How to find your gold mines
How to spot the handful of things that will create real impact.
This post is also available in Portuguese.
In the previous article, we saw that the 80/20 rule can help companies avoid getting distracted building lemonade stands in front of the gold mine.
I'd bet that you have a few gold mines right in front of you—a small number of things that will drive most of your desired outcomes.
The 80/20 questions (“What is the 80/20?” and “What are the critical success factors?”) can prompt great conversations and help you find those nuggets of gold hiding in plain sight.
The classic way to apply the 80/20 rule is by doing a quantitative analysis.
But using the 80/20 rule as a qualitative technique can be even more powerful, as it can help clarify strategy, creating focus and alignment.
Let's see how you can use both options in practice.
How to use the 80/20 rule in a quantitative analysis
For a simple example, imagine three product teams trying to achieve the same outcome: reducing the crash rate of their apps.
Team #1
Team #1 decides to move fast and starts working on projects they believe will reduce the crashes.
The team tracks the total number of crashes, but they only have a superficial understanding of the causes. When the crash rate fluctuates, they struggle to explain why, as they lack supporting data.
Team #2
Team #2 identifies 15 “P1” bugs causing crashes. They set a Key Result to reduce these bugs to zero, but struggle to choose which to fix first.
They start by working on all 15 bugs in parallel, but that slows them down. Then, they resort to fixing the easiest bugs first, regardless of their impact.
Team #3
Team #3 begins by asking themselves the 80/20 questions, “What is the 80/20? What are our critical success factors?”
To answer these questions, the team uses a simple quantitative method to analyze the data:
List all the bugs causing crashes.
Calculate the percentage of the total crashes created by each bug.
Rank the bugs from highest to lowest impact.
Create a graph to visualize the critical success factors and the supporting cast.
(Google Pareto chart or Pareto analysis for a full explanation and templates.)
The graph clearly shows that just four bugs are responsible for 86% of the crashes:
Instead of getting distracted like the other teams, team #3 focuses on these four bugs—their critical success factors—to ensure they'll make a real impact.
We'll discuss how to apply the 80/20 rule as a qualitative technique after this short break.
Get ready for 2025
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Using the 80/20 rule to make the implicit explicit
Gold mines often remain implicit. They may be locked in people's heads, buried under a pile of "priorities," or lost in the fancy language of a strategy document.
Using the 80/20 rule as a qualitative technique can help make the implicit explicit.
The 80/20 questions can offer a new lens for thinking about priorities and equip people with a clear language to separate what's critical from what's merely useful.
A common scenario is that one person has already spotted the gold mines but struggled to communicate it to others.
I remember when I asked a group the 80/20 questions. The engineering leader promptly answered, “The critical success factors for our development pipelines are speed, security, and ease of use.”
However, the team members looked at each other as if it was the first time they had heard that.
Deep down, they probably knew these factors already. But no one had made them explicit or stated it with such clarity and simplicity. Their gold mines were hidden under a pile of “priorities.”
Another common scenario is when a group has to work together to make the gold mines explicit. Using the 80/20 questions paired with visual tools can be quite powerful.
As a simplified example, I was once working with a financial services company when a product team asked for help:
- We are struggling to decide which outcomes our team should focus on.
In the end, we want to increase revenue, but we depend on the sales team for that. We could share the revenue target with sales, but it would be hard to know if our team made a difference.
- The 80/20 rule can help you identify where you should focus. What is the 80/20? What are the critical success factors for increasing your product's revenue?
- We know that customer satisfaction with the product is critical. The performance of the sales team is key as well, but we have little influence over it.
-Ok, so let's dive a bit deeper. What is the 80/20 for improving customer satisfaction? What are the critical success factors?
After some debate and back-and-forth, the team reached a conclusion.
- The critical success factors that drive customer satisfaction are ease of contracting the product, time to complete each transaction, and ease of managing the contract in post-sales.
- Great, let's write each of these factors on stickies to help us visualize them:
The team then worked to identify the best metrics to measure each one of those three outcomes that represented their “gold mines.”
The diagram above is an example of an outcome map (or outcome tree), a powerful tool to clarify strategy and make it tangible for everyone.
In a future article, we'll discuss how you can use the outcome map to help people understand how they contribute to your company's success.
But before we do that, we need to understand why so many people fail to apply the 80/20 rule—it's not because they are stupid or lazy.
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