In 1897, an Italian economist Vilfredo Pareto observed a pattern in the distribution of wealth among citizens no matter the country or time period concerned. He found that the distribution was extremely skewed toward one end: A small minority of earners always accounted for a large majority of the total wealth. Pareto’s theory was tested, forgotten, revived, proven, and eventually adopted in the United States and Europe during the 1960’s as the “80/20 rule.”
The 80/20 principle has been applied to many disciplines and basically states this: 80 percent of results come from 20 percent of effort. While the formula is not 100 percent accurate, it is amazingly close and I have read many examples where it was dead on. In dentistry, I often talk about “Top 20 patients.” This refers to that 20 percent or so of patients who are responsible for approximately 80 percent of the practice’s revenue for a given year. Any business can apply this principle to just about any area of that business. Eighty percent of the work is completed by twenty percent of the workers. Eighty percent of your inventory comes from twenty percent of your suppliers. As an average individual, 80% of your productivity, comes from 20% of your time. Take a minute to think about that. The average worker, 80% of us, spends 8 hours per day on the job, but less than two hours of that is productive time! You’d be surprised at how many small business owners I share that statistic with and get the response, “Tell me something I don’t know!”
So how can you become one of the 20% of individuals who accounts for 80% of all success? Identify what you do best, what makes you the most productive, and what provides the greatest value to you and/or your organization. What are those tasks? Now identify the tasks you do that could be performed, probably even better, by someone else. Are there some things that could be eliminated completely?
I find that a lot of companies have employees doing things just because “we’ve always done it that way.” We maintain the status quo when we could be setting records because our people are spinning their wheels in low productivity, time-consuming, practically worthless tasks. When we allow people to focus on their top 20 contributions, their creativity is spurred and we start innovating in our industry. A company is only as strong as it’s people. This is true whether you are a small business owner working alone, or a Fortune 500 company.
For an in-depth study on how to become more effective and productive, check out Richard Koch’s Living the 80/20 Way.
This post was written by Debra Moorhead, Motivation, Education, Inspiration on November 12, 2009