The 80/20 Principle: The Secret to Achieving More with Less

by Richard Koch

The 80/20 Principle asserts that a minority of causes, inputs, or effort usually lead to a majority of the results, outputs, or rewards. Taken literally, this means that, for example, 80 percent of what you achieve in your job comes from 20 percent of the time spent. Thus for all practical purposes, four-fifths of the effort—a dominant part of it—is largely irrelevant. This is contrary to what people normally expect.

value. If we did realize the difference between the vital few and the trivial many in all aspects of our lives and if we did something about it, we could multiply anything that we valued.

Equality ends in dominance: that is one of the messages of chaos theory. The 80/20 Principle’s message is different yet complementary. It tells us that, at any one point, a majority of any phenomenon will be explained or caused by a minority of the actors participating in the phenomenon. Eighty percent of the results come from 20 percent of the causes. A few things are important; most are not.

“The reasonable man adapts himself to the world. The unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.”15

linked. It was better to be in the right place than to be smart and work hard. It was best to be cunning and focus on results rather than inputs. Acting on a few key insights produced the goods. Being intelligent and hard working did not.

Conventional wisdom is not to put all your eggs in one basket. 80/20 wisdom is to choose a basket carefully, load all your eggs into it, and then watch it like a hawk.

THE 80/20 PRINCIPLE TURNS CONVENTIONAL WISDOM UPSIDE DOWN Application of the 80/20 Principle implies that we should do the following: • celebrate exceptional productivity, rather than raise average efforts • look for the short cut, rather than run the full course • exercise control over our lives with the least possible effort • be selective, not exhaustive • strive for excellence in few things, rather than good performance in many

delegate or outsource as much as possible in our daily lives and be encouraged rather than penalized by tax systems to do this (use gardeners, car mechanics, decorators, and other specialists to the maximum, instead of doing the work ourselves) • choose our careers and employers with extraordinary care, and if possible employ others rather than being employed ourselves • only do the thing we are best at doing and enjoy most • look beneath the normal texture of life to uncover ironies and oddities • in every important sphere, work out where 20 percent of effort can lead to 80 percent of returns • calm down, work less and target a limited number of very valuable goals where the 80/20 Principle will work for us, rather than pursuing every available opportunity. • make the most of those few “lucky streaks” in our life where we are at our creative peak and the stars line up to guarantee success.

The 80/20 Principle suggests that your strategy

is wrong. If you make most of your money out of a small part of your activity, you should turn your company upside down and concentrate your efforts on multiplying this small part. Yet this is only part of the answer. Behind the need for focus lurks an even more powerful truth about business, and it is to this theme that we turn next.

Because business is wasteful, and because complexity and waste feed on each other, a simple business will always be better than a complex business. Because scale is normally valuable, for any given level of complexity, it is better to have a larger business. The large and simple business is the best.

Serving the core 20 percent of customers must be a company-wide obsession

Some customers are vital. Most are not. Some sales efforts are wonderfully productive. Most are inefficient. Some will lose you money.

THE VITAL FEW GIVE SUCCESS TO YOU

A few things are always much more important than most things

A few people add most of the value

We need massive reeducation to stop thinking 50/50 and start thinking 80/20. Below are some hints. • Think skewness. Expect 20 percent to equal 80 percent. Expect 80 percent to equal 20 percent. • Expect the unexpected. Expect 20 percent to lead to 80 percent and 80 percent to result in 20 percent. • Expect everything—your time, your organization, your market, and every person or business entity you come across—to have quality 20 percent: its essence, its power, its value, a small part with substantially all the goodness hidden away by the mass of mediocrity. Look for the powerful 20 percent. • Look for the invisible 20 percent and the subterranean 20 percent. It’s there—find it. Unexpected successes are one give-away. If a business activity succeeds beyond expectations, that is a 20 percent activity—and it will have much further to run. • Expect tomorrow’s 20 percent to be different to today’s 20 percent. Where is the germ, the seed, of tomorrow’s 20 percent? Where are the 1 percents that will grow to 20 percents and be worth 80 percent? Where are the 3 percents that last year were 1 percents? • Develop the facility for mentally blocking out the 80 percents—the easy answer, the obvious reality, the evident mass, the current incumbent,

The best place to start 80/20 Thinking about achievement and happiness is the subject of time. Our society’s appreciation of the quality and role of time is very poor. Many people intuitively understand this and several hundred thousand busy executives have sought redemption in the form of time management. But these executives are just tinkering around the edges. Our whole attitude toward time needs to be transformed. We don’t need time management—we need a time revolution.

If we make good use of only 20 percent of our time, there is no shortage of it!

Free yourself from obligations imposed by others

Be unconventional and eccentric in your use of time

Identify the 20 percent that gives you 80 percent

Multiply the 20 percent of your time that gives you 80 percent

The Top 10 low-value uses of time 1 Things other people want you to do 2 Things that have always been done this way 3 Things you’re not unusually good at doing 4 Things you don’t enjoy doing 5 Things that are always interrupted 6 Things few other people are interested in 7 Things that have already taken twice as long as you originally expected 8 Things where your collaborators are unreliable or low quality 9 Things that have a predictable cycle 10 Answering the telephone

The Top 10 highest-value uses of time 1 Things that advance your overall purpose in life 2 Things you have always wanted to do 3 Things already in the 20/80 relationship of time to results 4 Innovative ways of doing things that promise to slash the time required and/or multiply the quality of results 5 Things other people tell you can’t be done 6 Things other people have done successfully in a different arena 7 Things that use your own creativity 8 Things that you can get other people to do for you with relatively little effort on your part 9 Anything with high-quality collaborators who have already transcended the 80/20 rule of time, who use time eccentrically and effectively 10 Things for which it is now or never

History is driven by individuals who form effective alliances

There are only four types of officer. First, there are the lazy, stupid ones. Leave them alone, they do no harm…Second, there are the hard-working intelligent ones. They make excellent staff officers, ensuring that every detail is properly considered. Third, there are the hard-working, stupid ones. These people are a menace and must be fired at once. They create irrelevant work for everybody. Finally, there are the intelligent lazy ones. They are suited for the highest office. GENERAL VON MANSTEIN ON THE GERMAN OFFICER CORPS

TWO WAYS TO BE HAPPIER • Identify the times when you are happiest and expand them as much as possible. • Identify the times when you are least happy and reduce them as much as possible.

MAKING OURSELVES HAPPY BY STRENGTHENING EMOTIONAL INTELLIGENCE

MAKING OURSELVES HAPPIER BY CHANGING THE WAY WE THINK ABOUT EVENTS

MAKING OURSELVES HAPPIER BY CHANGING THE WAY WE THINK ABOUT OURSELVES

MAKING OURSELVES HAPPIER BY CHANGING EVENTS