Pareto Winning Strategy

Pareto Winning Strategy

The 80/20 Rule is Divine

• 80 percent of the outputs are caused by 20 percent of the inputs.

People have changed their life upon discovering this principle of personal effectiveness.  Tim Ferris in his book, “The Four Hour Workweek,” made a big deal out of the Pareto Principle.  Stephen Covey, the guru of personal effectiveness, called this Quadrant Two, in his popular book, “The Seven Habits of Highly Effective People.”

Stephen Covey and the Seven Habits

Stephen Covey popularized the now famous Matrix with Urgency on the X-axis and Importance on the Y-Axis.  Quadrant One is both Urgent and Important, while Quadrant Two is Important but not Urgent.  He recommends retooling our lives to spend most of our time in Quadrant Two.  Many important but not urgent things often get dropped like relationship building, creativity, recreation, exercise, and planning.  But these things give us the biggest bang for our buck - they are the 20% of inputs that give us the greatest output of 80%.

Pareto 20% causes 80%

Pareto noticed something interesting.  The ration of 20/80 applied in many areas.  80% of the wealth is owned by 20% of the population.  80% of your revenues come from only 20% of your customers.  80% of your problems come from 20% of the people you interact with.  Focusing on your top 20% priorities will give you the biggest bang for an 80% return on effects.

Strategy for Success

Tim Ferris in his book, “The Four Hour Workweek,” describes something very similar to the following.  The night before you begin you next day, sit with a notepad and write down all the things you think you are supposed to do for the next few days.  (Do not use a computer or any other electronic device for this task as electronics will distract you and even cause you to write 100 tasks, which is ridiculous.)  Hone down the list to the top 20% that will push you toward your top 3 highest priorities.  Write down only 2 tasks on this piece of paper to do tomorrow.  Do not end your day until these items are complete.  If you do not complete one of these two, perhaps you need to think more carefully about what really is important for that day next time you perform this evaluation.  Take at most 2 hours to perform each task.  Force yourself to complete each task within 2 hours or fewer.  This is Parkinson’s Rule per Tim Ferris.  When you force yourself to perform a task within a limited or even insane amount of time, you cut out the unnecessary fat from the task, leaving only the essential.  Non-essentials are exactly that: not essential!  So, why do non-essential things for work?  Save this time for recreation and relationship time, or study time.

What to Ignore

We are granted 24 hours in a day.  We must spend this limited amount of time on something.  When we choose to spend it on X, we choose not to spend it on Y.  We must understand this clearly.  We cannot do everything we want to do in one day.  We have to focus on things that give us the biggest return on investment - the biggest bang for the buck.  So, ignore people when they say foolish things like “Everything is important!”  No, not everything is important.  The word important suggests priorities, and priorities suggest that our time is better spent on some things rather than other things.  We are capable of filling our schedules with crap - and this happens by default unless we control this process by focusing on our highest priorities.

So, as yourself at least 4 times per day, “What are the top 20% of important things that I should be spending time on?”  Look at your bottom 80% of low priorities and cut them out completely.  Do not hesitate if you want to be a high performer.  Letting unimportant things slide is the more important skill in setting priorities and goals.  Forget the bottom 80%.  Forget it!  Perhaps you may delegate it, but under no circumstance are you to act on the bottom 80% of your priorities.

Focus on your top 20% of priorities and forget the bottom 80%.

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Freddy Martini