Why do we need the Pareto Principle more than any learning today?
The Pareto Principle, adapted to the 80/20 Manager by Richard Koch, is an excellent quick read for professionals who want to be successful today. The book discusses how 80% of all results are driven by the 20% "cream" of all jobs or tasks, as we call them. Richard Koch relates the principle to work, people, skills, knowledge gathering, and even performance setting. He sets the premise by saying that “Greatness is collective, but its foundation is individual and ever shifting.”
The world is really about 80/20. One-fifth of customers are worth four-fifths of the company's value, which means the other four-fifths are only worth one-fifth. One core customer is 16 times more valuable than one ordinary customer. It takes 16 underperforming people to create the same number of products as one super-performer producing on their own. The super-performers, therefore, are 16 times more powerful and productive than the underperformers. This is the breakthrough principle of sixteen times. Here are a few examples to illustrate my theory:
In 1941, Joseph Moses Juran, an electrical engineer, developed theories of quality control that became useful in Japan after the war. Juran trained top and middle managers for quality until Japanese industrial standards became stronger than those of the U.S. At the time, Juran used the “rule of the vital few” to concentrate on the small number of—or sometimes single—causes of quality failure that accounted for most defects.
In 1997, Steve Jobs slashed 70% of models and products. He abandoned all non-core products like printers, servers, and the Newton Personal Assistant. Jobs only focused on the 30% of products that generated cash and scrapped the 70% that drained it.
The iPhone focused on the 20% of features that everyone used 80% of the time.
Twenty percent of our friends matter in the huge pool of people we know. Here is another point to ponder: weak links are often more powerful than the strong links of close friends and family. Sociologist Mark Gravette wrote a seminal paper about “The strength of weak ties” – how managers got new jobs. Most managers found their jobs through personal contacts rather than ads, formal applications, or recruitment consultancies. People receive crucial information from individuals whose very existence they have forgotten.
People are people are people.
Never present yourself as infallible. Share your successes but be open about your failures too. You should exploit as many levers as you can. A ‘lever’ is a simple device that has the power to multiply the effectiveness of your inputs and allows you to achieve extraordinary results through ordinary efforts. Seven levers for great results are:
- Caring and the power of the subconscious
- Confidence
- Ideas
- Decisions
- Trust
- People
- Money
Value is not related to time, but to ideas, collaboration, and the power of our intent as human beings to do what we do. In the creative work of the best managers, value is hardly related to time at all. Time itself does not create stress.
To derive meaning from your work, you need to polish and hone your core attributes so that they become polished and appreciated. Answering the following questions will give you some pointers:
- What can I do faster, better, more elegantly, and with less trouble than almost anyone else?
- What are the best results I have achieved? How did I do it?
- Who are my core customers—people inside and outside my organization who value my contribution?
- Do I identify with these core customers, or do I want to serve a subset?
- Am I better at thinking or doing? What kind?
- Which few things do I enjoy intensely or experience more than others? Why are they significant to me?
- When have I pointed in a different direction than others and been proven right?
When we have answers to the above questions, we will have formulated a plan to execute the 80/20 principle in our lives, which will highlight our priorities at best.
Ralph Waldo Emerson quotes, “As to methods, there may be a million and then some, but principles are few. The man who grasps principles can successfully select his own methods. The man who tries methods, ignoring principles, is sure to have trouble.”
