Episode 90 - Chapter 7 - How to Win the War on Waste in 90 Days - Audio Book

A Consortium of Problem Solvers Podcast of Len Bertain's Audio Books

7. Tools of the War

Over the years, we used tools of the trade in unique ways. We borrowed tools from friends. And we made up our own tools. Some of these are worth noting.

120/20 Rule of Profits.
There is a corollary to the 80/20 Rule. A business “turn around” consulting friend showed us this rule. We have all seen it. It is the 120/20 Rule of Profits.

· 120% of a company’s profits come from 20% of the customers.

· 120% of profits from 20% of the salesmen.

· 120% of the profits from 20% of the products or services.

We call it the Bibeault 120/20 Rule of Profits, in honor of our consultant friend who pointed it out to us.[1] This rule is a good tool to develop an effective customer-driven strategy. It allows us to focus attention on those customers, salesmen or products that deliver the most profit. It may also help understand why. Why are some more profitable?
The 5/67 Rule ­(1 Sigma)
The 5/67 Rule is a subset of the 20/80 Rule or 80/20 Rule. We discovered it during the War on Waste. We were always in a hurry to get projects completed and we didn’t have time to look at 20% of the problem demanded by the 20/80 Rule. But we did have time to look at 5% of the problem. When we did that we kept seeing that we were getting about 60 to 70% of the targeted benefit. We called it the 5/67 Rule without really knowing much about it. It just seemed to work but it didn’t make sense.

Yes/No Charts
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World Record Reports
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[1] Don Bibeault is a venture capital investor now. In his former life, he was management consultant. He specialized in turning around distressed companies.