80/20 Focus

The 80/20 rule (Pareto’s Principle) is one of the most useful concepts for business and life in general. 80/20 focus is a way of applying it.

Some Background

Although I’ve referred to this principle numerous times in previous articles, the other day I was reminded of just how simple the idea is when reading this quote of Winston Churchill, “You will never reach your destination if you stop and throw stones at every dog that barks.” That quote really hit home. Let me elaborate.

Too Much to Do

If you’re like me you have a list seemingly a mile long of things to do. In the work world there seems to be an inexhaustible number of things to accomplish. When you add to that things in our home and personal life one has to wonder when we’ll get to sleep. But here’s the key idea. Not all tasks are created equal. By that I’m not just referring to the level of difficulty but also to the benefit that completing them will provide. In your personal life you can probably easily see that trimming a bush or raking leaves are unlikely to provide the same level of benefit as repairing a leaking roof. That’s not to say the bush will not eventually have to be trimmed and the leaves raked, but the priority is different.

But Business is Different

When it comes to business you may well say, “But business is different!” No, it really isn’t. Imagine you are trying to launch a business and have the following five items on your to-do list:

  1. Write a business plan
  2. Name the business
  3. Identify products to sell
  4. Identify suppliers
  5. Find a physical place to lease

Now this list is intentionally short just for the purpose of demonstrating the concept. In the above list, using the 80/20 principle, identify the one thing that must be done first. In this case you might think, “Hmm, I’m interested in such and such so I think I’d like to sell products related to that. That one decision creates a number of steps to identify the specific products, where they can be sourced, and what is the best way to sell them. It may be that the best way to sell them is with an e-commerce site. In that case number 5, find a physical place to lease, may well go away. Likewise, what you decide to sell may determine what you name your business. But here’s the thing; until you take the first essential step you won’t know that. Until you do the first step all the other things on your list are the barking dogs to which Churchill was referring. Notice in this case focusing on one thing first represented only 20% of your list. That is a simple example of 80/20 focus. Of course, in real life your list would undoubtedly be longer, but even then it is likely than somewhere between 10% to 30% of the items on your list will be what matters first, and until they are accomplished all the others are barking dogs.

Think about it. Whether your business is in start-up, growth, or maturity, there will always be more on your list than you can reasonable expect to accomplish. Interestingly though, when you use 80/20 focus you will be able to ignore the barking dogs to a great extent, particularly if you are deliberately disciplined. Actually this is a way to simplify your life a regain control of your time.

A quote often attribute to Albert Einstein, “Everything should be made as simple as possible, but no simpler” sums this up well.

The 80/20 rule is a powerful way to get focused on what really matters.

If you want to know more, contact AimCFO – Contact

As always, your comments are welcomed.

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