What do you know about the 80/20 Principle? Have you ever used it intentionally? Or do you just talk about it? Do you know where it originated from?
The Italian economist Vilfredo Pareto, developed the 80/20 Rule, or Pareto Principle. But like so many innovators and thought leaders, he wasn’t fully able to exploit what he created.
Richard Koch built on the work of others, including Pareto, and presents it in The 80/20 Principle: The Secret to Achieving More with Less.
5 Big Ideas from The 80/20 Principle
- The 80/20 Principle suggests that 80 percent of your results come from 20 percent of your efforts. It’s a theory of imbalance. It's important to uncover which 20 percent of your activities will yield the greatest results. Then you focus on more of those activities.
- Focus on the key causes of the relationship. That means that you focus on the most important 20 percent. Take a look at the data, then do something about the under-performing 80 percent that contribute to the 20 percent of output.
- Instead of dreading time and thinking that you don’t have enough of it, embrace it. Time is your friend and you have enough time to do the things that matter to you. The 80/20 Principle can help you to figure out where to spend your time.
- Eighty percent of your time is spent on low priority activities. It’s important to stop doing activities you don’t enjoy. As much as you can, take control of your time.
- Work on forming strong alliances with a few people if you haven’t done so already.
What is the 80/20 Principle?
In a nutshell, the 80/20 Principle suggests that 80 percent of your results come from 20 percent of your efforts. It’s a theory of imbalance. What this means, is that 80/20 is a benchmark. The imbalance could be 90/10, 99/1, 65/35, 70/30, 80/30 and so on. The important point to note, is that it’s doing more with less resources. And the proportion does not have to total 100.
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Why I Decided to Read The 80/20 Principle by Richard Koch
I cannot remember the first time I learned about the 80/20 Principle. But what I do know, is that it was a long time ago. These days my focus is on productivity. I want to grow The Invisible Mentor to a million-dollar enterprise. And I’m looking for effective ways to do so. Also, in two years, I want at least 5000 professionals to be reading a book each week. How do I accomplish that?
Because I’m a small business, I have fewer resources available, and I want to achieve more with them. How can I do that? I believed that learning more about the 80/20 Principle would help me. I know the basics of the 80/20 Principle. But would reading a book about the concept help me? I decided to find out for myself. After research, I decided that I should read the book written by Richard Koch.
If I’m going to accomplish my two stated goals, I have to make my clients richer. I have to give them a reason to choose me. And I have to focus on the 20 percent effort that will yield the 80 percent result.
Summary: The 80/20 Principle by Richard Koch
While reading the 80/20 Principle, I couldn’t help but think how narrow my thinking was on the concept. I never imagined that you could use the Principle in so many ways. You can use the 80/20 Principle for service improvement, cost reduction, improved marketing and sales of a product and service. If you’re looking to live a more fulfilled life, information in to book can help you.
In the book, the author, Richard Koch writes about 80/20 Analysis and 80/20 Thinking. A good way to think about the 80/20 Principle is cause versus effect.
80/20 Analysis
Focus on the key causes of the relationship. That means that you focus on the most important 20 percent. Take a look at the data, then do something about the under-performing 80 percent that contribute to the 20 percent of output. The book gives you many examples of how you can do this. For instance, you could look at your customer data, product data, and/or marketing and sales data. Doing this can increase your profitability.
80/20 Thinking
Apply the Principle to everyday life. What is the 20 percent leading to the 80 percent result? What are the key inputs? Where can you find the 20 percent essential information that’s being drowned out by the 80 percent non-essential information?
Time is Your Friend
Instead of dreading time and thinking that you don’t have enough of it, embrace it. Time is your friend and you have enough time to do the things that matter to you. The 80/20 Principle can help you to figure out where to spend your time. A lot of the information in the book goes against conventional thinking. But when you think about the points raised, you realize that they make sense. For example, Koch writes:
“The most productive time on a project is usually the last 20 percent, simply because the work has to be completed before a deadline. Productivity on most projects could be doubled simply by halving the amount of time for their completion.”
If you take a look at your life, you’ll find that you spend some of your time in low quality ways. Eighty percent of your time is spent on low priority activities. It’s important to stop doing activities you don’t enjoy. As much as you can, take control of your time. When you discover the 20 percent of your time that yields 80 percent of your output, you’re in the driver’s seat. Multiply that 20 percent of your time by focusing on what you do best. Try to eliminate or reduce low-value activities.
In case you are wondering what are some low value uses of time, Koch gives you 10 examples. And he also presents the 10 highest value uses of time. High value use of your time include: Things that advance your overall purpose in life, things that use your own creativity, and things that others say can’t be done.
Are You Living the Life You Want?
Most people seldom live the life they dream of. They often settle for less than what they deserve.
- Are you working in a job you enjoy?
- Which type of career would make you the happiest?
- What could you achieve that would make you proud?
- Do you have enough money so you don’t have to worry? Or are you living from paycheck to paycheck?
- How many hours do you have to work, to show for what you have?
- Does your lifestyle match the one you dreamed of?
The 80/20 Principle offers you a way to can determine your desired lifestyle and career.
Other Important Information in the 80/20 Principle
I loved the chapter on relationships and the emphasis that we need a few key allies to succeed. Work on forming strong alliances with a few people if you haven’t done so already. For relationships and strategic alliances to work well, there are a few things that are necessary.
- Enjoy each other’s company.
- Respect each other.
- Have shared experiences.
- Respect each other.
- Give and take.
- Mutual trust.
You’ll also learn from the book, how to become a superstar in your career. Learn how to leverage your brilliance and creativity. Here are some rules for career success.
- “Specialize in a small niche; develop a core skill.
- Choose a niche that you enjoy, where you can excel and become a thought leader.
- Realize that knowledge is power.
- Identify your market and core customers and serve them best.
- Identify where 20 percent of efforts give 80 percent of returns.
- Learn from the best.
- Become self-employed early in your career.
- Employ as many net value creators as possible.
- Use outside contractors for everything but your core skills.
- Exploit capital leverage.”
Richard Koch takes the time to explain each of the 10 career success rules. There is so much information in the 80/20 Principle – and something for everyone.
Final Thoughts on The 80/20 Principle by Richard Koch
The 80/20 Principle by Richard Koch covers a lot of ground on how to use the Principle. After reading the book, I believe there is too much information to digest at once. When reading, focus on the sections that apply to you. You can always refer to it to get information when you need it.
I recommend you read The 80/20 Principle
by Richard Koch. If you find this article valuable, please share it.
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