The Power of Saying NO: Embracing the Eighty-Twenty Principle for Business Success

When my two boys reached the age of two, they discovered the word NO and practiced using it in every conceivable situation. Looking back, I now realize it was probably the most important word they will ever learn. It is the most important word to learn when starting or running a micro-business.

That’s where the Eighty-Twenty Principle comes into play. Developed by Italian economist Vilfredo Pareto, who observed that 80% of the land in Italy was owned by 20% of the population, the principle states that 80% of outcomes come from 20% of causes.

When Steve Jobs returned as CEO of Apple in 1997, he believed in simplicity and eliminating unnecessary features. He famously reduced the number of Apple’s products from over 350 to just a handful, ensuring each product was of high quality and met customer needs. He saved Apple from near bankrupcy to become one of the largest companies in existence today.

Let me give you some examples:

• Eighty percent of your revenues will most likely come from twenty percent of your customers.
• Eighty percent of your referrals will most likely come from twenty percent of your customers.
• Eighty percent of your profits will be generated by twenty percent of your time spent working on your business.
• Eighty percent of your business will be controlled by external environmental forces, while twenty percent will be controlled by your decisions, strategies, and actions.

Startups should assume that 80% of their original business concept or model is probably wrong, making it essential to test new ideas and track key metrics.

Your primary job as a business owner is to become like that two-year-old and learn to say NO to the eighty percent that will deliver little or no value to your customers and your ability to capture value or profits for your business. Another way to say this is that you need to become a CURATOR.

You’ll need to:

• Select the right stakeholders—customers, employees, suppliers, vendors, bankers, professionals, and partners—to support your business.
• Build a community passionate about your business, embracing your value proposition and sharing your values and interests.
• Select the right products and services and create a customer experience to deliver maximum value to your ideal or core customers.
• Align your value proposition to your customers’ jobs, provide your customers with the benefits they desire, and eliminate friction within the customer experience that causes pain or annoyance.

Applying the Eighty-Twenty Principle is what will create your competitive advantage and separate your business from competitors. Curation is what makes your business special.