Improvement Insights Blog
The Flip Side of Arthur’s 4-50 Rule
You may be familiar with the 80-20 Rule. Arthur’s 4-50 Rule takes it farther. Here’s the flip side of the 4-50 rule.
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“Hi, I’m Jay Arthur, author of “Lean Six Sigma Demystified” and QI Macros [software].
“If you know anything about me, I always preach Arthur’s 4-50 rule: That 4% of what you’re doing is producing over 50% of the mistakes, errors, waste, rework, and whatever. But let’s look at the flip side of the 4-50 rule, which is 50% of what you’re doing is only producing 4% of the benefit. 50% of your customers, 4% of the benefit.
“Jeff Bezos recently said, “Hey, 50% of Americans are only paying 3% of the total income taxes.” Now, it costs a lot of time and energy to collect, process, and manage all that 50%. He said, “I think we can find the 3% and not have those people have to pay.” There’s an idea. The flip side of the 4-50 rule.
“Maybe you should not focus on the 50% that only gets you 3% of the benefit. Maybe you should focus on other stuff. Right? So, the 4/50 rule works both ways. Right? 4% of your customers are producing half your revenue. 50% are only producing 4%. And the 50% producing 4% are probably the crankiest of them all. I’ve found in QI Macros, the big customers we almost never hear from, and it’s the small ‘onesy-twosey’ ones that can be annoying sometimes.
“So, think about the flip side of the 4-50 rule. What should you change based on looking at your business that way?
“Let’s go out and improve something this week.”
