Post on 18-May-2015
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The 80/20 Principle
The 80/20 Principle says that the majority of outcomes in life are the result of just a few causes. If you think about your own life you will recall situations where a relatively small amount of focussed effort lead to significant outcomes. This presentation will help you understand the 80/20 Principle and put it to better use in your work and personal life.
This ‘universal law’ was first made famous by Wilfredo Pareto, who in 1906 made the observation that 80% of Italy’s wealth was held by just 20% of the population. As a result it is often referred to as the Pareto Principle.
This presentation will help you to understand the significance of the 80/20 Principle and how to use it to your advantage.
You are free to use this presentation however you wish, providing that it is not altered in any way and that the credits are not removed.
For further reading on the 80/20 Principle, you make be interested in the book ‘The 80/20 Principle: The secret of achieving more with less’, by Richard Koch. This book has inspired our presentation and is available at good bookstores or here.
Using the 80/20 principle to help you become more productive
Benjamin Franklin, 1743
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WHY IS IT THAT…
Some people seem to take all your time for little return?
WHY IS IT THAT…
?
? ?
WHY IS IT THAT…
Some people,
who start with nothing,
achieve unbelievable
results while others
seem to go around
in circles?
WHY IS IT THAT…
The universe is wonky…
• The 80/20 rule tells us that, in any population some things are likely to be much more important than others.
• A good benchmark is that 80% of outcomes are the result of only 20% of inputs and often from a much smaller proportion of powerful forces.
• For example Isaac Pitman found that 700 common words make up two thirds of everyday language and these account for 80% of common speech. Therefore fewer than 1% of words are used 80% of the time.
• When used well the 80/20 Principle will help individuals and groups achieve more with less effort.
Where do you see it in everyday life?
Statistics tell us that: 80% of accidents are caused by 20% of drivers (which is why no-claim policies were introduced)
Where do you see it in everyday life?
20% of clothes will be worn 80% of the time
Where do you see it in everyday life?
20% of carpet is likely to get 80% of the wear (which lead to the invention of carpet tiles)
Where do you see it in everyday life?
80% of personal telephone calls are to 20% of the people in an address book
80% of wealth is held by 20% of the population. Interestingly, if all wealth were distributed evenly, it would take less than 10 years for the 80/20 principle to work its magic and for the wealth to be re-distributed again....
Source: www.wikipedia.com
Quintile of Population Income
Richest 20% 82.7%
Second 20% 11.7%
Third 20% 2.3%
Fourth 20% 1.4%
Poorest 20% 1.2%
80/20rule is counter-intuitive.
The
THIS IS PLAINLY NOT THE CASE
We tend to assume that 50% of causes or inputs will account for 50% of results or outputs.
WE ALSO TEND TO ASSUME THAT
All customers are equally valuable
All customers are equally valuable
All phone calls are equally important
All customers are equally valuable
All phone calls are equally important
Every opportunity is of equal value to us
All customers are equally valuable
All phone calls are equally important
Every opportunity is of equal value to us
All friends should be treated the same
Most of the significant achievements and value that a person adds is achieved in a minority of their time. There is a profound imbalance between what is created and the time taken to create it.
The chances are that only a few specific days, weekends or events stand out in your life when you look back.
Where do you see it in everyday life?
It is because we have so much time that we squander it.
80% of what we achieve is the result of just 20% of our time (and often less than this).
If we only use 20% of our time properly, there can be no shortage of it!
As an example, think of everything you do every day that adds no value to your goals and objectives, but
uses lots of time... (making coffee, surfing the internet, talking to colleagues about the weekend, wondering
what to do next)
Time…
Time…
The most productive time on a project is usually the last 20%, simply because the work has to be completed before a deadline.
Productivity on most projects could be doubled by halving the amount of time for their completion.
If we can do anything about this, we should do something radical. There is no point tinkering around the edges or making use of our time a little more efficient.
Time management courses implicitly imply that we know what is and is not good use of our time. The secret is to prioritise the most important things we do and spend 80% of our time doing these.
Don’t allow things that are important to be at the mercy of things that are urgent (but not important).
Realise that you can’t do everything, and that your most productive time is spent thinking, planning and directing.
Eliminate things from your life which take time, effort and resources for little or no reward.
Time…
Face time…
• In most businesses, it is apparent that the most critical and important time is in face to face meetings with the customer.
• These meetings have an overwhelming influence on the whole business (both good and bad).
• In these meetings, it usually comes down to a few minutes where we discuss key directions and strategy. During this time we set expectations, sell our ideas and gain (or lose) respect.
• Therefore, it makes sense to focus on what we can achieve during these meetings, and spend a lot of time working out how to do it!
do we plan & direct or
do we let things happen ?
Some people are critical to us, others have little influence, even though we may see them a lot. Understand the difference and
do something about it.
People
80/20 Learning
So, if we follow the 80/20 principle in this presentation,
what have we learned so far?
1.Whether you like it, accept it, or not, this rule exists.
2.Therefore, you would be wise to learn about it and use it!
The maintenets of the 80 / 20 principle
The doctrine of the vital few and trivial many – there are only a few things that ever produce important results
Simple is beautiful, complex is ugly
What you see is generally not what you get – there are subterranean forces at work
Most good events happen because of a small minority of highly productive forces; most bad things happen because of a small minority of highly destructive forces
Most activity, en masse and individually, is wasteful and does not contribute to desired results! Note that this does not mean leisure is wasteful but that it should be considered and used well!
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2
3
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5
Seven steps to time revolution…
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56
7
3
Make the difficult step of dissociating effort and reward.
Give up guilt.
Free yourself from obligations imposed by others.
Be unconventional and eccentric in your use of time.
Identify the 20% that gives you the 80%
Multiply the 20% of your time that gives you the 80%
Eliminate or reduce the low value activities.
4
56
7
3
Make the difficult step of dissociating effort and reward.
Give up guilt.
Free yourself from obligations imposed by others.
Be unconventional and eccentric in your use of time.
Identify the 20% that gives you the 80%
Multiply the 20% of your time that gives you the 80%
Eliminate or reduce the low value activities.
4
56
7
3
Make the difficult step of dissociating effort and reward.
Give up guilt.
Free yourself from obligations imposed by others.
Be unconventional and eccentric in your use of time.
Identify the 20% that gives you the 80%
Multiply the 20% of your time that gives you the 80%
Eliminate or reduce the low value activities.
4
56
7
3
Make the difficult step of dissociating effort and reward.
Give up guilt.
Free yourself from obligations imposed by others.
Be unconventional and eccentric in your use of time.
Identify the 20% that gives you the 80%
Multiply the 20% of your time that gives you the 80%
Eliminate or reduce the low value activities.
4
56
7
3
Make the difficult step of dissociating effort and reward.
Give up guilt.
Free yourself from obligations imposed by others.
Be unconventional and eccentric in your use of time.
Identify the 20% that gives you the 80%
Multiply the 20% of your time that gives you the 80%
Eliminate or reduce the low value activities.
4
56
7
3
Make the difficult step of dissociating effort and reward.
Give up guilt.
Free yourself from obligations imposed by others.
Be unconventional and eccentric in your use of time.
Identify the 20% that gives you the 80%
Multiply the 20% of your time that gives you the 80%
Eliminate or reduce the low value activities.
4
56
7
3
Make the difficult step of dissociating effort and reward.
Give up guilt.
Free yourself from obligations imposed by others.
Be unconventional and eccentric in your use of time.
Identify the 20% that gives you the 80%
Multiply the 20% of your time that gives you the 80%
Eliminate or reduce the low value activities.
Take time to think about how to get the best results with the least effort.
Nurture key relationships.
Lean your ladder against the right wall.
Make a list of 3 things to do at the start of each day, then do these things.
Spend a lot of time at the start of a new project planning, collaborating and organising the strategy. Ensure that you understand the outcome before you start the project.
Remember