In 1906 Vilfredo Pareto observed that a high percentage of land was owned by a small percentage of people. He also noted that this same small percentage of people had a similarly high percentage of the income in every society. Contrary to what most people think, Pareto did not call this the 80/20 Rule, but instead referred to it a law of income distribution.
It was Joseph Juran, a management consultant, who realized in 1941 that Pareto's discovery applied to many other situations and coined it the 80/20 Principle.
The 80/20 Principle asserts that a minority of causes, inputs, or effort usually lead to a majority of the results, outputs, or rewards. An example would be that 20% of your customers represent 80% of your revenues. Another would be that 20% of your product line represents 80% of your company's income.
Most people have, at least, a cursory understanding of this principle. Unfortunately, not many people truly get its power.
In his excellent book, The 80/20 Principle, Richard Koch writes:
"The 80/20 Principle can and should be used by every intelligent person in their daily life, by every organization, and by every social grouping and form of society. It can help individuals and groups achieve much more, with much less effort."
Koch advocates that understanding and living by the principle would guide us to only do those things that really make meaningful impact on our lives. Through careful monitoring of what we focus our time and energy on, we can learn which of our efforts (the 20%) yield the greatest results (the 80%). After we figure that out, we would then logically adjust to maximize those results-making efforts.
Think about it from a time management perspective. Let's say you are an entrepreneur earning $100,000 per year. After monitoring, you determine that 20% of your time has produced $80,000 and 80% of your time has only produced $20,000. The smart thing to do then is to find a way to increase your time spent doing those things that make you the most money and, of course, decrease time spent on those things that don't! For example, if we INCREASED our high-producing 20% to 40% (+$80,000) and DECREASED our low producing efforts from 80% to 60% (-$5,000), we could conceivably increase our income by a net $75,000. Maybe it's not that simple…but then again, maybe it is.
This is not new stuff, but few of us actually make the effort. The title of this post is not a mis-print. I believe most of us fall into the easy trap of actually living a 20/80 life. We accept the fact that most of our efforts have little payoff. We bemoan it, but we accept it.
For my most recent webinar, I asked you to send me your questions and I would spend the hour answering as many as I could. I was surprised at how many questions focused on productivity.
One, in particular, really struck me. He asked: "How do you stop working in your business to find the time to work on your business as relates to marketing, innovating etc.? The interruptions keep getting in the way."
It would be easy for us to scoff because the answer is so obvious. But I doubt many of us should cast the first stone. I certainly can't. As hard as I work at maximizing my time and efforts, I still fall into bad time management habits.
If I'm not consciously diligent every single day, it becomes natural to fill my hours with unproductive tasks. I'll find myself checking email every few minutes. I'll grab my phone when a new text message dings and immediately respond. I'll check Facebook or LinkedIn too often. Somebody emails and asks me to take over some millstone they don't want around their neck and I stupidly accept. Their urgency now becomes my emergency.
I think this is a human curse. We are doomed to naturally suck at time management. We create our daily "to-do" lists thinking we're setting ourselves up for victory. But what happens? Our list fills up with those urgent little tasks that "will only take a couple of minutes," and the next thing we know the day is gone again. We convince ourselves we're being productive, but in reality confuse busyness with effectiveness.
The answer is painfully obvious and more painfully simple:
Maximize your 20% every single day.
Force yourself to do it. Force yourself to say no. Force yourself to be vicious with your time. Force yourself to find someone to do those $10 per hour jobs, so you can focus on the $1000 per hour tasks.
I doubt it ever becomes an unconscious habit. I just don't think most of us are hardwired that way. For a small percentage maybe it will, but most of us will have to consciously and aggressively push ourselves to do it.
We will make some people angry, to be sure. Not many will applaud our efforts to break away from the life they choose to lock themselves in. They'll be upset because you won't allow them to drag you back into their mundane world. I say tough sh–. Winners make a habit of doing those things losers don't want to do.
My first monthly report to my new subscribers is titled, "Turning Pro." In it I wrote about how certain professions have created cultures where the "professional" is clearly different from the "amateur." Acting, sports, art, writing, and speaking are great examples where you make a conscious decision to Turn Pro. And when you do, everything changes. The way you think about your profession…the way you approach it…the way you learn and prepare…and the way you are perceived all change. These professions consciously practice maximizing time and effort for maximum results.
Why don't we all take that approach with our careers and professions? We should. Understanding and embracing the importance and power of the 80/20 Principle enables each one of us to "Turn Pro."
(Note: For information on my monthly MIB Club subscription, Click Here.)
Steve, Very interesting. I might have this wrong, but if you increase your 20% it will still be 20% all be it a higher value. As for equating this to time management I am the worst. My mind wanders and never seems to settle long enough to totally finish each project. They are always a work in progress. However I think I use the 80/20 rule since the project with the best possible roi seems to always stay on top.
I agree – the 80/20 rule is amazingly powerful. In my previous position it was easy to see that 80% of my time was working with accounts that were less than 20% of my business. By refocusing on the 80% of my income (which was less than 20% of my clients), I was able to keep them happy, retaining them as a customer and getting referrals from them that were great. It was a blessing to lose the 80% of my work… the hard part was getting over the “guilt” of not giving everyone the same attention.