Why doing less can get you more

Few companies can boast success from consistently choosing to do or sell less. However, that’s been the profitable path for ITW since Chicago financier, Byron L Smith, saw the opportunity for a “growing manufacturing business” in 1912. Central to Illinois Tool Works’ success has been its strict adherence to the 80/20 rule, which it claims keep it focused on its most profitable products and customers. The concept: that 80 per cent of a company’s sales are derived from the 20 percent of its product offering being sold to key customers. That razor-like focus has seen ITW post enviable growth, year in year out, for much of its existence. It might not have been the 80/20 rule driving the late Steve Jobs, but biographer Walter Isaacson relates a similar “Zen-like” focus on the few rather than the many. Returning to Apple in 1997, Jobs was confronted by a proliferation of computers and peripherals that forced him to grab a Magic Marker and head for the whiteboard, where he drew a grid containing four boxes: Consumer, Pro, Desktop and Portable. Focus on four great products – one for each quadrant – and cancel all other products, he told his team. “There was a stunned silence,” Isaacson relates. “But by getting Apple to focus on just making four computers, he saved the company.” Bain & Company partner and author, Chris Zook, says focus is critical to sustainable success. “At first blush, narrowing the focus to grow sounds almost counterintuitive,” Zook says. “But just as plants often must be cut back to concentrate their energy on fewer, stronger branches, so too must businesses be pruned to counter their tendency to branch out more than they should.”

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