How to Think 80/20
By: Hubert Crowell
Definition of the 80/20 Principle
The 80/20 Principle is based on the fact that in most cases 80% of the results come about due to 20% of the effort. The same is true in reverse 80% of failure is due to 20% lack of effort or effort in the wrong direction. The relationship between effort and results are unbalanced.
When actually measured it may turn out that only 15% of the effort resulted in 80% of the result or 25% of the effort resulted in 73% of the result, but it will hardly ever be 50% of the effort resulting in 50% of the result. In other words it will never be balanced.
If you are looking at products, you will find the about 20% of any given number of products in a company account for about 80% of the profits. The flip side of this would be that 80% of the products make only 20% of the profits. Nearly always, a small proportion of the total products produce a large proportion of the profits.
How to use the 80/20 Principle
There are two applications of the 80/20 Principle, 80/20 Analysis and 80/20 Thinking.
80/20 Analysis looks at the relationship between two sets of data. One set is always people or objects, usually a large number of 100 or more, that can be turned into a percentage. The second set of data relates to some interesting characteristic of the people or objects that can be measured and turned into a percentage.
80/20 Thinking is a hypothesis about a possible imbalance between inputs and outputs. Instead of collecting data and analyzing them, we estimate them. 80/20 Thinking requires us to spot the few really important things that are happening and ignore the large number of unimportant things.
When we are using the 80/20 Principle, we do not assume that its results are good or bad or that the powerful forces we observe are good. We decide if they are good and if so encourage the minority forces in the right direction.
The 80/20 Principle turns conventional wisdom upside down
Application of the 80/20 Principle implies that we should do the following:
1. Celebrate exceptional productivity, rather than raise the average efforts.
2. Look for the short cut, rather than run the full course.
3. Exercise control over our lives with the least possible effort.
4. Be selective, not exhaustive.
5. Strive for excellence in a few things, rather than good performance in many.
6. Delegate or out source as much as possible in our daily lives to specialists, instead of doing the work ourselves.
7. Choose our careers and employers with extraordinary care, and if possible employ others rather than being employed ourselves.
8. Only do the thing we are best at doing and enjoy most.
9. Look beneath the normal texture of life to uncover ironies and oddities.
10. In every important sphere, work out where 20 percent of effort can lead to 80 percent of returns.
11. Calm down, work less and target a limited number of very valuable goals where the 80/20 Principle will work for you, rather than pursuing every available opportunity.
12. Make the best of the few times in our life when we are at our creative peak and things are working really well.
No activity is immune from the influence of the 80/20 Principle. If you want the benefit from 80/20 Thinking, you have to do it!
When I was attending tech school and had taken all the courses offered in electronics, I unknowingly used the 80/20 Principle by applying for a teaching job at the same school. That small step was the tipping point in my career and eventually landed me a job with Eastman Kodak Co.
When Jesus called Simon Peter to follow him and become fishers of men, he was using the 80/20 Principle by choosing a few to touch millions. Jesus concentrated on the twelve, teaching them so that the world might be reached.
Assignment: Read Chapter 2 of The 80/20 Principle, By Richard Koch, ISBN 0-385-49174-3
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Optional Exam: Give an example in you life where the 80/20 Principle worked for you.
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