Illinois Tool Works (NYSE: ITW) owns 750 business units in 49 countries. But, to stay focused, ITW uses the "80/20 Rule." This rule focuses the company's efforts on the 20% of its businesses that generate 80% of its revenues. The company works to streamline operations for the 20% of top revenue-generators. Of the 80% of companies that produce the remaining 20% of revenues, those with potential are nurtured by management, and those without are eliminated. ITW's 80/20 Rule is also applied to supplier and customer relationships, favoring key suppliers and customers that do the most business with ITW. This process keeps margins high, new ideas in the pipeline, and management focused in the right direction.
