World-Class CEO Jack Truong on Critical Priorities and the Art of the 80/20 Rule

“Knowledge itself is power,” wrote Sir Francis Bacon in his seminal 1597 collection of essays, Meditationes Sacrae. In a career spanning over two decades and with three major corporate transformations under his stewardship, veteran CEO Jack Truong has seen this axiom proved true time and again. However, it’s what follows Bacon’s initial pronouncement that drives understanding and ultimately, creates a force for change.

“The real test of knowledge is not whether it is true but whether it empowers us,” Bacon elaborated. “Scientists usually assume that no theory is 100% correct. Truth, consequently, is a poor test for knowledge. The real test is utility. A theory that enables us to do new things constitutes knowledge.”

With an impressive scientific background  — he holds a Ph.D. in chemical engineering from Rensselaer Polytechnic Institute and boasts 11 groundbreaking U.S. patents to his name — it’s a small wonder that Bacon’s teachings resonate with Jack Truong. Technology and innovation are inseparable from sustainability and growth for a business to run on a global scale. Consequently, Truong asserts that in a business context, understanding your company’s potential for utility is what translates to its potential for profitability.

In Knowledge Lies Power, In Utility Lies Profit

Simply put, knowledge is the power that fuels successful strategies in business. While theory has its place, divining the crucial factors intrinsic to the company you lead — what Truong calls “the 20%” — is the key to unlocking the profitability of the remaining 80%. “As CEO … you want to make the biggest impact. That means you have to be able to make decisions based on the 80/20 rule, [and] you can only know the 80/20 when you have a view of what’s going on with your business,” he explains.

For a newly installed CEO or other high-level executive to shed light on the most direct route to achieving utility, Truong believes they must personally undertake a deep dive into the company’s assets to identify its most valuable resources. Implementing novel policies that aren’t grounded in a thorough understanding of the 20% — including everything from inventory and production capabilities, distribution channels to partnership alliances, human capital to brand recognition — can be a disaster in the making. Truong can’t stress strongly enough the importance of discerning which priorities are the most urgent before making changes.

“What I’ve seen a lot of times is that people just don’t understand what drives their business or their company, because they don’t have a good handle on the 80/20,” Truong reflects. If a CEO doesn’t narrow down which factors have the potential to make the biggest difference to a company — if they don’t have the critical priorities in place before acting — they risk losing both momentum and opportunity.

Mastering the Art of 80/20

It’s only after having attained a true understanding of a company’s chief utility factors that a CEO can focus on implementing appropriate strategies to increase efficiency, optimize performance, and ultimately, realize maximum profitable growth.

“So first, you’ve got to get into the market and really understand what’s going right and what’s not going right for your company from different constituents — consumers, customers, employees, and owners,” Truong notes. “And then you form a strategy on how you want to take your company from point A to point B. Once you have that, then you have to understand the 80/20 rule: What are the critical few things that you’re going to focus on that will allow you to go from A to B with the biggest impact?

“To me, that part is the art, not the science. It’s the art of how to really create a new business, or to take the company from A to B in a very big way.”

While Jack Truong’s track record for rapid growth and dramatically increased market share is unassailable, he acknowledges his peers’ approach to taking charge of a new company is sometimes counterintuitive. In addition to incoming CEOs who make broad, sweeping policy changes without having first done their homework, Truong says he’s observed newly hired executives allowing themselves to get caught up in “the minutiae,” rather than honing in on the elemental factors that can make or break their business.

“When you make decisions, the difference between making the wrong decision versus the right decision is when you really understand what’s going on. A lot of the C-suite and CEOs make decisions, but [much] of the time, they make wrong decisions because they’re based on wrong assumptions [or] based on their incorrect view of what’s going on in their new business,” Truong reveals. “And a [lot of times when] CEOs come into a company since they don’t have a good grasp of what goes right for their company and what goes wrong, they can’t have the right strategy to take the company from A to B. [Instead], they tend to do many different things — like an initiative of the day or initiative of the week or initiative of the month — and that can create a lot of confusion.”

Jack Truong’s Tried-and-True Caveats for Incoming CEOs

Jack Truong believes making sure that everyone in your company is on the same page and moving in a uniform direction is the key to success, so it’s up to the CEO to implement a clear, meaningful, and actionable strategy that everyone can follow. Truong credits his strategic leveraging of the 80/20 rule with allowing him to quickly make definitive, transformative decisions that significantly revolutionized the trajectory of the corporations he led, creating significant value — and doing so in a remarkably short period of time. “It’s not just increasing the value by 20% or 100%,” he points out. “It’s two, three, or four times the original value in three to four years.”

One final error in judgment Truong cautions newly hired executives against making is climbing into the cockpit and taking the captain’s seat, then setting the controls on autopilot and expecting the status quo to keep the company in the air and heading in the right direction. Just going through the motions won’t cut it, he says bluntly. Rather than a smooth flight, you’re more likely in for a crash-and-burn scenario.

Granted, he’s only given us “the 30,000-foot view” of the approach he has serially employed to transform the profit profiles of the three major global corporations he led, however, Jack Truong says if a CEO hopes to create significant value and do it quickly, they must first understand what they’re working with. Knowledge itself may indeed be power, but it’s understanding the potential for a utility that fuels profit. Only by initially identifying and analyzing the critical 20%, can a CEO devise a viable flight that will not only keep their company aloft, but allow it to fly higher and faster, and obtain further success than ever before.