80/20 Sales And Marketing Chapter 14

80/20 = Harnessing Natural Forces

Ken McCarthy, the mentor who recommended Richard Koch’s The 80/20 Principle, is a pioneer in internet education. He organized the first internet marketing seminar in 1995 with Netscape founder Marc Andreessen. “Good marketing always harnesses natural forces,” Ken says. “When something works in the marketplace, there’s almost certainly a prevailing wind or force that you’re cooperating with, that makes it possible. It’s a huge mistake to fight nature.” The genius of 80/20 is, it harnesses hidden forces in nature that are far more powerful than you would have suspected. How and why does 80/20 work? It works because of chaos and feedback. I believe it’s very important for you to gain a wider picture of 80/20. We’re going to leave the business world for a few pages. Then, armed with some new insights, we’ll return to the business theme with even more tools in your tool belt.
Where the Exponential Power of 80/20 Comes From I’ll never forget my first trip to the Grand Canyon. It’s just so huge. It’s hard to believe that all it takes to create something like that is weather, water, and time. (See Figure 14–1.)

The Grand Canyon perfectly illustrates 80/20 because once upon a time, a flat slab of rock came to the surface of the land and the water began to wear it away. With every receding tide, water drained away, taking the path of least resistance, wearing that channel ever so slightly deeper. A slight indentation became a groove, which became a crack, which became a crevasse. With every rainfall, it became that much easier for water to take that path, until the water had no choice but to take that path. A very slight
Figure 14–1. Canyons are structures where water has worn channels in the stone over thousands of years. The wearing of water is positive feedback, and the depth of the channels obeys 80/20. (Photo by Flickr/MoyanBrenn ©2011, used under Creative Commons license.)

inclination once upon a time grew into an irreversible destiny through the power of erosion. The erosion that creates rivers and streams and the Grand Canyon is positive feedback. Positive feedback is when past action reinforces future action, in the same direction. This is the exact opposite of negative feedback, which corrects errors. Cruise control keeps your car clicking down the highway at a steady 70 miles per hour, but if your car goes over 70, a negative signal reduces the pressure on the accelerator; it corrects it to 70 miles per hour. Negative feedback steers a guided missile or keeps a Segway electric vehicle perfectly balanced. Positive feedback is the feedback of reinforcement instead of the feedback of correction. Positive feedback is the root cause of chaos.

The sun shines on a black rock. The rock heats up, warming the air around it. The air around it expands, and because the air density goes down, it rises. This makes room for the air below it to flow past the rock
Figure 14–2. The regular but inexact pattern of these sand dunes is created by chaos—the same force that drives 80/20. (Photo by Flickr/mikebaird ©2008 Mike Baird, used under Creative Commons license.)

and also become warm. Air flows around the rock and affects the air patterns nearby. It generates wind. When you string together hundreds or millions of these tiny systems, you get . . . weather. The repetitious, ever-familiar, but never perfectly predictable nature of clouds and weather is a grand phenomenon that scientists formally study as chaos. Chaos Theory isn’t about disorder and disaster as its name might suggest. It’s the patterns and regularity of complex systems. Chaos is where fractals come from. It’s why all snowflakes have the same six-sided shape but every one is different. The same math that describes chaos also describes 80/20. If you’re curious about this, check out the Appendix. Just as water transforms a slight indentation into the Grand Canyon, 80/20 amplifies your own power. I used to listen to motivational tapes all the time, believing that I could transform the world with action and willpower. Mostly I only managed to make myself weary and didn’t accomplish much. It was because I was not harnessing natural forces; I was actually working against them. In business, when you harness natural forces, everything you do becomes easier and more effective. Why sculpt sand dunes with your back and shovel when the wind is perfectly willing to do most of the work for you? That’s what happens when you flow with 80/20 instead of resisting it.
The Amazing Power of Feedback A 14-year-old boy takes his first drink of Jack Daniels and likes it. Thirty years and 10,000 drinks later, he’s an alcoholic. Positive feedback. An 11-year-old girl gets a standing ovation at her piano recital. She drinks in the applause, and 25 years later she appears in a black evening gown at Lincoln Center in Manhattan, where she plays Beethoven’s Symphony #2 with the New York Philharmonic. Positive feedback. Why is there always a second 80/20, and a third, and a fourth? The same reason why on that rock, water wears away a groove within a groove within a groove. The cycles of positive feedback loops create self-similarity. The large pattern looks exactly like the small pattern. Water seeping into a mud

puddle in your front yard on a rainy day, in Figure 14–3, left, looks almost exactly the same as the as the edge of a lake seen from an airplane, in the right side of Figure 14–3.

This means that when you zoom in or zoom out 10X, 100X, and 1,000X, you see the same pattern over and over.
Positive Feedback Is Phenomenally Powerful Ever turned up a PA system too loud, or let a microphone wander too close to a speaker? The system squeals and howls. That’s positive feedback—the output is going right back to the input, and the energy grows exponentially. If you inch the volume level carefully, the system begins to ring just a little bit. Inch it up more, and it slowly begins to howl. Inch it up a little more, and it deafens everyone in the room. The sensitivity of that threshold shows you the incredible power of positive feedback. That range between no feedback and howling is pretty narrow. It’s a leverage point in the system, a place where a tiny amount of effort generates a big result. You get good at 80/20 by learning to identify the leverage points. In fact, it takes only a little bit of information to figure out exactly what those leverage points look like. Coming up: a software tool that makes it easy.
Figure 14–3. This tiny puddle of water on concrete (left) looks very similar to the edge of this lake in northern Michigan (right), even though the lake is tens of thousands of times bigger. Macro imitates Micro. (Photo credits: left, Shutterstock; right, United States Geologic Survey.)

————————————————— PARETO SUMMARY —————————————————— p Any time you have positive feedback, you get 80/20 behavior. p 80/20 is about harnessing natural forces. The same laws that make rivers, canyons, and sand dunes will also help you sell more and make more, if you let them. Wherever possible, let nature amplify your efforts by leveraging positive feedback and the patterns it creates. p Rewarding people over time is just as powerful as water flowing on rock.

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