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The 80/20 Principle: The Secret to Achieving More with Less

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In The 80/20 Principle, Koch proffers that 20 percent of what companies and individuals do generates over 80 percent of their positive results (a theory that he attributes to Vilfredo Pareto, an Italian economist around the turn of the 20th century). Koch proposes that by identifying the 20 percent of the activities that generate 80 percent of the results and increasing the effort put into those 20-percent activities you can dramatically improve results. To this end he provides an astute evaluation of the economic and social realities of business.

Koch goes further, though, and tries to extrapolate the 80/20 theory to success, happiness and life in general. While some of what he suggests makes sense, his examples seem to get progressively weaker as he moves away from the world of business.

The book's other main flaw results from its severe organizational problems. Koch seems to have a very limited number of examples - and because of their repeated re-use (and in many cases their limited pertinence to the topic at hand) the book seems to weave in and out of topics, making it somewhat difficult to follow for anything else than a linear read.

The principal, itself, is almost a truism, which as Koch points out, is not thought about nearly enough. The books main strength is that he explains the concept quite well. Unfortunately, the extrapolation to life in general and the organizational difficulties make 80 percent of the book just not worth reading. Read the first two chapters - they explain the principal - and the last chapter (which basically explains all of the extrapolation theories) then put the book down - you will have read the 20% of the book that contains over 80% of the value!

The principle is simple, but counter-intuitive: Nature creates imbalances. This is true for money (20% of people have 80% of the wealth), crime (20% of criminals commit 80% of crimes), energy usage (15% of population uses 85% of energy), competition (20% of suppliers have 80% of market share)and even carpet (20% gets 80% wear and tear). . .

In a non-linear world:

1) Celebrate exceptional productivity . . .look for the short cut. . .be selective. . . only do what you do best. (pg 38)

2) Keep it simple. Size often creates complexity - which in turn creates inefficiency. Pour your effort into the 20% that makes a difference. Sometimes it is better to lose unprofitable customers to competitors (pg 93)

3) Hold on to your good customers and employees forever!

4) The key to 80/20 is not time-mangement. Don't try to do more. Just do more of the right things.

5) Do what you enjoy because enthusiasm and success is a complementary cycle.

6) Three great lists:
The top 10 low-value uses of time (pg 161)
The top 10 highest value uses of time (pg 161)
The ten golden rules for career success (pg 194)

I read this book about a year ago, and still regularly think of it and apply it's concepts in my life and business.

I have worked in sales for years, so I am very familiar with the 80/20 concept as relates to business. Simply stated in my field of real estate it's a proven fact that in different markets of the country and over time 20% of the agents make 80% of the income. This is true in other types of sales as well. Of course the flipside of this is that the large 80% of the agents only make 20% of the income. Basically a small number of people make most of the money. Why this is has been debated, but it seems to be a consistent rule that holds.

Koch points out how 80/20 is seen in other areas. For example 20% of taxpayers account for 80% of IRS revenue. What Koch does then is expand this rule to all aspects of life. He says that the 80/20 rule holds for all kinds of activities. He says that 20% of your work activity is responsible for 80% of your productivity on the job. And that 20% of your leisure time is responsible for 80% of your happiness. When I read this I just knew intuitively that it is true. So the next step is to figure out what the 20% activities are that are paying off the 80% returns in your work, or personal life, or anything. And then devote your energy into those activities and receive huge returns. He says that we're better off focusing on our strong suits where we're most effective rather than focusing our attention on the areas where we think "we need to improve". This idea alone is priceless.

This is practical, useful material that you can put to use today in your business and personal life. Koch has some seemingly offbeat ideas about playing with time unconventionally, boosting happiness, productivity through being "intelligent and lazy", and more that I loved. It really opened my mind to a range of possibilities.

Koch is a successful businessman who says he researched and could find no other books written on this subject.

INTERESTING CONCEPT, TEDIOUSLY REPEATED.

I suggest readers borrow this book from a public library and take Richard Koch's Oxford tutor's advice (found on Page 25): "Read the conclusion, then the introduction, then the conclusion again, then dip lightly into any interesting bits.'

More than 80 per cent of the value of this book can be found in 20 per cent or fewer of its pages, and absorbed in less than 20 per cent of the time most people would take to read it through.

Thus re-confirming the 80/20 Principle.

QED

The 80/20 principle is one of those books where the idea keeps turning over in your head for days after you read it.

The 80/20 rule is one that I use quite often in assessing business situations. The book consists of three parts, an introduction to the rule, its application to business and its application to one's life. Koch does a good job in showing how to apply the 80/20 rule in business.

The real kick from the book is how Koch applies the 80/20 rule to living one's life. If 20% of our efforts yield 80% of the results we can increase our productivity 100% by doubling our 20% activities and eliminating the 80% activities. This would leave you with 60% of your time to do other things, more time with family and friends, hobbies, talking a walk.

because it's also packed with other BS, like lecturing you on how to use your life and other areas where the author has no authority in. He pointed out some of the voice of opposition, and beat them one after one, However, there is some very important one that he left out. I'm a Hong Kong Chinese, in our 5000years' culture, Yin and Yang has came to play from the very beginning, the author seem to ignore this. For example, he tells you to analyse your life and see which 20% of your life give 80% of your happiness and concentrate on that 20% only. I did just that years ago, but I only got worse, Life is a balance between work and play, you enjoyed that 20% of (yang) activity because you are released from that 80% of (yin) activity. 80% of the tastefulness of hamburger is from 20% of the meat inside, but if you drop the bread on the top and bottom, its taste will become too strong, it'll lose its favor. Similarly, perhaps your honeymoon or a graduation trip to Europe was the most wonderful experience, yet, if you redo that over and over, by principle of marginal return, it'll be boring. If you follow his advice, pretty soon, you'll get bored of everything. 20/80 can be applied perfectly to work, but to play, not so. I also wonder if the author will think 80% of sex pleasure derive from 20% of the time between (yang)climax, so, probably we should drop the (yin) foreplay all together? Well... women suffers if guys do this. ;>

The "80/20 Principle" was a discovery made by Vilfredo Pareto, a 19th century economist. His discovery was profound and has broad implications today. In a limited sense, the author has done a tremendous service by re-introducing the subject to the general public. The problem with Koch's book is that it can be summed up in a paragraph at most and really does a disservice to the essence of Pareto's findings.

Paretos's findings have touched a great many students of business and economics. In fact, every MBA graduate at one time or another has heard of the "80/20 Principle". The "80/20 Principle", also know as Pareto's law, simply states that approximately 80% of the output is a result of just 20% of the input. In Pareto's case, he found that 80% of the world's resources/wealth was under the control of just 20% of the population. Please note that the use of the term 80/20 is used loosely and is not to be taken literally. The disproportionate relationship could easily be 90/10, 65/25, 70/10, etc. The basic idea behind Pareto's law is that the relationship between input and output is rarely if ever balanced. The key then is to isolate what input is causing the most output. This law can apply to an infinite number of disciplines and can be used to increase productivity on the micro and macro level. The list of relationships goes on and on, but here are just a few examples: 1) Business: Customers-to-Sales, Product Lines-to-Sales, Items-to-Sales, Raw Material-to-Finished Product. 2) Sociological: Automobile Type-to-Number of Accidents. 3) Personal: Hours Worked-to-Productivity, Types of Investments-to-Investment Returns, Scheduled Tasks-to-Personal Happiness.

In a nutshell, do not waste money on the purchase of this book. The explanation cited here is the 20% needed to apply the "80/20 Principle" to all areas of life.

This is the only review I ever wrote for a book, but this is such an important book, that I had to do it. On the face of it the book is self evident in many ways, as the entire book is summarized in its title, the 80/20 Rule: 80% of the results comes from doing the 20% of the work that truly mattered. Yet this book helped me become successful far more than my 2 years MBA. I read about 30 books a year, and in the past 5 years I feel this has been the book that helped me the most in my work and in my life, as it opened my eyes: Do only the 20% that matters the most, and you will have achieved 80% of the results. He also gives other good advice, do what comes easy to you, and become a top expert in it, outsource everthing else. etc..I feel everybody should read this book, it will help them achieve so much more and at the same time, save so much time and effort. It is Priceless advice.

Believe me when I say that I, as many of us do, felt that I had a pretty good understanding of the concept of the 80/20 rule, otherwise known as the Pareto Principle. We teach it in our seminars, it's referenced quite often in personal development messages, and is a mainstay of entrepreneurial theory.

In a nutshell, 19th century economist Vilfredo Pareto observed that the distribution of wealth was predictably unbalanced, regardless of the country or timeframe. Over the years, this economic principle became known as the 80/20 principle.

In this book, the author describes the Pareto Principle at length and demonstrates that it's in play in so many areas of our lives, and is sometimes misunderstood or simplified. It's not just that 20 percent of people do 80 percent of the work. Or that 20 percent of society holds 80 percent of the wealth. Mr. Koch's premise is that 20 percent of any effort accounts for 80 percent of the results. The converse being that 80 percent of your efforts (my efforts!) don't count for much.

This book is not an easy read. In fact, I would suggest that you approach the first three or four chapters as something to power through to get to the portions that will be applicable to your business. I don't suggest skipping those chapters, because they lay the groundwork for the following chapters so that you can truly understand how the 80/20 principle works in everyday life. This book is worth the investment and your time, even if the beginning may be slower going.


If you stick with it, concentrate on the solid information provided in the beginning, and keep on reading, you'll find that the book will help you identify the most productive 20 percent of your efforts and will show you how you can get more out of your business, and even your life, for less time, work, and effort.

In fact, you may be surprised by some of his conclusions. I found it to be very interesting and enlightening. He encourages you to look for the "short cut" and to choose to only do what you do best. Rather than stretching yourself over many tasks, projects, or clients, he demonstrates how you get a better pay off by simplifying, doing less, and performing exceptionally well at what you choose to keep doing. Instead of trying to do more to get better results, opt to just do more of the right things. Those are the things that make the biggest difference.

One idea regarding expanding your business really hit home with me. It's the idea that 80 percent of your sales come from 20 percent of your clients. So to boost your business, rather than always being on the hunt for more clients, it's smarter and more effective to concentrate your efforts on giving your existing, bigger and better clients more of your attention and time. Exceed their expectations and value them more and your business will grow more from the additional business you get from your existing super happy clients than from a bunch of new ones. I found that to be so eye-opening and considered how this would apply to follow-up calls and with the "Power Hour" concept. I immediately put that premise to work in my own business.

In the book, he provides examples of how the 80/20 rule comes into play in our personal lives and other areas of society, but it's the applications to our businesses that seem the most useful. I would recommend this book to anyone who feels like they're working hard in their business, but would like to improve their results or experience more satisfaction with their business-expansion efforts. There's a reason that the 80/20 rule is a truism. Harnessing the power of it and switching the percentages to your advantage can only help you reach your goals faster.

In today's knowledge-based economy, people are everything. The 80/20 Individual holds within it the potential to unleash the power within yourself and others within your organization.

For me, this book literally changed my life in that it finally sold me on the concept of intensely focusing on my core strengths, rather than vainly attempt to be good at everything. Being good at everything is simply an impossibility and Koch says that energy should be redirected into 20-percent activities.

According to Koch, To become an 80/20 individual, you will need to
take the following nine steps:

1. Use the most creative 20 percent of your imagination and intellect.
2. Spawn and mutate great ideas in creative ways.
3. Find the vital few profit sources in your current or prospective business.
4. "Enlist Einstein" by recognizing the centrality of time in every activity.
5. Hire great individuals - that is, other 80/20 wealth creators.
6. Use your current company's profit potential to your advantage.
7. Exploit creative practices and ideas from other firms.
8. Secure enough capital to succeed.
9. Make zigzag progress - by recognizing that various stages of growth require different approaches.

I'll leave you with this question (which is the question that most changed my life):

---> "What thing are you better at than nearly anyone else?" <---

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Michael Davis - Editor, Byvation