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Judge Rules in Consultant's Favor with 80-20 Rule
I opened the registered letter and was shocked. My best clients were joining together in a class-action suit against me. The letter stated that I had promulgated a false illusion of success by having them follow the 80-20 rule. It alleged that I brainwashed them into thinking that the 80-20 rule was a basic law of business and nature. They followed my advice and many of them had gone bankrupt. I confess, I do quote the 80-20 rule like it is divinely ordained. Called by whatever name, the 80-20 rule reminds us that the relationship between input and output is not balanced. The rule states that a small number of causes is responsible for a large percentage of the effect, in a ratio of about 80-20. For example, it could be said that 80 percent of your profits come from 20 percent of your customers or 80 percent of your budget comes from 20 percent of the items and so forth. The 80-20 rule is definitely biblical in its origins. It's my mantra. I start all my training sessions with a simple question. Although there are Ten Commandments, which ones do you think generate most of our sins? "Do not covet? " is obviously No. 1. The group usually argues over No. 2. Lately "Honor thy father and mother" has been the runner-up. (I guess with the increase in life expectancy, it has become much more difficult to follow this commandment.) We have a few laughs, and I make my point. Each commandment does not generate an equal amount of sins. "Do not covet" and at least one more could well make up 80 percent of our daily transgressions. My audience loves the story. True, they would initially argue that the 80-20 rule does not apply to them. Their businesses are unique and such sweeping rules could not include them. However, I show them data and a lot of anecdotal evidence. I can be very persuasive. Finally they succumb and buy my book, training tapes, and subscribe to my Web site in order to follow my latest advice. I reread the letter. I'm flabbergasted. I call my best customers, but they won't talk to me. They refer all my calls to their attorneys. My attorney warns me that this is not a frivolous lawsuit. I need to have a strong defense. We live in times when consultants are being sued by their clients for a lack of ethics, conflicts of interests, and down right plain stupidity. Consultants are paying hefty fines, even getting jail time. I started working on my defense at the library. I researched the great scientific discoveries of the Renaissance. I believed that the 80-20 rule could be found in the footnotes of Sir Isaac Newton's manuscripts on the universal laws of gravitation. I was wrong. An alternative, for sure, would be Charles Darwin's law of the survival of the fittest. The 80-20 breakdown seemed like a natural outgrowth of his studies of competition, genetic mutation, and the animals of the Galapagos Islands. Again no luck. I was starting to worry. I did find some stuff on an Italian economist of the late 19th century, Vilfredo Pareto. He developed "Pareto's Law" which he presented as: log N = log A + m logX. When dumbed down it is the 80-20 rule. I was very excited. I showed it to my lawyer. "Forget it." I would lose the jury with any math beyond third grade. I decided to tell my lawyer the truth. My pals in high school promulgated the 80-20 rule. We were trying to figure out the probability of getting dates on any given Saturday night. We collected data from our classmates. Surprisingly a small percentage of the guys (20 percent to be exact) dated most of the girls (80 percent to be exact). These guys were considered the "in crowd" and always had dates. On the other hand my friends and I, "the nerds," the other 80 percent of guys, were always competing to get one of those few girls (the 20 percent that would date a nerd) to go out with us. The rule applied in college too. Eighty percent of the beer cans could be found in front of only 20 percent of the dorm rooms. We knew because we collected them for recycling. (OK, we did it to get the five-cents refund available in politically correct California). It just seemed that everywhere I went this 80-20 thing worked. My lawyer sounded encouraging for the first time. He could use this type of information to convince a jury. Initially, his strategy was to plea bargain and ask the judge for community service. Now he was ready to go for an acquittal and threaten to counter sue my former clients for defaming my professional name and character. Did you see me on Court TV? Not only did I win, I got the judge and 80 percent of the jury to buy my book. Hesh Reinfeld writes a syndicated business humor column. You can read additional examples of his columns on his website: http://www.heshreinfeld.com Or contact him at hesh1@comcast.net
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