Monday, December 14, 2009

The 10% Rule

One of the most famous aphorisms in projects is the 80-20 rule (Pareto’s Principle): it says that the last 20% of any project will take 80% of the time and effort.  Getting things right and complete is hard, and there are legendary “Death Marches” to product release that engineering veterans tell over hot drinks on cold nights.

A related maxim is knowing when 80% is good enough.  Many times, in brainstorming, feature definitions, or negotiations if you get 80% of what’s there to get, 80% agreement among participants, you should be satisfied and not waste increasing effort and resources on diminishing returns.

I’m putting together a fireside talk for business students in Cambridge: they’ve asked me to recount some real-world experiences and advice for those moving beyond the business plan to actually implement their funded ideas.  It should be fun, a chance to reflect on what’s happened the past year as well as to get some ideas of how I might have done things better.

As I make my notes, I’m surprised at how often 10%, not 80%, recurs.  Maybe it’s the magic number for researchers and entrepreneurs.

  • In budgeting, always leave “10% for the arts”, slack in the budget for creative product / process improvement.
  • In market planning, there  needs to be at least a 10% diagnostic incidence or therapeutic improvement to make the project worth doing.
  • Set aside 10% of your time for training: keeping up with your field and learning new techniques.
  • In almost all medical capital equipment businesses, 10% of revenues flow to the bottom line.
  • 10% of customers will be early adopters of any new product idea.
  • Pay yourself 10% of every paycheck, first.
  • Exceptional performers perform among the top 10% of all employees or students.

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