Intelligent and Lazy
By: Hubert Crowell
General Von Manstein of the German Officer Corps, said that there are only four types of officer. First there 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.
I personally made a decision early in my career to become technical and not to enter sales or management. I feel that I have been successful and lived a fulfilled life. I did not however come anywhere near the TOP. Getting to the top or close to it becomes a career within itself and has many risks. For those willing to take the risks, the rewards are also high. However if we do not learn along the way how to take responsibly and proper control of the rewards, we will fail in the end.
THERE IS A BIG GAP BETWEEN THE TOP AND THE REST
Highest paid people of 2009:
1. Stephan Schwarzman: $702,440,573, co-founder of the Blackstone Group private-equity firm
2. Larry Ellison: $556,976,600 CEO of Oracle
3. Oprah Winfrey: $275,000,000
4. Ray Irani: $222,639,705 CEO of Occidental Petroleum
5. Tiger Woods: $110,000,000
6. Madonna: $100,000,000
7. Tyler Perry: $75,000,000
8. Harrison Ford: $65,000,000
9. Adam Sandler: $55,000,000
10. Kobe Bryant: $45,000,000
11. Nicolas Cage: $40,000,000
12. Dale Earnhardt Jr: $35,000,000
There is a big difference between being at the top, and well known to all, and being almost at the top, and well known only to a few enthusiasts. The best-known stars can make millions, those just below the top rank, only a comfortable living.
The average income in the US is only slightly above $50,000
Household income distribution
Bottom 10% $0 to $10,500
Bottom 20% $0 to $18,500
Bottom 25% $0 to $22,500
Middle 33% $30,000 to $62,500
Middle 20% $35,000 to $55,000
Top 25% $77,500 and up
Top 20% $92,000 and up
Top 5% $167,000 and up
Top 1.5% $250,000 and up
Top 1% $350,000 and up
Source: US Census Bureau, 2006; income statistics for the year 2005
WHY DO THE WINNERS TAKE ALL?
What is intriguing is that this disparity between top returns and the rest has not always existed. Stars of the past did not make this much money. The imbalance of financial rewards for talent is becoming more and more pronounced as the technological revolution in broadcasting, telecommunications and consumer products like DVD's and High-Speed Internet increases.
The key is how maximize revenue, which superstars can do.
ACHIEVEMENT HAS ALWAYS OBEYED THE 80/20 PRINCIPLE
If we set money aside and deal in the more enduring and important matters, we see that the concentration of achievement and fame occurs in the lives of only a few. Most great people did not become millionaires.
Although it is most noticeable and exaggerated with respect to media superstars, it is significant that 80/20 returns are not confined to the world of entertainment. The top professionals in any profession take the lion's share of the loot.
Talent has probably always followed an 80/20 pattern. The effect of technology may be, roughly, to move talent to a curve approximating 90/10 or 95/5.
WHAT DOES ALL THIS MEAN FOR THE AMBITIOUS?
1. Specialize in a very small niche
2. Realize that knowledge is power
3. Become self-employed early in your careerv
4. Use outside contractors for everything but your core skillv
Specialize in a very small niche
Specialization is one of the great, universal laws of life. A small business that does not specialize will die! An individual who does not specialize will be doomed to life as a wage slave.
Specialization is intrinsic to the 80/20 Principle. The reason that it operates, 20 percent of inputs can result in 80 percent of outputs, is that the productive fifth is much more specialized and suited to the task at hand than are the unproductive four-fifths.
If the unproductive 80 percent specialized in what they are good at, they could become the productive 20 percent in another sphere. This in turn would produce another 80/20 relationship, but at a higher level. This is what has happened in industrial nations, higher living standards have been driven by greater and greater specialization.
Your career ought to evolve in a similar way. Knowledge is the Key.
Find your niche. It may take you a long time, but it is the only way you will gain access to exceptional returns.
Specialization requires very careful thought. The narrower an area, the more important it is to choose it with extreme care. Specialize in an area in which you are already interested and which you enjoy.
This is not as hard as you may think. Everyone is excited by something. If not they are dead or dying. And almost every hobby, every enthusiasm, every vocation can these days be turned into a business activity.
If you are not enthusiastic about your current career, and are ambitious, you should stop doing it. But before you take this step, work out a better career. Write down all the things about which you are enthusiastic. Then work out which of these could be made into a career niche. Then choose the one about which you are most enthusiastic.
Realize that knowledge is power
The key to making a career out of an enthusiasm is knowledge. Know more about an area than anybody else does. Then work out a way to market it, to create a market and a set of loyal customers.
It is not enough to know a lot about a little. You have to know more than anybody else, at least about something. Do not stop improving you expertise until you are sure you know more, and are better in you niche, than anybody else. Then reinforce your lead by constant practice and inveterate curiosity. Do not expect to become a leader unless you really are more knowledgeable than anyone else.
Identify your market and your core customers and serve them best. Your market is those people who might pay for your knowledge. The core customers are those who would value your services most.
Serving customers is key, but they must be the right customers for you, those whom with relatively little effort you can make extremely happy.
Identify where 20 percent of effort gives 80 percent of returns. Keep reminding yourself of some of the golden 80/20 insights. In any sphere of activity, 80 percent of people are only achieving 20 percent of results and 20 percent of people are achieving 80 percent of results.
In every market, for every customer, in every firm, in all professions, there is a way to do things more efficiently and effectively. Not just a bit better, but a step function better. Look beneath the surface for 80/20 truths in your profession or industry.
Learn from the best, be willing to pay a high price to work for the best. Find any excuse to spend time with them. Observe how they do things differently. Leaders have many 20/80 practices, observe, learn and practice.
Become self-employed early in your career
Leverage you own time so that you focus on the things where you add five times more value than elsewhere. When you are self-employed, you get paid by results. For those use the 80/20 Principle, this is good news.
The one circumstance in which it may not be appropriate to become self-employed yet is when you are still in the rapid learning stage.
Employ as many net value creators as possible. If the first stage of leverage is the best use of you time and the second stage is to ensure that you capture for yourself the value you create, the third stage is to leverage the power of other people. Hire only net value creators, those whose value comfortably exceeds their cost. It would be unreasonable to say you should only hire the best. Employ as many excess value creators as possible, even if some of them are only twice as goof as the average, others may be five time as effective. Within your own workforce, there is still likely to be an 80/20 or 70/30 distribution of effectiveness. The only requirement is that your least super effective employee still adds more value than he or she cost.
Use outside contractors for everything but your core skill
The most successful professional firms and corporations are those that out source everything but what they are best at. Keep your own firm as simple as possible and purely focused on those areas where it is several times better than the competition.
You can also benefit from capital leverage. Capital leverage is using money to capture additional surplus value. At its most basic, it means buying machines to replace labor whenever the machines are more cost effective. Capital can be used to multiply frozen know-how captured in a particular formula like that used in software distribution and fast-food chains.
Summary
Rewards increasingly demonstrate the 80/20 Principle, the winners take all. Those who are truly ambitious must aim for the top in that field.
Choose you field narrowly. Specialize. Choose the niche that is made for you. You eill not excel unless you also enjoy what you are doing.
Success requires knowledge. But success also requires insight into what delivers the greatest customer satisfaction with the least use of resources. Identify where 20 percent of resources can be made to deliver 80 percent of returns.
Early in your career, learn all there is to be learned. You can only do this by working for the best firms and the best individuals within them, "best" being defined with reference to your own narrow niche.
Obtain the four forms of labor leverage. First, leverage your own time. Second, capture 100 percent of its value by becoming self-employed. Third, employ as many net value creators as possible. Fourth, contract out everything that you and your colleagues are not several times better at doing.
If you do all this, you will have built your career into a firm, your own firm. At this stage, use capital leverage to multiply its wealth.
Assignment: Read Chapter 13 of The 80/20 Principle, By Richard Koch, ISBN 0-385-49174-3
Save this URL for future reference in you favorites folder.
Optional Exam: If getting to the TOP and climbing ladder of success is what you really want, then share here what you really enjoy doing. What gives you the most satisfaction in life?
For more information on the 80/20 Principle visit: http://www.the8020principle.com/
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