Many of you know about the 80/20 rule or, more fancifully, the Pareto Principle. In 1906 Vilfredo Pareto noticed that 80% of the land in Italy was owned by 20% of the people and, since then, the Pareto Principle pops up all over the place. We see all it all over startups across time, team, customers, investments, etc. So when it comes to operational planning for 2022 it is really helpful to figure out what 20% functional surface areas capture 80% of the value for the year ahead.

I remember a few years ago when we hit 100% of our yearly revenue plan. It felt great to hit all of our goals and the team was excited. We even got to go on a weekend trip to celebrate! But we got so lucky… Basically, we had a single whale of a customer come out of left field in September and cover a significant revenue gap allowing us to hit the plan. Without them? We would have been closer to 90%. Maybe less.

The point is we didn’t know our operating plan or what the 80/20 levers were in our model. We were just out there fighting the fight being “scrappy”. Hey, everyone goes through it. So as 2022 rolls around it’s time to get serious about operational planning.

Let’s assume you’re in a growth stage startup. You’re likely going to be asked to grow >50% because, well, look around. Maybe you’re trying to raise, get acquired, or go public. 50% growth is where the conversation is going to begin.

Next, you’re likely going to be at a company with one of two internal philosophies:

1. Growth At Most Costs – top line, top line, top line. Grow revenue, grow customers, grow user count. Let us worry about the accounting
2. Growth & Efficiency – we’re going to need you to grow aggressively. But we also need to be efficient and will be watching secondary metrics closely

Then comes the challenge of trying to figure out where to find 80% of that value. You might try one of the following popular breakdowns as a guide:

• Top 25 Customers
• Top 50 Late Stage Prospects
• Top 5 Growth Channels
• Core Product Roadmap Sprint Schedule

You’re likely going to be relying on limited historical data. Still, try to extrapolate the last couple years of performance for trends you can carry forward. Overall y/y growth or even contribution percentages for the above groupings relative to the whole are all helpful. Honestly, sometimes it’s less about accuracy and more important that you can track granular units of your business in a way that shows directional progress over time. The multipliers will shift but the groupings can remain constant.

Last, spend some time on experimental buckets of growth. This might be new business partnerships, new growth channels or new product areas to name a few. What can you hope those will contribute in the upcoming year? The 80% value surface area is always shifting so you have to keep seeding new areas for future years.

With all that work will this give us reasonable confidence of what to expect in the year ahead? Who knows what’s on the horizon after what we went through in 2020. But the above exercise will give you a great testing ground for your assumptions and, as you build a stronger track record, even more accuracy as the years (and data) compound.

Forget about the fact that we’re in the hottest job market..ever. Hiring competent and curious people to deliver the plan is a story for a different day.