I saw this story in an Early to Rise newsletter a few weeks ago.  It’s from Tom Monaghan, the founder of Dominoes Pizza.

“One night, most of my employees didn’t show up, and I didn’t know whether to open or not. Someone said, ‘Why don’t you just cut out the six-inch pizzas?’ We had five sizes, but most of our business was the smallest, the six-inch. It took just as long to make as the big one and just as much time to deliver but cost less. I decided we would try that.”

“We never got busy that night, and yet we made 50 percent more money than we ever had. The next night I cut out the nine-inch pizza, and all the bills caught up. I learned then that keeping things simple could be more profitable.”

This is really just another way of stating the 80/20 rule or the Pareto principle.  It doesn’t just apply to pizza, it applies to everything.  People can see value in an activity and so they assume they should be doing it.  Wrong!

The Brain Surgeon

Imagine a Brain Surgeon’s office.  Certainly the janitorial duties at the office are critical to success.  If somebody didn’t get rid of the waste, the pile up of waste would destroy the surgeon’s practice.  Does this mean the surgeon should perform the janitorial duties?  Absolutely not and everyone can see that.  Many people can take out the trash but only a few people can perform brain surgery.

More value is created when the brain surgeon concentrates on difficult problems in his patients.  Forget the trash, what about other medical problems?  He may be qualified to treat people with upper respiratory infections, but is that a good use of his time?  No, because he has a valuable and rare skill and he creates the most value when he concentrates on that and lets someone else do the other stuff.  He shouldn’t be spending his time filling out government and insurance company paperwork either.  He can hire other people to do those tasks.

The Lesson

I read one time that many small businesses fail because as the business grows, the entrepreneur spends less and less time creating and more and more time on the mundane tasks of running a business.  Big mistake.

This doesn’t just apply to entrepreneurs either.  You may have a regular job.  There will be many people, including your boss, who think you should be doing various “value-adding” activities.  They will rationalize how various things add value to the business.  So what?  If those aren’t the most value-adding activities you can be doing, then you shouldn’t be doing them.  You should be concentrating on what you do best.

This doesn’t just apply in business.  It applies in your personal life as well.  How much time should you spend dusting up the last remaining dust particle in your house?  Should you really be running all over the place trying to do everything? You should be concentrating on the very most important and doing what makes you happy and allows you to keep your sanity.  Your family will thank you.

We have a hard time cutting out what is not essential because in our minds we create a story that makes everything essential.  It’s not.  Most of it is trivial and won’t matter in the end.

What do you think?  Leave a comment and join the conversation.

Tagged as: 80/20 rule, identify the essential, pareto principle