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.