Archive for July, 2010|Monthly archive page

How Pareto’s Principle can turn 20 percent of your effort into 80 percent of your results

Your friend and mine, Vilfredo.

Allow me to introduce someone who can profoundly affect your productivity. You may know him by his reputation, if not by his name or face.

Name: Vilfredo Pareto.

Claim to fame: formulated/discovered the Pareto Principle, also known as the “80/20 Rule.”

Pareto was an Italian economist who first observed that in developed economies, about 80 percent of the wealth was owned by 20 percent of the population. Additionally (and to simplify quite a lot) Pareto noted a consistent, predictable  imbalance between inputs and outputs.

Relatively little was made of this discovery for many decades after Pareto published it. Still, other applications of Pareto’s discovery cropped up in odd places.

For example, most people find that they wear about 20 percent of their clothes 80 percent of the time. When carpeting is replaced in public areas, about 80 percent of it was still perfectly sound; only 20 percent was seriously worn. Many business owners find that 80 percent of their sales come from 20 percent of their customers. And 80 percent of their complaints come from 20 percent of their customers, too — but not the same 20 percent that accounts for the sales.

Pareto’s discovery was astonishing to him and to us because it runs counter to some of our basic beliefs about how the world works. We tend to believe that all actions have proportionate results. We behave as though all of our efforts are of equal importance, as though everything on our task list had equal weight. We behave as though Pareto’s Principle didn’t apply to us.

How can we use this 80/20 Rule to work for us? Recognize that the majority of what we do in a typical work day will have little impact while a small minority will have a major impact. Begin by identifying those things that are likely to make a real difference. Do those things first. Devote your best time of the day to making progress on the 20 percent of your activities that will likely yield 80 percent of your results.

Know where your revenues come from — which customers and which of your products — and focus your attention there. Let go of marginal (or unprofitable) activities. Be strategic in your use of all resources — time, capital, other people’s help, everything you’ve got.

Remember, it’s not the busiest person who wins, but the one who works most effectively. Use the 80/20 Rule to focus your energies on the activities that matter.

If you’d like to dig more deeply into how Pareto’s Principle can transform your life, pick up The 80/20 Principle: The Secret to Success by Achieving More with Less by Richard Koch.

Claim your spot in the “Plan to Thrive” teleclass

Register for this free session with Meggin McIntosh and me.

Does business planning really matter, or do all business plans sit forgotten on a shelf?

According to a recent study, lack of a well-developed business plan is a factor in 78 percent of all small business closures. In fact, planning is one of the best practices you can habitually engage in to bring success and ease to your growing business, develop your skills, and achieve the goals you set.

Wondering how to create a plan you will actually use?

One way is to join host Meggin McIntosh and me for this informational and practical (and free!) teleclass.  As a participant, you will:

  • review types of plans to find one that meets your needs;
  • begin writing your own plan;
  • receive planning tools to use again and again;
  • learn techniques to focus on the steps with the greatest impact;
  • discover secrets to sustaining your motivation no matter what!

Don’t just survive — plan to thrive!

Registration is free – reserve your spot here.

Worth Repeating – July posts from New Leaf News

photo by Margaret Lukens

I’m sharing a few posts from the New Leaf archives. Here’s what was on our mind in Julys past.

How can you make progress on a goal that, for lack of a “natural” deadline, seem to take a back seat to everything else? Here are a couple of ideas to help you get it done.

In good economic times and bad, it always pays to be respectful of your most firmly limited resource,  time. Are you saving a little money but squandering your time?

Abraham Lincoln provides a timely and timeless hope for Independence Day and every day.

Happy Independence Day

An Iraqi voter (AP Photo/Andrew Parsons/Pool, 2005)

We should constantly be reminded of what we owe in return for what we have.

— Eleanor Roosevelt, May 10, 1940 (quoted in No Ordinary Time: Franklin and Eleanor Roosevelt: the Home Front in World War II by Doris Kearns Goodwin)

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