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The 80/20 Principle: The Secret to Achieving More with Less Paperback – October 19, 1999
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From The 80/20 Principle:
"The 80/20 Principle can and should be used by every intelligent person in their daily life...It can multiply the profitability of corporations and the effectiveness of any organization. It even holds the key to raising the quality and quantity of public services while cutting their cost... The 80/20 Principle asserts that a minority of causes, inputs, or effort usually lead to a majority of the results, outputs, or rewards. Taken literally, for example, 80 percent of what you achieve in your job comes from 20 percent of the time spent. Thus for all practical purposes, four fifths of the effort--a dominant part of it--is largely irrelevant."
To learn how you can tap the hidden potential of the 80/20 principle in your life, read Richard Koch's exciting new book.
From the Hardcover edition.
From the Inside Flap
How anyone can be more effective with less effort by learning how to identify and leverage the 80/20 principle--the well-known, unpublicized secret that 80 percent of all our results in business and in life stem from a mere 20 percent of our efforts.
The 80/20 principle is one of the great secrets of highly effective people and organizations.
Did you know, for example, that 20 percent of customers account for 80 percent of revenues? That 20 percent of our time accounts for 80 percent of the work we accomplish? The 80/20 Principle shows how we can achieve much more with much less effort, time, and resources, simply by identifying and focusing our efforts on the 20 percent that really counts. Although the 80/20 principle has long influenced today's business world, author Richard Koch reveals how the principle works and shows how we can use it in a systematic and practical way to vastly increase our effectiveness, and improve our careers and our companies.
The unspoken corollary to the 80/20 principle is that little of what we spend our time on actually counts. But by concentrating on those things that do, we can unlock the enormous potential of the magic 20 percent, and transform our effectiveness in our jobs, our careers, our businesses, and our lives.
Top customer reviews
While the Pareto Rule (80/20 principle) is widely know, many companies do not fully exploit its potential to grow profitability.
The author, Richard Koch, describes how 80% of clients' perceived value comes from 20% of the company's activities. Also, 80% of the firm's activities yield only 20% of the profits. This brings the opportunity to optimize by reducing resources given to low profit activities and deploying them to replicate the success of the top performers.
In a business that is large enough to be statistically significant, its sales, cost and profit data usually respond to a non-linear distribution that contains the 80/20 rule. For example, the top 20% of customers generate 80% of profit while the bottom 80% of customers generates only 20% of the profit.
Deeper analysis of the data usually shows that about 5% of the causes (customers, business units, market segments or products) generate 50% of the profits, while the bottom 50% of causes generate only 5% of profit or revenue. Even worse, the bottom 40% usually generates no profit at all.
I've successfully used the 80/20 Analysis and Strategy for years to reduce operating cost without losing any business or irritating any customers:
a) Product portfolio (reduced from 1,400 SKUs to 400 SKUs)
b) Customer portfolio,
c) Market segment strategy
d) Sales force, and distributor productivity
e) New product innovation metrics."
The next parts, which make up the bulk of the book, apply the theory in a number of ways. Right when you think you "get it", another application or perspective of the principle is revealed. It doesn't attempt list all the applications, but it will put you on the path.
The last part explains the success and failure of various approaches in social, government and economic issues with the 80/20 principle as an ever present thread. The author seems to defend the theory as neither a right-wing or left-wing ideal, rather as a natural law that should be acknowledged and exploited by everyone.
The book was educational and easy to read. It is not one of those little bulleted brochure style books with large type and lots of white space that make the new executives comfortable. It is also not the 12 steps to success. As the cover suggests, it is a single but useful principle.