Have you ever noticed how with all the stuff around us, we only ever use a small portion of what we have? Like that smart phone a lot of us carry. How many aps and features does it have, and how many do we actually use frequently. Probably a pretty small proportion, I’m guessing. Same thing with the video camera I’m using right now, or all this stuff in my man-cave. – tons of features and gizmos, but I only use just a few; that’s one reason I’m cleaning it out today. There is actually a principle behind this reality; today we’ll talk about what it is, and how you can use it to be a better leader.
Transcript:
Back in 1896 an Italian economist named Vilfredo Pareto discovered a relationship between small things and big impacts – he was in the midst of a study and noticed that in England, 20% of the families owned 80% of the land. He wrote about it, and soon others latched on to the idea. Eventually it became known as the Pareto Principle or the 80-20 rule: Eighty percent of the effects come from twenty percent of the effort.
And it turns out that this ratio is everywhere. 20% of criminals commit 80% of the crimes, 20% of computer bugs cause 80% of the errors; 20% of salesmen bring in 80% of sales. I’ll bet you can think of a few more examples around you right now.
Here are three ways you can use the Pareto Principle to help you as a leader.
- FOCUS the efforts of your team. If you do fund raising and 80% of your donations come from 20% of your donors, focus on talking to THOSE people and finding more like them; if you are a traffic safety person and find that 80% of the accidents happen at a certain 20% of intersections, then you know where to send your work crews.
- Get rid of EXCESS. If storage is a problem, it’s a good bet that 20% of your stuff gets 80% of the use, so take a look at getting rid of all the other stuff you rarely use, like I’m doing here in the basement. Or maybe you have to cut costs this year. Take a look at your budget, and start trimming the parts that aren’t part of that critical 20% that brings you success.
- REDUCE RISK. If it is true that 80% of your business comes from only 20% of your customers, then you certainly want to treat them right. But it is also true that your business could be in trouble very quickly if just a few of those customers decide to go elsewhere; it might be time to broaden your customer base to lower the risk to your business.
The Takeaway
Here’s the TAKEAWAY. Ask yourself, “what is the 20% that we do that contributes to 80% of our progress?” Focus on doing more of that, and you will be sure to be making a good investment of time and energy.
And that’s your RapidStart Leadership Two-Minute tip for the day. See you next time.
Photo Credit: Pareto https://commons.wikimedia.org/wiki/File:Vilfredo_pareto.jpeg
This work is in the public domain in its country of origin and other countries and areas where the copyright term is the author’s life plus 70 years or less.
Pareto Statistics – https://en.wikipedia.org/wiki/Pareto_principle
