Dan Heath

But by compressing it, you get that liftoff velocity that you need to start the change process.

But by compressing it, you get that liftoff velocity that you need to start the change process.

Yes. So this came out of a conversation I had with a guy named David Philippi, who's a consultant at an agency called Strategex. They're zealots for the Pareto principle. I'm sure everybody listening has heard the 80-20 principle. In the business world, you often hear 80% of the revenue comes from 20% of the customers. Philip, I told me that's generally been true.

Yes. So this came out of a conversation I had with a guy named David Philippi, who's a consultant at an agency called Strategex. They're zealots for the Pareto principle. I'm sure everybody listening has heard the 80-20 principle. In the business world, you often hear 80% of the revenue comes from 20% of the customers. Philip, I told me that's generally been true.

Yes. So this came out of a conversation I had with a guy named David Philippi, who's a consultant at an agency called Strategex. They're zealots for the Pareto principle. I'm sure everybody listening has heard the 80-20 principle. In the business world, you often hear 80% of the revenue comes from 20% of the customers. Philip, I told me that's generally been true.

Although he said for profit, it's far more distorted. It's more like 20% of your customers are 150% of your profits. And what does it mean to have 150% of your profits? Well, what it means is you're serving a bunch of customers who are actually unprofitable. Like you would have a better business if you had a whole segment of customers go somewhere else.

Although he said for profit, it's far more distorted. It's more like 20% of your customers are 150% of your profits. And what does it mean to have 150% of your profits? Well, what it means is you're serving a bunch of customers who are actually unprofitable. Like you would have a better business if you had a whole segment of customers go somewhere else.

Although he said for profit, it's far more distorted. It's more like 20% of your customers are 150% of your profits. And what does it mean to have 150% of your profits? Well, what it means is you're serving a bunch of customers who are actually unprofitable. Like you would have a better business if you had a whole segment of customers go somewhere else.

So Phillip, I said they do this thing where they will force rank customers by profitability from most to least profitable. And he said that in almost every case, what they find is that the enterprise's worst customers are over coddled, getting too much time and resources devoted to them, and their best customers are under coddled.

So Phillip, I said they do this thing where they will force rank customers by profitability from most to least profitable. And he said that in almost every case, what they find is that the enterprise's worst customers are over coddled, getting too much time and resources devoted to them, and their best customers are under coddled.

So Phillip, I said they do this thing where they will force rank customers by profitability from most to least profitable. And he said that in almost every case, what they find is that the enterprise's worst customers are over coddled, getting too much time and resources devoted to them, and their best customers are under coddled.

So one tangible example is he says a lot of times the on-time delivery rates will be better for an organization's worst customers than their best, which just seems befuddling, right? How could you treat your worst customers better than your best? But the worst customers are just buying kind of nickel and dime stuff.

So one tangible example is he says a lot of times the on-time delivery rates will be better for an organization's worst customers than their best, which just seems befuddling, right? How could you treat your worst customers better than your best? But the worst customers are just buying kind of nickel and dime stuff.

So one tangible example is he says a lot of times the on-time delivery rates will be better for an organization's worst customers than their best, which just seems befuddling, right? How could you treat your worst customers better than your best? But the worst customers are just buying kind of nickel and dime stuff.

Maybe it's the kind of thing where you can stick one part in a box and mail it out and it's easy. And your best customers are spending tons of money with you and they're doing these complicated things and maybe they're assemblies that, require a lot of collaboration and maybe your shipping department procrastinates those.

Maybe it's the kind of thing where you can stick one part in a box and mail it out and it's easy. And your best customers are spending tons of money with you and they're doing these complicated things and maybe they're assemblies that, require a lot of collaboration and maybe your shipping department procrastinates those.

Maybe it's the kind of thing where you can stick one part in a box and mail it out and it's easy. And your best customers are spending tons of money with you and they're doing these complicated things and maybe they're assemblies that, require a lot of collaboration and maybe your shipping department procrastinates those.

And so it's this paradoxical thing where you're treating your best people worse than your worst customers. Now, all that is about profit analysis, but I actually want to take that in a different direction. I wonder if that same analysis could also apply to almost any situation in life, including our personal relationships.

And so it's this paradoxical thing where you're treating your best people worse than your worst customers. Now, all that is about profit analysis, but I actually want to take that in a different direction. I wonder if that same analysis could also apply to almost any situation in life, including our personal relationships.

And so it's this paradoxical thing where you're treating your best people worse than your worst customers. Now, all that is about profit analysis, but I actually want to take that in a different direction. I wonder if that same analysis could also apply to almost any situation in life, including our personal relationships.