Improvement Insights Blog
Arthur’s 4-50 Rule – The Secret to Breakthrough Improvement
We’re all familiar with Pareto’s rule: 20% of causes produce 80% of the results. But are you familiar with Arthur’s 4-50 rule? Typically, 4% of any process – one step out of 35 – is the cause of more than 50% of waste, rework and lost profit.
“Hi, I’m Jay Arthur, author of “Lean Six Sigma for Hospitals” and QI Macros [software].
“Now I’ve probably talked to you about this before, but we’re all familiar with Pareto’s rule that 20% of what you do produces 80% of the mistakes, errors, waste, rework, lost profit. 20% of your customers produce 80% of your revenue. 20% of your customers produce 80% of the hassles and headaches… You get the idea, right? So that’s really that there’s a big bar, and that’s 80% but only 20% of what you’re doing produces all of that issue. Then there’s miscellaneous other stuff, and we should only focus on the big bar.
“But the other thing that I have found is what I call Arthur’s 4-50 rule. If we take this big bar, Pareto’s rule applies inside of here, so I take this and expand it out. It turns out that about 4% of what you’re doing… (there’s a bunch of other little things in our 20% here) But 4% of what you’re doing produces over 50% of the mistakes, errors, waste, rework and lost profit. 4% of your customers may be producing over half of your total revenue. 4% of Americans have over half the wealth. 4% of the knowledge about any subject will give you over 50% of the bang for the buck. That’s why you don’t have to know everything about Lean and Six Sigma to start getting results, you only need to know 4%; maybe seven tools in the right order and get it done.
“So literally what we see here is that if we take it to high level, go down to the 80/20 part and then split that down, drill down into it, which is what our Improvement Project Wizard will do. You can go find that 4% that’s producing over half the errors, mistakes, rework, and lost profit. 4% is four steps out of a hundred; one step out of every 25. I call that the Million Dollar Misstep.
“So if we can start to do this and drill down into the lower level and find that 4%, WOW! Can we make progress! Can we make dramatic improvements across the board in any industry! It’s just that easy, but you need to use some tools to drill down and figure that out.
“So that’s my Improvement Insight for this week. Maybe you only need 4% of the knowledge about Lean and Six Sigma to get over half the results. Maybe you only need 4% of the knowledge about wealth creation… maybe you only need 4% of the knowledge about anything to get over half the total benefit out of it. I know this sounds radical, but if you think on it in your own life you may know a whole lot about something but most of the time you only use a little bit of it. You know it, and you know that within your own organization just a little bit of what you do causes most of the errors, waste and rework. If you fix that, the world will smooth out and I think every business can do this.
“So that’s my Improvement Insight for this week. Start using the 4-50 rule. Let’s go out and improve something this week.”