The 80/20 Principal

One of the biggest challenges people face is how to balance work, family, friends, spirituality, obligations and play.  As you become more successful, learning how to do this juggling act is even more critical.  Let’s face it, most C-level business execs are not happy people.  They are stressed, unhealthy and increasingly frazzled keeping up in the ever increasing frenzy of the “rat race”.  Even if they have time to stop and realize that they are these things, most figure it is just part of the job or don’t really know how to do un-do it.  Historically, achieving the ‘American Dream’ has involved working your ass off, making sacrifices and ultimately choosing career as a priority over the rest of the areas of your life.  I’m living proof that there is a better way.

I’m an executive of a large company and I work 32 hours a week.  I’ve come a long way from 60 hour a week burn out, plugged in 24/7.  While it has been work in progress (and still is), the principal below started me moving in the right direction.  Ironically I researched the principal in order to become more successful in running the business and ultimately became more successful in running myself.

The 80/20 principal is my go-to theory on how to live a balanced life.

What is the 80/20 principal?

The 80/20 Rule means that in anything a few (20 percent) are vital and many (80 percent) are trivial.

In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country, observing that twenty percent of the people owned eighty percent of the wealth.  Pareto’s Principle or Pareto’s Law, as it is sometimes called, can be a very effective tool to help you manage your business and life effectively.

The main premise behind the theory is that if you focus on the 20 percent that matters (and only pay minor attention to the 80 percent that is trivial), you can do a lot less and achieve the highest results.

Before I even knew anything about this theory, I started unconsciously applying this is my business life.   I remember being a fresh analyst and working with a guy that had multiple MBAs and seemed brilliant (just ask him!).  He worked 12-15 hour days for weeks, developing a rate development model that he would later need to defend in court.  He spent so much time on the minutiae and then ran out of time and spent very little time on the two variables that greatly impacted the resulting rates.  I remember thinking (although I was new and really didn’t know much about the subject matter) that there was something wrong with this picture.  Sure enough, in court, he got torn apart on the two major variables and very little time was spent all the elements that he had spent so much time on (because they really didn’t have much impact on the overall result!).

After that, I started looking at my business cases from a view of what were the biggest drivers to the analysis?  I also started managing projects differently.  I would pin point the few areas that were critical to completing and getting a good result from the project.  Those would be what I’d put the majority of my effort into.  This ability to prioritize and focus and be able to let go of the less important details were key in my ability to get a huge amount of work done that was meaningful to the organization.  Later in my career, I used this principal to help identify the customers that we would put the majority of our emphasis.  You guessed it, the 20% of customers that made up 80% of our profits.

In the crazy corporate world that many of us have grown accustomed to, it is more and more difficult to get anything done, let alone our jobs.  Most of the time, it’s like putting 10 pounds of shit in a 5 pound bag.  Not only can’t you hold the other 5 pounds, but likely you break the bag!  So to be successful, it is up to the organization, the management team and ultimately the individual to figure out how to be efficient but more importantly how to figure what the important 5 pounds are and to let the rest go.

A couple of methods that I use in my work environment are the following:

1) Action List: Once a week or so I go through all my action items.  I like to keep them in a journal and then jot them onto my whiteboard, (I know, very old school.) I go through and put asterisks beside the items that have to be done the following week or in the short term.  Then I label the rest with A, B or C.  A list are things that I feel will make a meaningful impact on the organization or the growth of myself or my employees.  B items are generally longer term and I like to carve out a day or two a quarter to focus on these items.  These items again should not be “nice to do’s” (cause who the hell has time for those?).  They should be longer term strategic items that will make significant impact on the organization or the growth of me or my employees over the long term (seeing a theme here?).  The C list are generally the “nice to do’s”.  If you work at any company that I’ve seen in the last 10 years, the C list items just need to be erased, trashed, shit-canned.  Seriously, why give yourself so much crap to do.  If it is something that has been on the list longer than a month (other than those key strategic goals), it probably isn’t that important and needs to get flushed.  Just do it… get the eraser out and take it off the list. Seriously.

2) Today’s Hot List: Every day before I leave work, I take a sticky (no bigger than the sticky or your just be repeating your Action List), and I write down 2-3 items that I absolutely have to get done tomorrow.  Put them through the litmus test of 1) are they significantly meaningful to the company, 2) are they paramount to my growth, or are they 3) paramount to the growth and well-being of my employees.  Sometimes what is on my list is “get my hair done!”.

Then the first thing I do when I get in the next day is look at my calendar (I always block the first 30 minutes of the day so I can get a good plan set), I identify when I’m going to be able to work on the 2-3 items.  If I don’t see a time (before 5 PM folks!), I start moving things around.  There is always something that can be moved around. Don’t be afraid to move or cancel staff meetings (no point meeting for the sake of meeting!).  Figure out when you are going to get those 2-3 critical items done.  If someone walks in during your allotted time for those actions (not if but when), tell them you are working on something pressing.  If it’s a 5 minute quick question, answer it.  If it will take a longer discussion, ask them to setup something on your calendar.

Above all, be sure you get your 2-3 things done.  You will feel that you accomplished something (nothing worse than working your ass off all day and getting home and thinking, shit I think I added more to my list than knocked off and I still didn’t get anything done that really matter.)  Your boss, peers and employees will love you. (How does she get so much done?)

I’m going to talk a lot more about this principal.  Stay tuned for more.

In the meantime, this book is an excellent, quick read that addresses how to apply the 80/20 principal in all areas of your life.

“The 80/20 Principle, The Secrets of Achieving More with Less” by Richard Koch

Start working on it – do more with less. ~ Heather


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