The 80/20 Rule

Since 1982, my hobby has been studying businesses. Illinois Tool Works was founded in 1912. They have seven large segments, from automotive to food service equipment, with 43,000 employees, 83 divisions in 52 countries, and 440 plants and facilities. ITW has increased the dividend 46 consecutive years and has a S&P credit rating of A+.

ITW’s simple 3-part business model is based on an 80/20 Rule:

  • Work “front to back,” prioritizing the best 80% of customers.
  • Drive innovation from the “customer back,” rather than from the top-down.
  • Operate with a decentralized, entrepreneurial culture.

The ITW business model echoes an earlier model with high expectations of leadership. Jesus turned away from leadership the conflicted or distracted, focusing his energy to train a dozen small group leaders. He used parables (stories) with crowds, “as much as they could understand. … But when he was alone with his own disciples, he explained everything.”

From the ITW 2020 Corporate Social Responsibility Report:

2 thoughts on “The 80/20 Rule”

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