![]() For that reason it’s a good idea to look at how you’re spending your time. Particularly for business owners, the social spheres of business and pleasure tend to blur. How about your life? Anyone looking to rank their friends and associates by value would likely raise an eyebrow, but 80/20 applies here too. Before Steve Jobs returned to Apple, the company was juggling a range of more than 300 products, which he ruthlessly whittled to 10. In fact, 80/20 should be a part of examining your existing processes to understand what works and what doesn’t. The 80/20 test can be applied to every aspect of your business, whether it’s sales, marketing, time management or customer relationships. ![]() The short answer is everywhere, but let’s start with your business. Where should you apply the 80/20 Principle? Koch believes that by harnessing and understanding 80/20, businesses can become more profitable, governments can be more effective, and we can become happier and more successful too. It’s not just about removing the 80% that doesn’t work, it’s about doing more of the 20% that does. He argues that pretty much everything in life, at least in terms of effort and reward is naturally imbalanced – it may not always be 80/20 (although it often is) but things aren’t as balanced as we assume – and we’re often surprised at the extent of the imbalance.īut it’s not a reason to despair – it’s an opportunity, in business and in life. While that’s a surprisingly democratic view of life, Koch calls it the ’50/50 fallacy’. We assume every bit of business, every product, every lead is as good as the next. Why it matters todayĪs humans we make assumptions, and one of those is that all causes have the same significance, more or less. We see it with wealth distribution, we see it in blockbuster movies, and it may just explain Ed Sheeran. ![]() Some forces will always grab more than their fair share of attention and this imbalance will grow through what he calls ‘feedback loops’. Koch explains that, in common with chaos theory, the 80/20 Principle says the universe is imbalanced, and that cause and effect are rarely linked in an equal way. And the principle really kicked off in industry in the 1960s when IBM actively applied the 80/20 Principle to revolutionise computing power. Even the internal combustion engine, the dominant form of locomotion for over a century, yields only about a 20% efficiency. To take a few examples, Koch notes that 20% of motorists cause 80% of accidents, 20% of your carpets take 80% of the punishment, and whether you admit it or not, you’ll wear about 20% of your wardrobe 80% of the time. It’s rare for a handy figure you can carry in your pocket to have universal applications, but 80/20 does seem to play out in all sorts of situations. The idea of 80/20 can seem a little too neat. It’s about intelligently focusing your time and effort on the areas of your business and your life that yield the results you want, whether we’re talking about repeat business or fulfilment at home. The 80/20 Principle isn’t at all about not trying. But while the book is about better results for less effort, it’s not a guide to slacking your way to success. He’s saying 80% of consequences flow from 20% of causes, or in other words, 80% of results come from 20% of effort. Koch summarises that “A minority of causes, inputs or effort usually leads to a majority of the results, outputs or rewards”. The 80/20 Principle could be read as a manifesto for working smart, not hard. Let’s take a look at how the ‘predictable unbalance’ at the heart of Pareto’s idea applies to your business, your life, even your happiness. The ‘Pareto Principle’ is one of those terms that gets thrown around at away days and dinner parties, but this book shows you the real applications. Koch himself is an entrepreneur, and the book takes a focus on the observations of Italian economist Vilfredo Pareto. The 80/20 Principle: The Secret of Achieving More with Less (1997) by Richard Koch is a well-known title – GQ placed it in the Top 25 Business Books of the 20th Century. And according to this week’s book you shouldn’t be trying. You can’t give your undivided attention to everything all the time. ![]() If you’ve ever felt like you’re trying to do everything at once, or spreading yourself too thinly in your working life and personal life, you’re not alone. ![]()
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