The 80/20 Principle by Richard Koch
Sep 5th, 2008 | By Bart Beattie | Category: Modern ReviewsThe universe, by nature is imbalanced, chaotic, tragically wasteful and non-linear. And that’s a good thing.
It happens everywhere - a minority of criminals performing the majority of crime to a minority of films raking in the vast majority of cinema dollars. Ubiquitous. The key is to understand what things are the true causes effecting desirable outcomes. What if I told you that you could spend about 1 and 1/2 hours at work, and be just as productive as if you spent the whole day? You’d look into it, wouldn’t you?
The crux of the Richard Koch’s The 80/20 Principle is a dance with that idea. You can improve your life and business by realizing that 80 percent of the outputs come from 20 percent of the inputs. 80 percent of your profits come from 20 percent of your products or customers. 80 percent of you personal happiness comes from 20 percent of your activities.
The author details dozen of examples to help you imagine it’s applications in your realm. He backs up his 80/20 hypothesis, originally defined by Wilfredo Pareto in 1897, with several strong pieces of evidence. One in particular that came to mind is how in the 50’s, Joseph Juran tried to market 80/20 strategies to American business, but failed. Instead, he brought this idea to Japan, where it was well received. One of the applications was that 80% of the failed machine parts and such came from a small handful of problems. Eliminate them and you have a huge boost in quality, by only solving a small subset of issues.
Juran’s work is very much responsible for the “quality revolution” in Japan from 1950-90, the time period where the Japanese car companies like Honda and Toyota become top-tier automobile powerhouses. Even today, other nations are trying to catch up with them.
At first paradoxical, the law of non-linearity will soon become your friend after you read this book. Clever applications of it serve as the cornerstone for other New York Time’s best sellers like The Four Hour Work Week, The Tipping Point, Blue Ocean Strategy, and even Paul Scheele’s speed reading revolution, Photoreading.
A superb and worthwhile read.
This is one of my favorite principles to think about! It’s always interesting to see it be applied to so many things in life. With my business, Convos (http://www.convos.com), we look at how leaders manage their groups or organizations. And in so many examples, there’s only a handful of active leaders and members that make up the majority of the productive results and benefits.
There should be a running list of who/what 20% provides the 80% we want. That would be interesting.
JP - thanks for the comment. I can “nerd-out” talking about 80/20 all day. I think it would be very cool if there was such a list too.