In his latest column for Bloomberg Businessweek online, Drucker Institute Executive Director Rick Wartzman looks at how Yum! Brands, the parent of fast-food chains KFC, Taco Bell and Pizza Hut, has done an exemplary job of focusing on its most promising economic opportunities—in its case, business overseas.
“Managing in this manner may appear to be a no-brainer,” Wartzman writes. But, as Peter Drucker observed, few companies approach this practice in a disciplined way.
“Every analysis of actual allocation of resources and efforts in business that I have ever seen or made showed clearly that the bulk of time, work, attention and money first goes to ‘problems’ rather than to opportunities, and, secondly, to areas where even extraordinarily successful performance will have minimal impact on results,” Wartzman quotes Drucker as explaining.
By concentrating on the most lucrative opportunities in China, India and elsewhere abroad—and shuttering less promising lines in the U.S.—Wartzman sees Yum as a great example of the Pareto Principle, which holds that 20% of almost anything will yield 80% of the results. “Drucker pushed the formula even further,” Wartzman notes, advancing the notion that “a very small number of events—10% to 20% at most—account for 90% of all results.”
“When it comes to chicken, KFC is famous for its secret blend of 11 herbs and spices,” Wartzman concludes. “When it comes to management, the winning blend is 90/10.”