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

Summary

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. https://balance6.biz/ --- Support this podcast: https://podcasters.spotify.com/pod/show/christoph-nauer/support