When I’m sitting in the sun practicing the noble art of omphaloskepsis* I often reflect on the great contribution made to good business by our old pal Vilfredo Pareto. Vilfredo was an Italian economist who came up with a most important principle. I reckoned that it was time I reminded you how his ideas can give your business a kick along.
No doubt idly sitting in his garden drinking a glass of wine one sunny Roman day he discovered that 20 percent of the pea pods in his vegetable garden produced 80 percent of the peas. Ruminating on this remarkable fact he discovered that 20 percent of Italians held 80 percent of the national wealth. The more he looked the more he found that this 80/20 relationship existed. These discoveries supported the great principle he developed that…
Around 80 percent of your results will always come from 20 percent of your efforts.
You’ve probably heard it referred to as the “80/20 Rule”. Many people I meet know the rule but, amazingly, very few have put its power to work in business.
What follows is that, if you do more of the things that matter, you’ll get more of the results that count.
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For example, if 20 percent gives 80 percent and you put more effort into whatever the 20 percent is made up of, say you double it, then 40 percent will now give 160 percent. A small increase in input produces a large increase in output.
What Pareto highlights is really the power of leveraging. That means identifying the smallest amount of effort that’s needed to produce the biggest result. His fabulous principle can be applied to the three balls you need to juggle in your business, no matter what sort of business you are in, to get the best possible results.
We’ll talk more about what those three balls are and what to do with them in a future article.
*omphaloskepsis is the contemplation of one’s navel, which is an idiom usually meaning complacent self-absorption, navel-gazing is another word for it! I often do it meaning I sit there and just think!
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