Back to the Future: Pare­to Every­thing & Lever­age Experimentation

Yeah, the future is here.

I was six years old when I first watched Back to the future. On a crap­py VHS and a TV set that occa­sion­al­ly need­ed a slap on the right, at a pre­cise angle, with spe­cif­ic speed and strength, to make it stop spin­ning ver­ti­cal­ly and / or show­ing every­thing in green and black shades. Of course I day-dreamed about fly­ing cars, hov­er­boards and self-lac­ing sneak­ers. 2015 went by and we’re still wait­ing for those cool wastes of tech­nol­o­gy and progress. It’s weird to yearn for some­thing you nev­er had, isn’t it?

We’ve been fooled by entertainment.

It turned out that the future is some­thing else. 

I’m obsessed with busi­ness longevi­ty these days. It might have to do with the fact that my own com­pa­ny has been around for near­ly twen­ty beau­ti­ful, ful­fill­ing, crazy tough years and my indus­try is chang­ing more than it ever did before. 

I’ve been in con­ver­sa­tions with many CEOs and founders of fam­i­ly com­pa­nies with more than thir­ty years in busi­ness and I notice some com­mon traits in long-last­ing companies. 

Pur­pose might have become even more pop­u­lar since Sinek’s ​“Start with why”, but it’s been the core of every fam­i­ly busi­ness since for­ev­er. Strong lead­er­ship and con­vic­tions (aka guts) are essen­tial to sail through the inevitable storms. Wits fos­ter luck when oppor­tu­ni­ties and good times show up. And then there’s a lot of hard work, spiced with a pinch of madness. 

I believe this is true for fam­i­ly busi­ness­es and for any com­pa­ny that’s ambi­tious, but not yet big enough to be able to get away with any­thing. If I know our audi­ence cor­rect­ly, that’s most of you there, beat­ing the odds with sheer deter­mi­na­tion and love for what you do.

It’s a lifestyle as much as a busi­ness. And it’s a choice as much as a part of you that can’t change. A sort of noble destiny.

I sin­cere­ly wish to see all of you twen­ty years from now, still thriv­ing, giv­ing it your all, deliv­er­ing val­ue and stay­ing rel­e­vant. My entire busi­ness is help­ing you achieve that. Today’s piece is a mix of ideas about what the future — should we call it the now? — looks like, and my strong con­vic­tion about a few things we all need to address so we can con­tin­ue kick­ing ass.

While 52% of lead­ers say tech­nol­o­gy devel­op­ments like AI, advanced imag­ing, data ana­lyt­ics, automa­tion will lead to new chal­lenges for their busi­ness, 93% also say it would lead to new opportunities.

Marsh McLennan’s Agency Busi­ness Insur­ance Trends Report

Start with what

The quot­ed report car­ried by Marsh McLen­nan sur­veys small to mid­size busi­ness­es every year to iden­ti­fy risks and trends. It turns out that we’re pret­ty much run­ning the show. The mid-mar­ket has an extra­or­di­nary abil­i­ty, a sixth sense to feel the imme­di­ate future. In 2023, the top con­cerns were infla­tion and eco­nom­ic slow­down. This year it’s cyber & data secu­ri­ty, reg­u­la­tions and the new ways of working. 

This is rea­son­ably con­sis­tent with my recent con­ver­sa­tions with own­ers. But there’s a big­ger under­ly­ing prob­lem: We may know what’s com­ing, but it doesn’t make it any eas­i­er to get stuff done. 

And we can read about what’s com­ing. But it’s up to each of us to fig­ure out what to do about it.

The ele­phant in the room (or a part of it)

A very old sto­ry you might have heard before: A group of blind men is asked to touch an ele­phant and guess what it is. The first one grabs the tail and says it’s a snake. The sec­ond grabs the trunk and thinks it’s a big, thick rope. The third one finds a leg, and is con­vinced he’s touch­ing a tree. 

We all have a lim­it­ed per­spec­tive of what real­i­ty looks like, and it’s only through shar­ing expe­ri­ences and bridg­ing them that we can have some­thing akin to a com­plete picture.

Now Back to the future, and to how we’ll deal with it. My part of the ele­phant, based on my exper­tise (mar­ket­ing, ecom­merce, dig­i­tal cul­ture), expe­ri­ences, con­ver­sa­tions with clients and the pat­terns I can find, can be sum­ma­rized in these three ideas:

1. Pre­pare for a new cycle
2. Get your pow­er laws right
3. Make room for experimentation

New and old tricks

A lot of good and bad shit is going on. We’re liv­ing in inter­est­ing times. But the cur­rent zeit­geist is a tran­si­tion, not a des­ti­na­tion. We’re just start­ing over. Big com­pa­nies are bet­ter equipped to man­age this risk and uncer­tain­ty. Some will even influ­ence the shape of that new real­i­ty. Oth­ers can pour mon­ey into the problem. 

We’re the fam­i­lies, the mis­fits and the crazy ones, the tur­tle that beats the rab­bit. We oper­ate on smarts and resilience. In our case, prepar­ing for the future means:

Adapt­ing our work­force structure.

We’re still adjust­ing to remote work with nov­el­ties like the four day week gain­ing pace. Every­thing dig­i­tal is more impor­tant than ever. The vague hyped phrase ​“dig­i­tal trans­for­ma­tion” meant, for the bet­ter part of the past two decades, adopt­ing tech­nol­o­gy at the core of our oper­a­tions. From now on it means adopt­ing tech­nol­o­gy at the core of our culture.

Going back to basics.

There are no more sil­ver bul­lets. The big promis­es made by dis­rupt­ing lead­ing tech com­pa­nies have become over­ly abused prac­tices. Inbound mar­ket­ing mor­phed from cre­at­ing enough rel­e­vant con­tent in order to be found, to cre­at­ing tons of absurd con­tent to bait irrel­e­vant vis­i­tors. It’s time to dust our rolodex and get back to a healthy habit of plac­ing real con­ver­sa­tions with real peo­ple at the cen­ter of our lead gen strategies.

Embrac­ing uncer­tain­ty.

Five-year strat­e­gy plans are no longer a map, but mere­ly a com­pass. There’s no way of know­ing what your ver­ti­cal will demand from us in five years. Stop wast­ing ener­gy in over­think­ing steps, and redi­rect it towards con­sid­er­ing bets and prob­a­bil­i­ties. Assume and fac­tor in uncer­tain­ty and look for deep, cre­ative and ongo­ing exper­i­men­ta­tion. Reframe strat­e­gy as plan­ning how to react to simul­ta­ne­ous sce­nar­ios as you move for­ward, instead of a straight vec­tor from zero to one.

Pare­to everything

We all know lin­ear rela­tion­ships. I need a cup of flour to bake a cake, and two cups to bake a cake twice the size. 

Non-lin­ear rela­tion­ships are trick­i­er. Some explain asym­me­try sys­tems where increas­ing efforts can lead to small out­comes (e.g. The Law of Dimin­ish­ing Returns). Oth­ers, called Pow­er Laws, explain sce­nar­ios where rare occur­rences have a dis­pro­por­tion­ate larg­er impact than com­mon ones. The dis­tri­b­u­tion is nat­u­ral­ly unbalanced.

Vil­fre­do Pare­to (Italy, 1848 – 1923) ana­lyzed wealth dis­tri­b­u­tion and doc­u­ment­ed the emerg­ing pat­terns in resource allo­ca­tion, pow­er and prob­a­bil­i­ty. He found out that 20% of the inputs cre­at­ed 80% of the out­puts. If you take a close look at your busi­ness you’ll see these pat­terns too:

• A small group of cus­tomers give you most of your revenue
• A small group of prod­ucts out­per­form the rest of your catalog
• A small group of your sales chan­nels deliv­er the major­i­ty of your leads

This is all mea­sur­able. And you can apply the same prin­ci­ple to eval­u­ate your team. Every­one is nec­es­sary and impor­tant, but only a sub­set of your ros­ter is deliv­er­ing val­ue above expectations.

It’s called a Law, but it’s more a rule of thumb. And a very use­ful one. In con­texts of con­stant change we can lean on this idea and pare­to every­thing.

How?

• Focus your efforts on max­i­miz­ing sales for your exist­ing top 20% cus­tomers. There’s mon­ey on the table, and they will be your brand cham­pi­ons.
• Don’t spread too thin with your omnichan­nel mar­ket­ing efforts. Pick your top five per­form­ing chan­nels and invest more in them. 
• Reor­ga­nize your web­site. Too often we see how ecom­merce plat­forms con­strain the cat­a­log orga­ni­za­tion for our clients. Vis­i­tors end up see­ing the bot­tom 80% prod­ucts instead of hav­ing easy, engag­ing and per­sua­sive con­tent around the top 20%.

Focus­ing on what works helps your orga­ni­za­tion strength­en its posi­tion­ing and frees resources (team, time, mon­ey, will) so every­one can achieve bet­ter results.

An idea is noth­ing more nor less than a new com­bi­na­tion of old elements

James Webb Young — A tech­nique for pro­duc­ing ideas (1940)

Lever­age experimentation

Increas­ing focus on the top 20% does not mean neglect­ing or for­get­ting the rest. Quite the oppo­site, it means now you have more resources to exper­i­ment. To try out new ideas, prod­uct lines, ser­vice offer­ings, go-to mar­ket strategies. 

The dif­fer­ence is that now these ideas don’t clash with your goals and your sta­bil­i­ty. And they can be orga­nized and sched­uled with hand­picked, high­ly planned efforts. Mini-projects with their own set of KPIs, goals, bud­get, timeline. 

Refine this prac­tice and, by mix­ing old ele­ments into new ideas, you’ll strength­en the group of top per­form­ing endeav­ors that thrust the com­pa­ny into the future.

Home­work

This is what I’m doing late­ly. Ask yourself:

1. What’s the 20% that’s working?
2. Are we clear about what we have to do next, as a company?
3. What are the lim­i­ta­tions of my van­tage point? 
4. What does the actu­al ele­phant look like? Who can help me fig­ure it out?
5. What’s next?

Talk­ing about pow­er laws, remem­ber that just a lit­tle help from new friends can go a long way. We have improved results by 80% and cut costs by 20% in the past. Our audit can help you fig­ure out the whats and the hows. Drop us a line and let’s chat.