The 20:80 Rule

This is a guest blog by Ken Hudson, author of the forthcoming book The Idea Accelerator—How to solve problems faster using Speed Thinking.

The 20:80 Rule

by Ken Hudson

This is a blog about the 20:80 rule. Yes, you have read this correctly. This is not the famous Pareto’s Principle which states that 80% of the effects come from 20% of the causes or typically when applied to business, suggests that 80% of your sales come from 20% of your customers.
Hudson’s Rule
No, this is a more important concept which I call Hudson’s Principle which states that a 20% disruption to a business needs to have an 80% return for it to be considered a worthwhile initiative. Which is a roundabout segue to Atlassian’s 20% time experiment that they announced on the developer blog a couple weeks back. I’m fascinated with how individuals and companies spur innovation. I’ve had a chance now to interview the founders of the business (Mike and Scott) to ask them about their intentions with the 20% time experiment. The concept is pretty simple: Atlassian are looking for ways to continue their amazing track record of innovation and growth through the introduction of a 20% time trial for the next six months. In short, this means that the engineers can spend up to 20% of their time on their own projects that they feel are important or would like to do.
If this sounds familiar then it should be. Google have been banging on about their 20% free time for their engineers for the past few years now with considerable success but exactly how it works remain a bit of a mystery (nothing is new however because 3M have been doing it for years). However, what is new is that Mike and Scott are willing to share their success (or otherwise) with their customers, partners and employees. This is also no small venture as they are willing to invest $US 1 Million in opportunity costs in this experiment.
Why it might just work
Let’s return to Hudson’s Principle. Can a 20% time trial for the engineers have an 80% upside?
Here are some of the reasons why it might:

• The simple act of saying to the 70 engineers that we trust you to work on your own projects is a very important symbolic act from the leadership team to a growing company where culture and values is all important.
• We know from all the literature on creativity and innovation that people do their best work on projects that have meaning to them and that they care about. Being able to select projects that excite you even for 20% of your time is extremely motivating.
• Being transparent with your customers about what you are doing and why and how it might benefit them in the future is something that customers can understand and perhaps willing to put up with a slight delay in the short term.
• It is only a trial. Innovating companies need to adopt an experimental mindset. The aim is to test, learn, retest quicker than the opposition.

Why Atlassian might just fail
I have also postulated why the time trial might not work:

• I think the ambitions are too low. According to Hudson’s Principle (ok I invented it I admit) success cannot be incremental. The goal should be to build a game-changing completely new product or service out of the 20% time which would not have otherwise occurred.
• I believe it is a mistake to limit it to the engineers. By doing so you have already limited your innovation ambitions to new products only. But what about what customer, employee or business model innovation? Why not give everyone the 20% time challenge?
• The 20% time trial is also predicated on the intrinsic motivation of the projects selected (i.e. the work itself is enough of a reward). But why not take it further? Why not any individual or team of engineers that can crack a breakthrough new product get to share in its financial success?

For your consideration
I would like to add another thought for consideration. Perhaps time is the wrong measure. Today value is created by what is produced rather than the time taken to do it. In the future I wonder if the rule should be the 20% results or output rule. This might mean that you are free to work on projects that interest you as long as 80% of your output is produced (if this takes some people less time than so be it).
I hope the Atlassian’s time trial works. It is big, ‘ballsy’ and open for all to see and learn from. It also is a wonderful way of unlocking the creativity and passion of employees. I’m interested to hear what you think!
Dr. Ken Hudson,
Founder and Chief Breakthrough Thinker,
IdeaSpace

Atlassian is blogging about its 20% time experiment on the Developer Blog. You can subscribe to just the 20% posts using this feed.