The 80/20 rule has been a part of the business world for many years but it actually goes back much further than that. It originated with an economist called Vilfredo Pareto in the late 19^th Century, which is why it’s often labelled ass the Pareto Principle.

The idea behind this rule is fairly simple, stating that 80% of something good is generated by only 20% of something else. Back when Pareto came up with this theory, he was talking about land- more specifically that 80% of the land was owned by only 20% of the people. This idea was born from a socialist perspective and was objectively correct. In fact, it’s common knowledge in today’s society that the vast majority of wealth is owned by a small percentage of people.

Conversely, the 80/20 Principle jumped over to the business sphere- an irony that wouldn’t have been lost on Pareto. The idea has been applied to a variety of relationships but the one that gets talked about the most is the theory that 80% of sales comes from only 20% of customers.

It’s clear to see why this idea has become so popular amongst those within the business sector- it’s music to their ears. If the majority of a company’s sales is only coming from a relatively small section of customers then promotion becomes infinitely easier and cheaper. Aiming all of your resources at a select few is always going to be an attractive option- especially compared with the alternative which is casting a wide net, taking extra time, money and effort.

So, is the 80/20 rule valid or is it an urban myth that won’t go away? Short answer is- it’s a myth. Yes, there are examples in which companies receive the majority of their sales from a small number of customers but it’s rare. Not to mention that sales fluctuate constantly, with some customers leaving and new customers joining. Therefore, it would be next to impossible for this 80/20 ratio to be a hard and fast rule.

One of the ways in which this idea has been able to take hold is because companies refuse to actually sit down and work out their numbers. Having a real-time view of sales and customers can be invaluable as it gives businesses an advantage when it comes to marketing.

Another point to consider is Sharp’s “Law of Buyer Moderation” – which basically states that you can’t extrapolate buyer behaviour using limited date. For example, there is no guarantee that a customer who makes many purchases one year will repeat this in the next. The marketplace can be volatile and customers are often unpredictable, especially when you’re trying to fit them in to a strict ratio.

Furthermore, whilst the 80/40 Principle is attractive in some respects, it may not be something to aim for. If a business is relying on a small number of customers for the majority of their revenue, that’s a very precarious place to be in. The company would only have to lose a small percentage of customers in order to notice a dramatic dip in sales. When the customer base is larger, the risk is spread out further and the likelihood of crashes is reduced.

Whilst it’s clear that the Pareto Principle was never a great fit with business- there are circumstances in which companies rely on smaller pools of customers for the majority of their revenue. For example, high end fashion and other luxury items. In situations such as these, it would make sense to target these particular customers. However, even in these rare cases, businesses would be foolish to ignore the vast majority of customers who make smaller purchases.

To summarise, whilst it may be an interesting concept, the 80/20 law is far too rigid to apply to the diverse and ever-changing world of business. It may be costly and time consuming but reaching out to a wide range of customers and potential customers, regardless of how much they buy is still a tried and tested roadmap to success.

There have been countless changes within the business world in recent years- many of which have been game changing. It’s fair to say that one of the driving factors behind so much change is the progression of technology and the changing way in which we interact with technology. Smart phones in particularly are really transforming practices. One such way in which business is being influenced by technology is the way in which we use the phone- specifically talking on the phone.

There has been a notable shift in the way in which people communicate, both in and out of business. Talking over the phone is being replaced with texts, emails, instant messaging and video chat. Ironically, It’s the rise of the smartphone which has caused the slow demise of traditional phone usage. This trend is widespread, with many people opting to disconnect their landlines and rely solely on their mobile phones. Obviously, this is mainly because mobile phones are much more convenient and consumers are opting to forgo the extra cost of a phone line they no longer use. Whilst we are placing this in a domestic context, it’s also happening in the corporate sphere.

Companies are experiencing a faster pace than ever before and text-based communication offers an attractive alternative to talking. It’s quicker. easier and allows us to get much more done within the working day. Not to mention, talking on the phone is a dying art, especially with younger people. So much so that research has shown that a majority of younger workers (25 and under) actually report a fear of talking on the phone. This is understandable considering they’ve grown up in a world in which smartphone and text-based communication is standard. This is an important point as we are moving through a generational shift in the which workforce is going from a baby-boomer majority, to a millennial majority. Therefore, the way in which businesses communicate will likely be going through a major overhaul in the coming years.

So, if workers aren’t making voice calls, how are they communicating? It’s actually quite a varied mix of techniques, ranging from texting, email and online communication such as VOIP and Skype. Whilst these methods may be more convenient and cheaper than using a traditional landline- there are disadvantages to be considered. For example, online communication requires bandwidth and as more people use it, more bandwidth is required. There are concerns that the infrastructure isn’t prepared for this shift away from voice calls. Another issue is security, which can be much more precarious when communicating via the internet. Considering the rise of hacking, data theft and attacks, security is more important than ever before.

However, one of the main downsides to the decline of the phone is the unique experience that it offers. Talking on the phone can facilitate a warmer, less formal interaction which can then be beneficial for creating stronger business relationships.  It’s also worth pointing out that although fewer people are making phone calls, they aren’t dead yet and are still incredibly popular with the 50+ age group.

We may be heading for a situation in which phone calls are so rare that when they happen, the mean more. For example, day to day interactions happen via text or email but when it’s an important business deal or a new client, then a phone call is used. Therefore, the customer feels special, in the same way in which post and letters have become rarer and more meaningful.

Whilst it may be premature to declare the death of the business telephone, it’s clear that change is coming. It’s probable that the phone won’t die but will evolve and companies will adopt a more multi-faceted approach to communication. Whereas in the past, the majority of businesses utilised mix of phone and email, we now live in an age where many forms of communication exist. Therefore, instead of a one-size-fits-all approach, companies will choose according to the specific situation and what benefits them at that time.

The majority of businesses have woken up to the importance of big data. Companies collect massive amounts of information on their consumers and potential consumers and this raw data is invaluable. Not only can this information be used to ascertain the current climate surrounding the company but it can actually be used to predict future patterns. This may sound like the perfect opportunity for businesses to stay ahead of the curve however many organizations are failing to utilise big data in any significant way- for a number of different reasons.

Before we get into the issues of expertise and resources, we need to point out that some companies simply refuse to utilise big data to its fullest potential. Many business owners cite the same reservations when it comes to big data, namely accuracy, expense and the actual usefulness of the data itself. For example, companies are worried that the data they do collect will not be completely valid and even if they do want to use it, it will be too expensive to go through the process of collecting, storing and analyzing the data.

Although these issues are still held by many business owners, it does seem like the majority of companies are waking up to the wealth of benefits that big data have to offer. Unfortunately, even when companies want to embrace the full potential of big data, they are hitting a wall when it comes to data analysis, due to a lack of skills within the industry.

A study by Forbes Insights and Dunn & Bradstreet found that even when companies are using big data, they aren’t adopting complex analytics. The study showed that 23% of companies are still using a spreadsheet as their main tool for data analysis, 17% only use basic dashboards and 19% use basic data models and regression. What this shows is that there is a severe lack of expertise when it comes to data analysis and many businesses are losing out on the potential benefits.

The main problem is that more and more data is being collected but the amount of data analysists available to process this data isn’t increasing- therefore there is a shortage of talent. In fact, 40% of companies have admitted that they find it difficult to find and retain data analytics talent.

We have seen an increase in higher education offering courses that will train people within this area, however it isn’t producing enough professionals to match the massive demand.

The use of data is only going to increase in the future, therefore this problem isn’t going away. It also seems like many companies are taking more of a holistic approach towards data analysis. Instead of expecting everything to be done within the IT department, some businesses want all of their employees to have at least some knowledge within this area. This is actually a very forward-thinking idea as it’s likely that in the near future, data analysis and projection is going to be much more common in every office.

So, what can businesses do in order to combat the lack of talent? The short answer is to invest in the future. As well as recruiting from universities and colleges, they also need to make the career path attractive and this can be achieved through internships, benefits and student projects. It’s obvious that the current infrastructure isn’t large enough to produce the number of analysists required by the industries, therefore business owners should look into creating their own infrastructure. This mean supporting talent throughout the entire process, from their first day as a student, all the way up to their position in the workplace.

The corporate world is changing dramatically and whilst some jobs are falling by the wayside, other careers are popping up to take their place. It’s becoming more and more obvious that data analysis is position that is only going to become more important in the future and now is the time to lay down the foundations.