The Power of the 80/20 Rule and how to apply it

Last time we talked about 10/90 rule, which most people have
never heard of


-  first 10% of time spent on planning and organizing work
before you begin can possibly save as much as 90% of time in
getting work done


today we’ll talk about the 80/20 rule, most of you have heard of
it, 


Vilfredo Pareto noticed that people in his society could be
divided naturally what he called 20% vitally few and 80% trivial
many


He later discovered that this principle could by applied much
more broadly


i.e. 


20% of activity, 80% of results


20% of customers 80% of sales


20% of products or services 80% of profits


20% of tasks, 80% of value of what you do


Etc, etc


So, let’s say you have 10 items on your to do list, 2 of them
will turn out to be more valuable than the other 8 combined


In other words, number of tasks is LESS important than importance
of tasks


It’s possible that 1 task of your list of 10 can be worth more
than the other 9 together. Now that should be the task we should
do first.


Unfortunately, most people procrastinate on the top 10-20 % of
tasks that are most important AND valuable, called the “vital
few” by Pareto


Instead they keep busy with the 80%, the least important or
“trivial many” that contribute little results


Question: how can you change this?


Start by reviewing your business, where does most of it come
from? What activities lead to most of our business? What business
and/or services have the biggest ROI?


We need to know our profit margins? Which jobs brought in the
most money and where did we lose money or only had a tiny profit
margin? We want to make sure not to go after more jobs like that
since this would fall into the 80%.


Most business owners don’t do this, maybe they feel it’s a waste
of time. However, this ties in with our topic of last week’s
podcast, the power of planning, 1 min of planning can save you 10
min of execution.


In this case it keeps us from focusing on the more lucrative
jobs, the ones that make our business profitable.


Entrepreneurs appear busy all day long but seem to accomplish
very little. Usually, the reason for this is that they are
working on low value tasks and procrastinating on the activities
that – if completed – could make a real significant difference in
their business.


The most valuable tasks are usually the most difficult and
challenging. However, the payoff is usually tremendous. That’s
why we must refuse to work on low level activities, the 80 %, and
put all our efforts and energy into the 20% until they are done.


So, before you begin work, ALWAYS ask: does this task belong in
the top 20 or bottom 80?


Whatever you choose to do over and over eventually becomes a
habit, my motto:


What we learn, we practice, what we practice, we
become.


ALWAYS start working on high value activities and refuse to spend
time on the 80 until all 20 tasks are done this leads to a sense
of accomplishment, success and motivation.


Those feelings motivate you and help you being more productive.


Time management is taking control over what you do next and the
choice is ours. Making the right choice, in other words picking
important over unimportant tasks, ultimately determines the key
of your success and life and business.


Close with quote from my mentor, Brian Tracy:


Effective, productive people discipline themselves to start on
the most important task that is before them. They force
themselves to eat that frog, whatever it is. As a result, they
accomplish vastly more than the average person and are much
happier as a result. This should be your way of working as well.


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