The 80:20 Rule and Sustainability
Historical factoid klaxon: the 80:20 rule, or Pareto Principle, was named after Vilfredo Pareto, who observed in 1906 that 80% of the land in Italy was owned by 20% of the population and that 20% of the pea pods in his garden contained 80% of the peas (thank you, Wikipedia). But it is a phenomenon that in many situations, roughly 80% of the effects come from 20% of the causes – known in mathematical terms as a power law distribution.
Sustainability is a huge issue, broad and deep, and its sheer scale means practitioners are often paralysed with fear. But there is little point in worrying whether the Des Moines office of a third tier supplier uses plastic or paper cups in its coffee machine – some form of prioritisation is required.
There are two common ways to prioritise actions:
- Go for quick wins – this gets momentum going which is no bad thing, but soon you’ll run up against diminishing returns and you won’t get much credit for ducking the big issues;
- Use the 80:20 rule to identify the small number of big issues that really matter and tackle those – at the risk of appearing to be doing nothing in the meantime and/or you don’t identify the 20% correctly.
The obvious answer is to do both – a quick wins workstream (which can be combined with employee engagement) and a major projects workstream to address those 80:20 issues. Some of the latter issues will be obvious, others less so, so it is important to be as objective as possible when carrying out a screening process. The following techniques can be used:
- Life cycle assessment of the product/service – this process led P&G to focus on designing low temperature clothes washing products as heating water turned out to dominate the results;
- Use a screening indicator (eg cost) to screen out the small stuff;
- Carry out a risk assessment to identify which issues could have biggest impact on the business under different future scenarios;
- Stakeholder engagement: ask regulators, NGOs, customers, employees, the public and/or others what they believe the big issues to be;
- Standards such as the GRI G4 reporting standard have procedures for identifying ‘material’ issues.
Whatever you do, make sure you are focussing your resources on the issues that matter.