Dr. North is hitting on a topic I cover in my book, noting the percentages in relation to specialty buyers time spent looking to innovative products. North has some other history and tactic to offer...
July 2, 2011Pareto's law operates in project completion. About 20% of your effort gets you 80% finished. Then things get expensive.
First 80% of the project: 20% of your costAbout 25 years ago, I read an article on the cost of pollution control. It said that the last 5% of pollution reduction gets very expensive. The last 1% will come close to bankrupting you. Seeking perfection will bankrupt you (last .8%).
Last 20% of the project: 80% of your cost
Last 4% (.2 x 20%): 64% of your cost (.8 x 80%)
Last .8% (.2 x 4%): 51% of your cost (.8 x 64%)
The article did not mention Pareto's law. I made the connection a decade later.
I write fast. It's the last 4% (20% of 20%) that takes a big chunk of my time: checking the facts, polishing the language, proofreading, and indexing. This part is boring. It takes a set of skills that are not common to creativity. I love to write. I hate to index. Yet if I don't index, the serious readers cannot get maximum value from a printed book. They cannot locate something important after they finish reading it.
Who are the readers an author wants to attract? The ones who go back and apply what they have read to their work. What percentage of readers are like this? I'll take a wild guess: 20%.
I am hoping that by using PDFs and search engine software, I can avoid future indexing. I will not index the final editions of 30 volumes of my series on an economic commentary on the Bible. Why not? Because I am running out of time. I must put the remainder of my life in final applications: a treatise on biblical economics, hundreds of support videos, books on epistemology, and maybe a high school home school curriculum. Here, creativity is crucial. Oddly enough, it is also cheaper in terms of input. I will get more output from my time if I skip the final 20%. Others can do the grunt work.
The grunt work of the last 4% can be delegated. The next-to-last 3% must be done. (Remember: seeking 100% perfection will bankrupt you.) But creative people tend not to delegate well. They don't trust other people to finish their work. So, they either must do the grunt work or else release a 96% completed project. A 96% completed project is risky, especially if it is a tool that others will use. Think of a rocket or a jetliner.
Whenever you produce a finished product, you must strive to get that last 5% finished in good working order. Budget your time and resources accordingly. Don't think, "That last 4% will be easy." It won't be.
That last 4% is where you will make your reputation. You will get your edge here. If you release things 96% finished, you will get the reputation as someone who cannot deliver the goods. Creativity does not suffice. The thing must work 99% of the time.
Why do firms issue beta versions? To get users to identify the last 4%, or last 1%, of the problem areas. This decentralizes. It delegates. It transfers costs to users. Some users like the challenge.
Akio Morita of Sony used to release preliminary versions of new products. Early adapters bought them. They complained about features or lack of features. Sony revised its products fast. The strategy worked. "Let users tell you what's wrong." But his engineers did not like it. It rubs engineers the wrong way. This is why engineers had better not be in charge of marketing.
Why does this strategy work? Two reasons: (1) the division of intellectual labor; (2) practicality of the recommended changes, i.e., user-supplied.
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