The 80/20 Principle – that 80% of results flow from just 20% of the effort – is the one true principle of highly effective people and organisations.
Most of what we do has trivial results. A little of what we do really matters.
So as leaders if we focus on the latter, we can control events instead of being controlled by them, and achieve several times the results. We can leverage our efforts to multiply effectiveness.
Here are 5 secrets of the 80/20 leader:
1. Predictably unbalanced
The world is predictably unbalanced. The concept that an unbalanced world is normal, and not the exception.
Imagine the power this gives you compared to those who naively believe the world is 50/50 – that 50% input equals 50% output – and do not understand that an unbalanced world is the norm.
2. The vital few
The vital few hidden in the trivial many. The concept that only a few things really matter – the vital few. But, they need to be identified from amongst the trivial many in which they are invariably hidden.
Imagine the benefits of knowing that, in reality, there are only a few things that really matter, and the power of a strategy that enables you to focus on finding those few.
3. The power of 16
The concept that a typical event in the top 20% is 16x more important / critical / significant than a typical event in the other 80%. Imagine the benefits of knowing how to exploit those few events that really have a huge payoff.
The 400% rule: The concept that if the top 20% of events could be replicated 5x over, the result / output would be 400% of the original. Imagine daring to conceive of a world in which such quantum gains are possible.
4. Profit ‘chunks’
It’s almost certainly true that 80% of your profits are made in chunks of your business that comprise less than 20% of your revenues.
The ‘chunks’ may be particular products, customers, channels of distribution, geographies, stages of value added, or combinations of these.
Do you know where your critical 20% lies?
5. The critical 20%
Once you know your critical 20%, you can try to multiply this type of business. It’s worth it – because adding another 20% of critical revenues could add another 80% of profits.
Do you have a plan to double the critical 20%? Is it working?
