This month's issue: Leveraging Pareto's Law.
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A Newsletter from Creative Ventures

Issue #110

Big News

The feedback we have been receiving from our most recent presentations has been incredible. Here are just what a few people are saying about:

"Emotionally Stirring."
"That was AWESOME!"
"Bravo, I was glued to my seat. You've learned the art of connection through story."

We couldn't be more grateful for the kind words. 

We are also getting ready to launch our newest strategic platform:

Check out the new video announcement here.




Looking for Pareto's Leverage:

"Leverage your brand. You shouldn't let two guys in a garage eat your shorts." 

- Guy Kawasaki

In 1906 Italian economist Vilfredo Pareto made an interesting discovery.  While working on a real estate project he discovered that 80% of the private property in his study area was owned by 20% of the population.  Musing about this observation led to Pareto’s Principle, or what most of us know as the 80/20 rule, or the law of the vital few. 
In a nutshell, Pareto’s Principle suggests that 80% of the effects or impacts are a result of 20% of the causes.  This simple formula has a startling impact as a general rule of thumb with almost universal application.

  • 80% of your profits come from 20% of your clients.
  • 80% of all complaints can be laid at the feet of 20% of your customers.
  • 80% of your product sales come from 20% of your products.
  • 80% of your sales come from 20% of your sales force.
Though the numbers aren’t always exact, the Pareto Principle provides a “mega effect” when used as a focused strategy.  The basic idea is that most things, in a pattern, are not distributed evenly (In our book THE DNA OF CREATIVE VENTURES), this is called The Law of Weight

Pareto’s Principle can be a valuable tool to focus on what elements in your business model contain the highest and best leverage.
We recently had the privilege of working with a client on a Pareto Project.  The goal of their strategy was to focus on their highest tier clients, their 20%, and develop value-add strategies that would further these clients’ loyalty and connection to the company.  To create a strategy around this idea you have to KNOW that your core product/service is at the foundation of value, so that adding value is ALWAYS based on core services.  It is a rule written in granite: are your basics so strong that you can look at adding value beyond them?

The idea of creating value-added strategies has been a popular application of Pareto’s Principle for  years.  You know them as reward programs.  Use our product, a lot, and you become an elite customer.  Airlines reward their 20% with no bag fees, early boarding, first class upgrades, and free airline tickets.  Credit card companies provide points for purchases and different levels of membership with progressive benefits.  It’s all Pareto’s leverage.

Our client was looking for a unique way to create a level of service that would separate them from their competitors by using new benefits to reward their top clients.  We were engaged to help them develop a focused approach to create Pareto Leverage.
This type of strategy needs determined discipline.  Your internal metrics will easily identify your 20%, but it takes a creative and thoughtful approach to develop value-driven programs. 
Our approach centers on one of the Repeatable Successful Acts (RSA) behavioral patterns we use, One Level Above (OLA).  A new strategy  needs only a single level above existing client expectations to create impact.  So the ability to focus on a single value-add creates a centered strategy where time and resources gain clear application.  We develop a whole suite of value-add ideas, but only one will be put into play.
Amazon uses their PRIME program as a modified Pareto strategy.  No charge for shipping, and delivery in two days for all PRIME members.  It’s such a powerful foundation that customers often will look for an alternative to their primary purchase if the product they desire does not have PRIME qualification.  Amazon has created additional value-based services for its PRIME members that include free streaming video and a Kindle lending library.  All Pareto leverage.

By focusing on your top 20% and narrowing your strategy to one significant value-add platform you can launch a plan with intent.  Though Pareto started with real estate, his vision was to apply the 80/20 formula to a wide variety of ideas.  By narrowing your vision to finding leverage in your 20% you will be focusing on what matters, and you will develop extended loyalty that will stop those two guys in their garage dead in their tracks.

Create a reality that stops your top clients from looking anywhere else!


Do This!


Most companies have value-based programs outside of their core business of products or services already in play.  In fact, they often have done them for so long they no longer see them as value adding elements.  Something as simple as early registration for key conferences that applies to their elite clients is forgotten until you go through a current reality exercise.  To start a Pareto driven strategy around value you add, you have to really know what you are doing for your key clients NOW.  Creating this list provides history, perspective, and a clear view of how you see the value around your 20%.  During this exercise  people on our client’s team would often confess, “Oh yeah, I forgot about that one.”  Current reality exercises form the foundation of many of our strategic attack points in the development of new ideas, story-based tactics, and many others.  You have seen this often in the DO THIS section of our newsletters.  Hopefully.

VALUE RANKING -  Use your Current Reality list to develop a two-part attack strategy.  Create a value scale.  It can be something as simple as this:  if you have ten current value added programs, rank them by assigning each one a value from 1 to 10 based on how your company determines its impact on your elite clients.  Next, follow the same strategy and rank the programs again from your clients’ perspective.  A  #5 from your perspective might be a client’s # 7, for example.  Combine the rating numbers for each program to create a master list, which ranks your current value- add programs by their new combined numbers to give you a truer sense of their value.  If your process allows the time, actually invite a couple of your Pareto (top 20%) clients to participate in the ranking exercise.  This can be done simply using internet survey tools.  The whole idea is to create a value metric for your current operation.

Time for some investigative work to expand your creative thinking horizons.  We call these “Beyond” projects.  Let’s divide this into two elegantly simple steps:
  1. Internal to your industry:  Pick three top competitors and make a list of their existing value-add programs for their top clients.  This shows where your industry finds value.
  2. External to your industry:  Expand your thinking.  Almost every major company in just about every industry from robotics to pharmaceutical sales treats their best clients to value added privileges.  It might be an invitation to their box seats at the stadium or a family picnic event.  It makes no difference what the industry is, you are looking for ideas. 
There you have it all:  a foundation in current reality, a quantified understanding of your existing value-based programs, and a bucket full of new ideas.  These are the pieces that create Pareto’s Leverage.



A whole bunch of the Vegas regulars are getting very nervous as Hong Kong-based Genting Resorts is gearing up to create a Las Vegas wonderland.  In 2008 Genting bought a piece of property just off the Strip and since has patiently been getting utilities moved, building permits finalized, and assorted other groundwork completed in preparation for the construction of Resort World Las Vegas, with a 100,000 square foot gaming space, a huge theater, a convention center, 3,000 hotel rooms in multiple hotels, 22 villas, and 45 shopping and dining options.  Hosting over 41 million guests in 2014, Las Vegas continues to be a huge vacation and conference destination, and now Vegas has a big new player hoping to open by late 2016.

During a recent conference I was sitting in the audience listening to a speaker and taking notes, only they weren’t regular notes, but instead a series of arrows, pictures, drawn figures and fonts.  The guy next to me asked me what the hell I was doing.  I told him it’s how we take notes, sketchnoting.  Mike Rohde has been at the forefront of this perfect (for us) system of how to use images to capture thoughts, and he calls it “sketchnotes.”  You can find his stuff at  We actually teach these methods in our IDEA FACTORY program.  Check Rohde’s ideas out and take them for a test run the next time you find yourself taking notes. 

Apple’s recent $3.2 billion purchase of Jimmy Lovine and Dr Dre’s Beat Electronics was not just about the wildly popular headphones, but perhaps more importantly their heavily hyped new streaming music service.  Pop culture is more defined by music than any other form of media.  Companies like Spotify, Pandora and YouTube, with their song and video streams, grew to $34 billion this year, an increase of $9 billion from just a year ago.  Apple wants a better market position and is hoping that Lovine’s unique ability to spot hits can move the culture needle further in Apple’s direction.  Perhaps an iBeats that can compare your tastes to the 800 million iTunes accounts can create a revolutionary way to combine a stream with your library of music.  Just another idea…
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