Why 80/20 is the one of the most important tools every effective business leader applies

Do you wish you could accomplish way more in the time you have?

I have a tool for you. If you learn how to apply it, you will be able to do less and get much better results. Watch or read to the end and you will never stop thinking: 

Where else can I apply this? 

Here is the video:

80/20 or Pareto rule is one of those principles that everyone heard of but not necessarily makes use of as it is pretty counterintuitive.

While it applies to everything, I consider it an indispensable tool for any business leader who - like I said - wants to accomplish more with less. 

And it is one of the go-to instruments in business decision-making. 

Let's take a closer look at this valuable rule. 

If you don't know this principle or have only heard about it, stop the busy work for this one. 

Focus and understand its implications, and you will start using all your resources way more effectively.

The 80/20 rule basically says that 80% of results come from 20% of the efforts or input. 

But it's just the surface. 

The 80/20 rule is fractal, which means that there is a pattern within a pattern within a pattern within a pattern.

I will make it simple for you - stay with me because it’s a game-changer when you really grasp and get to implement this thinking:

So 20% of your efforts produce 80% of your results, and there is 20% within this 20%, which is 4% which makes 80% of your 80% results, which is 64%.

And if you continue to the next layer, you will find out that  0.8% will produce 52%, 0.2% will produce 40%, and it keeps going.

So if you depict the 80/20 principle on a graph, it makes up an exponential curve. 

Are you with me? 

We are back to leverage and even more leverage in each successive layer. 

We want to move the resources from the left side of the curve towards the 20% on the right, and then again further to the right - towards the 4%. 

So let's translate how it applies in business on a really simple example. 

Let's say you have 1000 clients  that bring a million dollars in revenue:

200 of them bring you 80% of your revenue 800.000 USD, 

40 - bring you 64% 640.000 USD, 

and 8 of them account for 52% of your total revenue 520.000. 

Now, since most people generally think intuitively - in the averages, they assume that 50% of the clients should get 50% of their time. 

And you know now that it is a massive waste of resources. 

So - apply counterintuitive, exponential thinking and focus on creating value for that significantly smaller number of clients that generate most of your revenue.  

So you can use the won time and attention somewhere else to apply the 80-20 rule and move the needle even further. 

And please keep in mind that the same principle applies to the products, marketing channels, ad spending, time, used software, meetings, team members, network, etc. 

Start looking for places where small input has huge results. And do more of that, reduce or eliminate all else. 

But it also works in the other direction - 

20% of your clients account for 80% of your headaches.

What if you could identify them and get rid of them. 

It is that simple.

But - like I said - counterintuitive

And the more difficult part? 

You will need some time and cognitive space to work yourself through it on a regular basis,but - trust me - it will be worth it. 

Assess your business activities from the 80/20 principle perspective.

What will you say NO to from now on?