Getting more from less

Successful people have this one thing in common, they have realised that time and resources are not infinite and so they identify activities that bring in more output from minimal effort and put most of their effort there because they will reap good results. They exploit the 80/20 Principle to increase their effectiveness and improve the productivity of their companies with much less effort, time, and resources, simply by identifying and focusing their effort on the 20 percent that really counts.  According to the 80/20 principle, 20 percent of one’s activities account for 80 percent of the results.

The 80/20 rule is a very helpful concept in life and effective for good time management and if applied can change the way we set and achieve goals. The 80/20 principle which is sometimes referred to as the Pareto Principle is named after the Italian economist Vilfredo Pareto, who, in 1906, found that 80 percent of the land in Italy was owned by 20 percent of the population. What Pareto found is that the 80/20 distribution occurs extremely frequently in areas like customers, time management, and workers’ contribution to a company’s performance and in many other business and social activities.

Some of the areas we can observe the 80/20 principle in operation is in the following:
l    20 percent of the input creates 80 percent of the result
l    20 percent of the workers produce 80 percent of the result
l    20 percent of the customers create 80 percent of the revenue
You might be asking what then is the use of the 80/20 principle in business and life? The Pareto principle is an incredible tool for growing one’s business and ensuring that you achieve great things in life.  The principle helps us in maximising our results by concentrating on a minority of inputs.  For instance if 20 percent of workers contribute 80 percent of results then the company should focus on rewarding these employees to ensure improved performance and if 20 percent of IT bugs contribute 80 percent of computer crashes then one should focus on fixing these bugs first and if 20 percent of customers contribute 80 percent of revenue then the company should focus on satisfying these customers. The important thing is that you should focus your effort firstly on the 20 percent input that makes a difference, instead of the 80 percent that doesn’t add much value. In marketing the 80/20 rule can be applied to customers. About 20 percent of customers produce 80 percent of the company’s sales. If we know this rule we should then put most of our effort by focussing on this segment.

Unfortunately sales reps tend to waste time trying to please all customers even those who are not adding value instead of the most lucrative 20 percent. Customers are not all equal.
Some bring an amazingly disproportionate amount of revenue while others bring a little amount of money, and still others even waste your time. So as a business leader your goal should be to concentrate most of your effort on those 20 percent of customers who are critical for the business’ profitability. Ignore the problem customers, and direct your time towards relationships with the hassle-free, big spenders. The 80/20 principle is also very effective in time management. Entrepreneurs tend to want to do everything even those tasks that can be done by an assistant or a lower level employee. Instead of a senior manager spending time in doing trivial tasks that earn him $10 an hour it would be more profitable to identify tasks on which the manager can earn $1 000 per hour and concentrate on those tasks.

These tasks are the 20 percent that produce 80 percent of the results. You should not waste your time on the “trivial many” instead spend time on the “few majors.”
As a leader you should spend most of your time working on the parts of the business that improves significantly with your core skills and leave the tasks that are outside your best 20 percent to other of your managers. When analysing which products or service to pay attention to you can use the 80/20 rule.  Identify products or services that generate the 20 percent income and drop the rest or give minimal attention to the 80 percent that only provide marginal benefits. Your staff should put effort on the 20 percent.  In this day and age time is a commodity we wish we could have more of it. Time keeps on ticking and waits for no man. It’s incumbent upon us to utilise time very carefully.  We have goals that have competing priorities so we need to spend time on those goals that bring the most benefits. Using the 80/20 rule will solve the problem.  One needs to identify the few critical goals that will bring the greatest change or impact to your life or business and then concentrate on these.

Stewart Jakarasi is a business & financial strategist and a lecturer in business strategy and performance management.
He provides advisory and guidance on leadership, strategy and execution, preparation of business plans and on how to build and sustain high-performing organisations.
l For assistance in implementing some of the concepts discussed in these articles please contact him on the following contacts: sjakarasi@gmail.com or +266 58881062 or on WhatsApp +266 62110062