Back to the Future: Pareto Everything & Leverage Experimentation

We’ve been fooled by entertainment. 

It turned out that the future is something else. 

We’ve been around for for twenty beautiful, fulfilling, crazy tough years, and the industry is changing more than it ever did before. But when you talk to CEOs and founders of family companies with more than thirty years in business, you can see some common traits in long-lasting ones. 

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 (a.k.a. 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. 

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. That’s probably 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.

But what does the future — should we call it the now? — look like? And what should we do to continue kicking ass? 

Start with what 

The quoted report 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. In 2025, 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 of 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. 

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 

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? 

Speaking of power laws, remember that just a little help from new friends can go a long way. 

Our audit can help you figure out the whats and the hows. 

Drop us a line.