resources, or accomplishing an
increase of 20 times in results while employing the same or
fewer resources. A combination of those results can also be
a 2,000 percent solution.
When first creating a 2,000 percent solution, many people
report discovering that their solution could have been
implemented at any time during the prior 50 years. But no
one had. Why is that?
Here’s a story that helps explain such delays. An executive
works in a business where 95 percent of the ingredients
were once discarded at the end of the production process.
That’s like taking a piece or two of a large wedding cake
and then throwing the rest of the cake away. The
organization first called the unused ingredients “waste”
and dumped that material into the ocean. A new treaty in
the 1970s prohibited this kind of dumping, and the “waste”
went into landfills. Environmental laws were later enacted
that made it more attractive to do something else with the
“waste,” and the leftover ingredients were turned into
“by-products” that didn’t have much value. The executive
redefined those used ingredients as “products” and
discovered that with a little upgrading they became
valuable forms of organic fertilizer that many were anxious
to buy. Soon the executive had developed a large fertilizer
business and was successfully making similar upgrades of
waste into valuable products for other manufacturers.
From this experience, the executive learned that people
only pay a lot of attention to “products,” seldom focus on
“by-products,” and hardly ever examine their “waste.”
Similarly, people pay a lot more attention to 2,000 percent
solutions than to efforts to meet the annual budget
increase of 10 percent. Why? It’s more exciting and
rewarding to develop 2,000 percent solutions. When you
accomplish that first 2,000 percent solution, your
self-esteem reaches a higher level than you ever thought
possible. You’ve done it once and you know you can do it
again.
A parallel observation to Pareto’s Law (referred to by many
as Pareto’s Principle, or the 80/20 principle, meaning that
80 percent of the results can be observed to come from 20
percent of the people doing an activity) states that 80
percent of the results of any economic activity come from
20 percent or less of the efforts. Let’s look at an example.
Imagine that a business has 100 salespeople selling 100,000
units a year. Consistent with the parallel observation to
Pareto’s Law, 20 of those salespeople produce total sales
of 80,000 units per year (an average of 4,000 units per
year) while the remaining 80 salespeople produce total
sales of only 20,000 units per year (an average of 250
units per year. The 20 most productive salespeople create
on average 16 times (4,000/250) more than the average of
the 80 remaining sales people. Matching the performance of
the remaining 80 sales people to what the most productive
20 salespeople accomplish is a 1,500 percent solution.
Within the group of 20, some are more productive than the
others. Let’s assume that the most productive salesperson
produces annual sales of 7,000 units. That amount is 28
times what the 80 less productive salespeople average. If
the less productive people can move up to the productivity
of the most productive salesperson, that’s a 2,700 percent
solution.
Within the group of 80, some are less productive than
others. Let’s assume that the least productive salesperson
who won’t be fired sells merely 100 units per year. If that
person could match the most productive salesperson, that
would be a 6,900 percent solution.
The nature of which customers are served may have something
to do with why these two salespeople vary so much in
productivity. But if the least productive salesperson can
increase performance to even half the average of the most
productive group, that’s still more than a 2,000 percent
solution
Let’s also assume that the company has a more effective
competitor where the most productive salespeople sell on
average 10,000 units per year. Within that group, let’s
also assume that the most productive person sells 18,000
units per year. If some of this success is based on selling
methods that the least productive salesperson in the first
company can emulate but doesn’t use now, that relatively
low performing salesperson would only have to capture
one-eighth of the results of this most productive
competitor‘s salesperson to achieve a 2,000 percent
solution.
In addition, there are probably better performing
salespeople in other industries who could also show the
lowest producing salesperson in the original company how to
improve. By drawing on those examples, the least productive
salespeople can expand their productivity further.
From the first company’s management perspective, notice
that the challenge is different. Only if the salespeople in
total improve their productivity by 20 times does the
company enjoy a 2,000 percent solution. Even if the methods
and personal qualities of the best salesperson can be
duplicated in the rest of the sales force, such a 2,000
percent solution cannot be achieved. That’s because the
company would still need eight salespeople to equal the 100
current salespeople in performance. Only by dropping the
sales force to four people and keeping the same sales level
could the company achieve a 2,000 percent solution.
Reaching that level of performance would mean exceeding the
productivity of the competitors’ best performer. What’s the
solution?
The odds for creating a 2,000 percent solution for the
whole sales force are improved by another factor we haven’t
discussed. Few of the top performing salespeople will be
using identical methods. As a result, you can combine
highly productive techniques to exceed the performance of
even the most effective salesperson.
Likewise, 20 percent of the customers will produce 80
percent of the earnings. So it’s as important whom you sell
to as it is how efficiently you perform. Some organizations
will find that their highest volume salespeople are mostly
bringing in business from relatively unprofitable
customers. As a result the most profitable best practice
may be found among a so-called average performer who only
produces high margin sales. Cross-fertilize the methods of
the high volume salesperson with the high-margin one, and
you should increase the profit-productivity of sales
efforts by much more than 2,000 percent.
For a given organization, simply determining who are most
productive and what they do differently that may account
for their success is a very powerful starting point for
expanding effectiveness. That’s why the few organizations
that do such benchmarking within their company are quick to
find ways to make enormous improvements.
Here’s an important lesson: Pick the highest payoff
opportunities first! We all know that each activity varies
in its significance. For instance, developing new medicines
at a pharmaceutical company is much more valuable than most
other activities. If your company is below average in such
an important activity, the company-wide benefits of either
improving to become above average or outsourcing to an
organization that is above average can result in a 2,000
percent solution for the entire company’s profits. As a
result, those who are wise in selecting the activities to
improve first can make much faster progress than those who
focus in less significant activities.
You should consider an even more important lesson: Some
companies are making tremendous strides by developing skill
throughout their organizations in designing and
implementing 2,000 percent solutions. Such organizations
will have vast advantages over those who simply look at the
internal best practice or the industry best practice, or
outsource to a highly effective outside organization. Such
2,000 percent solution expert companies will be able,
instead, to advance to 5,000 and 10,000 percent solutions.
From that perspective, you can see that achieving a 2,000
percent solution is often a modest target … even though at
first blush a 2,000 percent solution would seem to be the
opposite, a stretch goal.
How much time and effort is involved? People who have
worked on creating 2,000 percent solutions were often able
to reach 20 times higher performance levels within six
months of implementing this solution development process.
Rarely does it take longer than two years. Individuals who
have developed 2,000 percent solutions usually report being
able to create the plan for one solution with less than 60
hours of effort over a few weeks. Hardly anyone ever
requires more than 120 hours of personal effort.
What are you waiting for?
Copyright 2007 Donald W. Mitchell, All Rights Reserved
—————————————————-
Donald Mitchell is chairman of Mitchell and Company, a
strategy and financial consulting firm in Weston, MA. He is
coauthor of six books including The 2,000 Percent Squared
Solution, The 2,000 Percent Solution, The Portable 2,000
Percent Solution, and The 2,000 Percent Solution Workbook.
You can read about his work on improving effectiveness at:
http://www.2000percentsolution.com .
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