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

The way to create something great is to create something simple.

golden rules for career success 1 Specialize in a very small niche; develop a core skill 2 Choose a niche that you enjoy, where you can excel and stand a chance of becoming an acknowledged leader 3 Realize that knowledge is power 4 Identify your market and your core customers and serve them best 5 Identify where 20 percent of effort gives 80 percent of returns 6 Learn from the best 7 Become self-employed early in your career 8 Employ as many net value creators as possible 9 Use outside contractors for everything but your core skill 10 Exploit capital leverage

There are people who want to achieve--and then there are sane people.

Not only is happiness not money, it is not even like money.

It may be that you will be happiest in the rat race; perhaps, like me, you are basically a rat.

Things that matter most Must never be at the mercy of things that matter least.

THE 80/20 PRINCIPLE AND CHAOS THEORY Probability theory tells us that it is virtually impossible for all the applications of the 80/20 Principle to occur randomly, as a freak of chance. We can only explain the principle by positing some deeper meaning or cause that lurks behind it. Pareto himself grappled with this issue, trying to apply a consistent methodology to the study of society. He searched for “theories that picture facts of experience and observation,” for regular patterns, social laws, or “uniformities” that explain the behavior of individuals and society. Pareto’s sociology failed to find a persuasive key. He died long before the emergence of chaos theory, which has great parallels with

We can change the way that we think about external events, even where we cannot change them. And we can do something more. We can intelligently change our exposure to events that make us either happy or unhappy.

80 percent of products, or customers or employees, are only contributing 20 percent of profits; that there is great waste; that the most powerful resources of the company are being held back by a majority of much less effective resources; that profits could be multiplied if more of the best sort of products could be sold, employees hired, or customers attracted (or convinced to buy more from the firm).

It is not shortage of time that should worry us, but the tendency for the majority of time to be spent in low-quality ways.

Who you work for is more important than what you do

from 20 per cent of clients. In the consulting industry that means two things: large clients and long-term clients. Large clients give large assignments, which means you can use a higher proportion

You might get much better value and happiness out of a simpler and cheaper lifestyle.

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.

Innovation is the name of the game;

Pursue those few things where you are amazingly better than others and that you enjoy most.

There are proven techniques for exiting feelings of incipient sadness and depression before they become damaging to your health and happiness. Moreover, by cultivating habits of optimism you can help to prevent disease as well as have a happier life.

HINT 3: ONLY WORK FOR AN 80/20 BOSS What is an 80/20 boss? Someone who consciously or unconsciously follows the principle. By their works you shall know them: They focus on very few things—the ones that make a BIG difference to their customers, and, if they still have them, their bosses (hopefully a temporary arrangement—the best 80/20 bosses are not themselves constrained by a boss). They are going places fast. They are rarely short of time, and never flustered. They are usually relaxed and happy, not workaholics. They look to their people for a few valuable outputs. They pay no attention to inputs such as time and sweat. They take the time to explain to you what they are doing, and why. They encourage you to focus on what delivers the greatest results with the least effort. They praise you when you deliver great results, but are constructively critical when you don’t—and suggest that you either stop doing something unimportant or do something important in a more effective way. When they trust you, they leave you alone and encourage you to come to them when you need guidance.

In this kind of situation one might well ask: why continue to make the 80 percent of products that only generate 20 percent of profits? Companies rarely ask these questions, perhaps because to answer them would mean very radical action: to stop doing four-fifths of what you are doing is not a trivial change. What J-B Say called the work of entrepreneurs, modern financiers call arbitrage. International financial markets are very quick to correct anomalies in valuation, for example between exchange rates. But business organizations

complexity. As the business becomes more complex, its returns fall dramatically. This is not just because more marginal business is being taken. It is also because the act of making a business more complex depresses returns more effectively than any

10 golden rules for career success 1 Specialize in a very small niche; develop a core skill 2 Choose a niche that you enjoy, where you can excel and stand a chance of becoming an acknowledged leader 3 Realize that knowledge is power 4 Identify your market and your core customers and serve them best 5 Identify where 20 percent of effort gives 80 percent of returns 6 Learn from the best 7 Become self-employed early in your career 8 Employ as many net value creators as possible 9 Use outside contractors for everything but your core skill 10 Exploit capital leverage

80% of the results come from 20% of the effort. The key is knowing which 20%.

George Bernard Shaw put it well: “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.

Equality ends in dominance: that is one of the messages of chaos theory.

The French economist J-B Say coined the word “entrepreneur” around 1800, saying that “the entrepreneur shifts economic resources out of an area of lower productivity into an area of higher productivity and yield.

The 80/20 Principle asserts that a minority of causes, inputs, or effort usually lead to a majority of the results, outputs, or rewards.