How anyone can be more effective with less effort by learning how to identify and leverage the 80/20 principle–the well-known, unpublicized secret that 80 percent of all our results in business and in life stem from a mere 20 percent of our efforts.
The 80/20 principle is one of the great secrets of highly effective people and organizations.
Did you know, for example, that 20 percent of customers account for 80 percent of revenues? That 20 percent of our time accounts for 80 percent of the work we accomplish? The 80/20 Principle shows how we can achieve much more with much less effort, time, and resources, simply by identifying and focusing our efforts on the 20 percent t at really counts. Although the 80/20 principle has long influenced today’s business world, author Richard Koch reveals how the principl works and shows how we can use it in a systematic and practical way to vastly increase our effectiveness, and improve our careers and o r companies.
The unspoken corollary to the 80/20 principle is that little of what we spend our time on actually counts. But by concentrating on those things that do, we can unlock the enormous potential of the magic 20 percent, and transform our effectiveness in our jobs, our careers, our businesses, and our lives.
1) 80/20: The Basics
The 80/20 Principle:
- 80% of your effort, action, or input will lead to only 20% of your results, output, rewards, or victories.
- 20% of your efforts, action, or input is what leads to the majority of your results, output, rewards and victories.
- It is a proven nonlinear approach to everything that happens. You will see this consistently across the board
- 20% of the pea pods will have 80% of the peas
- 80% of the money in this world is controlled by 20% of the people
- 80% of your carpet wear will be on 20% of your carpet
- 80% of your profits come from 20% of your customers
2) You Can Be great
The 80/20 principle states that it is possible for anyone to achieve greatness.
The key: Do not spend your time trying to figure out how much effort you will need to become great at something.
Instead: Figure out what is the right thing for you to do.
- jWhat is it that makes you great?
- What is it that makes you come alive?
- What is that area where you are the best?
If you’re spending your time on everything else, you’re just going to be wasting your life away, never getting to that point of greatness.
So find that area where you can be great and just push on that. Continue to work on that.
That may be where you’re expending minimum effort but are getting the most benefit from. That is the area where you will get exponential results.
3) Choose Your Allies
One of the most important decisions you can make in your life concerns your allies – figuring out who are the people you are going to spend time with.
But in most cases, people are doing this wrong.
The allies they have are by default. They just happened to run into certain kinds of people and hence they associated with them. That how they choose – or how they don’t choose – their allies.
- These are the wrong kinds of “allies.”
- Your allies should not be chosen by default
People have too many allies. There are just too many people in their lives who do not add much value.
People do not know how to use their allies, how to be able to leverage them.
The key to 80/20 thinking Say this: “I’m going to choose my allies who are going to help me move forward in my life.”
You’re not going to do it by default. It’s going to be by design.
- Pick a few allies that are powerful.
- Pick a few that are going to really help you move the needle forward.
- Don’t have too many.
- And then use them properly.
- Leverage their strengths and they will leverage yours.
That’s the power of allies. You help each other out and you build each other up and get exponential results in the process.
4) Design Your Own Game
How people play the game of life
- They play their game of life by default
- They play the game of life that their parents want them to play, that the society wants them to play
- They continue to lose at that game because they never designed the game that they are in.
But as 80/20 thinkers, we need to design our game – the game that we most want to play – then it will be really easy for us to win at that game.
Those with default conditioning are actually playing someone else’s game. They’re simply wasting their time playing others’ games, society’s games, and so on – anything but their own game, which is what really matters.
The greatest innovations and the greatest accomplishments are always a result of people who are designing their own game and hence winning at those games. They’re designing their own races of life and are playing in those races, winning in those races, and that’s what we need to do.
We need to design our own game and win in those games to get exponential results.
5) Achievement Island / Desert
As you look back at your life, what you’ll see is That
- there are short periods of time when you get extreme results
- there are long periods of time when you got almost no results
Wonder what’s going on?
The key to harnessing the power of 80/20:
Realize that we’re gonna have these short periods of extreme results (or the author’s so-called “Achievement Islands”)
To Do:
- Make a list of all the times in your life where you’ve had these Achievement Islands. Be guided by these questions:
- Where have you had extreme results in very short durations of time?
- What are the key characteristics of those situations?
- What are the things that stand out when you think about these moments of extreme results?
- What happened?
- Why did you get those results?
- On the other end, make a list of the times in your life where you almost got no results at all despite trying and trying (“Achievement Deserts”).
- What happened?
- What were the common situations or characteristics that were happening during those long periods of time?
- Now your job is to focus as much as possible on the things where you were getting maximum results. Those are what will get you to move towards your Achievement Islands rather than your Achievement Deserts.
6) 80/20 in Relationships
When it comes to relationships, 80/20 principle still holds true.
- 80% of your relationships give you only 20% value
- 20% of your relationships give you 80% value
So what you need to do is ensure that you’re spending 80% of your relationship time on only 20% of those relationships. These are your high-leverage people, the relationships that are creating the most value.
With that, spend only 20% on the remaining 80% people in your life.
Many people tend to spray their effort with a lot of different relationships (the 80%) all over the place.
- These are relationships that don’t bring them any long-term value.
- They have a lot of friends, but none of them are real.
- None of them are actually going to help them build anything useful or accomplish great goals.
As an 80/20 practitioner, find a few powerful alliances. These are your key allies ( your 20%).
- Develop deep relationships with them.
- Spend a lot of quality time with them in order to strengthen those 20% relationships.
Richard Koch says that all we need is just 6-7 key allies, and then we can do tremendously in our lives. We don’t need 100, 200, or 500 friends. From there we can leverage the power of our relationships.
Start figuring out who these people are, or those who will add that value to your life. Design your circle rather than let it happen b default, which happens unfortunately to most people.
7) Ruthlessly Prune
We need to cut down. We don’t need to add. We need to remove, to reduce, so that we can get massive results. This process is called ruthless pruning.
The problem that happens with most people:
- 80% of their time is encroaching on their 20% time where they create the most value.
- 80% of their allies are encroaching on the 20% that create the most value for them.
- 80% of your customers actually take up so much value that you end up not having enough value to give to the 20% customers who create the most value for you.
- Mental energy expended on 80% of your projects is taking away mental energy from. the 20% projects that create the most value/exponential results for you.
Actions expended on 80% of your projects do the same thing. They take away from the 20% projects that are creating the most leverage, the most value for you. The same happens with any area of business - marketing efforts, sales effort, strategic efforts, whatever it is.
That’s why one of the things Jack Welch at G.E said was: “We’re only going to do things that we can be in the Top 2 to Top 3 in the world. If we’re not in the Top 2 or Top 3, then we’re going to stop doing those things.”
Hence, we’re going to only expend our energy on the 20% things and we’re going to ruthlessly prune the 80%, even if there is some result coming from it… in order to exponentially grow the areas of business and life where we’re getting maximum results.
8) Multiply Output
In order to multiply our output, we need to move our resources from an unproductive place to a productive place, from an unproductive arena into an arena, where the resource can be productive.
EXAMPLE: A hammer is great at hammering a nail but it’s not useful when it comes to cutting a piece of cloth. It’s not going to help.
Similarly, a pair of scissors is great at cutting a piece of cloth but entirely useless when it comes to hammering a nail.
Both these resources are very powerful but they have to be used in the right arena and that’s the key.
That’s the 80/20 – the understanding that the resource needs to be used in the right arena where you get 10x, 100x, even 1000x more improvement or higher productivity.
The same holds with you. If you’re using your resources and your strengths properly, then you are living in the right arena. You are being highly productive.
But if you’re not using those strengths properly, if you are using them in the wrong arena, you are in the unproductive zone.
Again, our job is to move our resources from an unproductive area to a productive area. That’s when we can massively multiply our productivity.
KEY POINTS:
- The basics - The 80/20 principle in a nutshell.
- You can be great - How the 80/20 principle can make you, and everyone else, great.
- Choosing allies - Why choosing your allies is important and how to identify them.
- Design your own game - Stop living your life by default.
- Achievement island and desert - Be clear with your “achievement islands” and only build on them.
- Relationships - How the 80/20 principle applies to our relationships and how we can improve them.
- Ruthlessly prune - Why we need to reduce, not add, in our lives.
- Multiplying output - Use your strengths and resources properly in order to multiply your productivity.