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The 80/20 Promise (1of4)

March 05, 2015

The 80/20 rule extends very promising possibilities. The idea of what could happen if you prioritized your time to work on “the stuff that really counts” can be quite compelling. The imagination of what’s possible if you spent the majority of your energy on the actions that really moves the needle at the end of the day, instead of trying to manage it all, is both captivating and a sense of relief.

In this multi-part series, I’d like to walk you through briefly some relatively unknown realities that you’ll need to contend with if you wish to use the 80/20 rule where you work.  Stuff I’ve never seen published anywhere, but that I’ve learned in the trenches while helping executives, perhaps just like you, make this work for them.  Things you need to know to successfully apply 80/20 at work.

Most of us have heard of the 80/20 rule or the Pareto principle postulated by Joseph Juran, as he reflected on the earlier work of Vilfredo Pareto. It’s essentially a law of distribution; a description of a pattern that states for many things roughly 80% of the effects come from 20% of the causes. Or as Richard Koch, said, “Very few things matter at all, but those that do, matter enormously.”  Here’s some general statistical examples you may have come across:

  • 80% of a company’s profits come from 20% of its customers 
  • 20% of your customers will generate 80% of all complaints received 
  • 80% of a company’s profits come from 20% of time invested by staff 
  • 20% of your products will generate 80% of your total sales
  • 4% of your effort will generate 64% or roughly 2/3rds of all your results
  • 80% of customers only use 20% of a product’s features

So far, so good.  However moving from the 80/20 rule as a distribution model, to using it as an applied “cause and effect” model, turns out to be quite a challenge. According to a 2013 survey by WorldatWork, the 80/20 method is used by only 12% of US corporations. Other estimates are higher, but in general it seems that most businesses aren’t taking advantage of the 80/20 rule and maybe that includes you as you read this blog.  What if look into how to change that?

Don’t Misappropriate the 80/20 Rule

One of the first keys to successfully using the 80/20 rule is not to misapply the concept.  That’s probably true for most things. So let’s first look at how the concept gets mangled, then at how to apply it mindfully.  Let’s use some examples as object lessons:

  • Google, Zappos and others have re-interpreted the rule to suggest that if you give staff 20% of their work time to be freely directed on some level that will create innovation. Google effectively stopped that practice in 2013.  In fact, the 80/20 principle doesn’t predict that if everyone spends 20% of their time working on what they want, versus what their boss wants, that the free time will be their top 20% time for generating 80% of the results. That’s a myth, even if sometime it works. However the 80/20 principle would predict 20% of their time, whether working on their own agenda or their boss’s agenda, could generate most of the innovation.  No magic there. 
  • Others’ publish on the web that in terms of time management, you should set aside the first 20% of your time to work on the important stuff and leave the rest of your day (80%) to work on the non-important. That’s really misinformed.  Again, nothing wrong with blocking out time to preserve your focus, but why only spend 20% of your day being highly productive?  No, the key is to continue to spend more time, not 20% of your time, on the activities that leverage the big (80%) results. 
  • Some suggest you should just outsource everything that’s not your most productive 20% work. Sounds nice, but for many it simply isn’t feasible.  In that case be sure to look at my 3rd suggestion on how to manage differently (later in this blog series)
  • Finally some misinterpret the 80/20 rule to suggest that it means you should only complete 20% of a project that generates 80% of the requirements versus 100%.  Sounds like a software release, doesn’t it?  More mangling. Take any product, whether its software, your car, your house.  What if the producer thought they were done when 80% or 95% of it was completed? Wait, maybe that is what happens! 😉 Anyway, 80/20 doesn’t mean you only complete the highly leveraged aspects of a project, but as you’ll see later, you want to focus on the highly leveraged tasks and use less focus and more systemic approaches to deal with the non-leveraged 80% of the remaining tasks. I’ll explain as we get into my 3 tips for making this all work.

I’m sure I stepped on some toes, hopefully no feet. We’ll go over 3 keys to understand and use to apply the 80/20 rule at work for better outcomes.  But before I wrap, let’s summarize in two sentences.

  1. The 80/20 predicts that not all activities have the same impact (leverage) upon results, and in fact that 20% of most areas of activity generate 80% of the total response.  Given that the 80/20 rule is a fractal, that means if you square it, it’s just as accurate or 4% generates 64% of your total results.
  2. The 80/20 rule is not meant as a time designator, it simply says if you know what to focus on, you can get big things accomplished with a comparatively small (focused) effort. 
    It’s a power law, not a Day-Timer guide.

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