80/20 Rule

Morning Leaders,

The 80/20 rule or Pareto Principle is a great principle to live by in an effort to be more productive, stay focused and make a meaningful difference in a shorter period of time.

The Pareto principle states that for many outcomes roughly 80% of consequences come from 20% of the causes (the “vital few”). Other names for this principle are the 80/20 rule, the law of the vital few, or the principle of factor sparsity.

Well, why is this important? Because the majority of results come from a minority of inputs.

Rather than investing time, lets talk money. Would you prefer to invest 20% of your money to see an 80% gain or would you prefer to put in 80% of your money to see a 20% gain? Identifying the critical few stocks will be the difference between you being wealthy with surplus cash, and you being not so wealthy with your money tired up in poor performing stocks. Same in leadership, it’s about working smart and investing your time wisely in high yielding tasks which will free up more of your time to get even more important work done, and make an even bigger difference to the lives of your people.

Pareto suggests two out of ten items on your to-do or project list will turn out to be worth more than the other eight items put together. It’s unfortunate that the vast majority of people will focus on the eight less vital items as they will busy themselves with this low value easy work to make themselves feel productive.

The point of the principle is to help you answer this very important question: “Is the work you are focusing on going to have the biggest and most meaningful impact to your organisation, to your people or to your customers?”.

One common misconception with this principle is that the numbers have to add up to 100. You could have 8% of the effort equaled 78% of the results. 80/20 is just a rough guide for typical distribution. The rule observes that most things in life have unequal distribution.

Common examples:

• 20% of a companies products represent 80% of sales

• 20% of customers represent 80% of revenue

• 20% of criminals commit 80% of crimes

• 20% of your TV channels are watched 80% of the time.

Photo by Razvan Chisu on Unsplash

Identifying those critical few areas can have a profound impact on your effectiveness as a leader.

How do I ensure I am working on the Important tasks?

1) Focus on high value items. What are the 2 or 3 critical items that are going to help you become a better leader, or improve the environment for your people or make your service offering better for the customer experience. Think strategic, think volume, think globally, essentially think like a CEO. If you are not sure what those critical items are, look at your company or personal goals, or speak to your leader or mentor for some guidance.

2) Eat the Frog. Usually high value items are put off because they require a higher level of thought and focus. Stop procrastinating. Just do it. Schedule the time in first thing in the morning and turn up and get that important task done. If you are stuck, speak to your leader or mentor for guidance on next steps and if the path you are on is the right one.

One area I focused on as an example and is paying dividends everyday is coaching (20%). Years ago I would spoon feed answers to my team or provide advice to get them a quick solution to their challenge as this is what I thought at the time was the best and quickest approach. In fact, I was very short sighted. It certainly helped the employee in the moment with that particular problem, but it wasn’t setting them up for success with the other 100 problems they were going to run into over the next year as they would continue to come back to me every time. Instead, I committed to becoming a better coach and I now approach things very differently. By asking more questions and coaching my people I am developing not just other leaders who will pass on the coaching, but critical thinkers and self sufficient individuals who feel trusted and empowered to solve a number of challenges on their own (80%).

Thanks for reading.

David

Resources Of The Week

• Book - Stephen R. Covey - 7 Habits of Highly Effective People. This beloved classic presents a principle-centered approach for solving both personal and professional problems. With penetrating insights and practical anecdotes, Stephen reveals a step-by-step pathway for living with fairness, integrity, honesty, and human dignity.

• Book - Austin Kloen - Show Your Work. If you are looking to build a personal brand or contribute content online but are feeling uncomfortable with putting your voice out there, then this is the book for you. It’s a quick read with 10 very actionable principles. This book really resonated with me as I am currently working on my own belief system and sharing my work on a daily basis.

• Blog - Leaders vs Leaders of Leaders. Came across this blog that provided me with some value and great insight and I wanted to share. It uncovers the key differences in thinking and behaviour between a Leader leading individual contributors and a Leader leading other Leaders.

Quote of the Week

“Focus on being productive instead of busy.” - Tim Ferriss