The 80/20 Principle

Richard Koch

Introduction

Richard Koch

Consultant, Businessman and Author

The 80/20 Principle - The secret of achieving more with less (this book)

The 80/20 Individual - The nine essentials of 80/20 at work

Living the 80/20 way - Work less, Worry less, Succeed more, Enjoy more

the8020principle.com

Entertaining and practical applications of the 80/20 principle in his books

Really the 80/20 'guru' of our day and age

The 80/20 Principle

“The 80/20 Principle, like the truth, can make you free. You can work less. At the
same time, you can earn more and enjoy more. The only price is that you need to do
some serious 80/20 thinking.”
The principle states that 20% of efforts lead to 80% of results

Also known as the Pareto Principle or Principle of Least Effect

Incredible powerful when applied to

Business

Relationships

Learning

Success

Sales

Marketing

Almost Anything!

It's Everywhere

“80/20 thinking requires, and with practice enables, us to spot the few really important
things that are happening and ignore the mass of unimportant things. It teaches us to
see the wood for the trees.”
Vilfred Pareto

Italian economist who studied wealth and income distribution in 19th century
England
 During his studies he realized that the majority of the land and wealth was
controlled by the minority of individuals

In fact 80% of the wealth was owned by 20% of the people

When testing this principle he found that this not only held true in almost all other
countries but also in his garden where 20% of the pea pods yielded 80% of the peas
Everywhere

Since Vilfred noticed the 80/20 principle in economics and gardening other experts
have identified it in many fields!

20% of Criminals 80% of Crime

20% of Motorist 80% of Accidents

20% of Married Individuals 80% of Accidents

20% of Carpet 80% of Wear

20% of Streets 80% of Traffic

Look Around!

Where do you notice the 80/20 principle in your life?

Open your awareness to

Where you spend your time

Where you make your income

Who you spend time with

What you read/learn from

Application

"20% of what we do leads to 80% of the results; but 80% of what we do leads to only
20%. We are wasting 80% of our time on low-value outcomes"
His advice

"Calm down, work less and target a limited number of very valuable goals where the
80/20 Principle will work for you"

Apply This

Step back for a minute and look at any area of your life..

Where is the Principle at work?

How can you maximize the time spent on the 20% the produces the 80% of the
results?
How can you minimize the time spent on the 80% that produces the 20% of the
results?

*Koch talks a lot about working less and getting more.. But keep in mind you can
work the same amount and get 5x done by cutting the 80% and focusing only on
expanding the 20%
Business

“The 80/20 Principle suggests that your strategy is wrong. If you make most of your
money out of a small part of your activity, you should turn your company upside down
and concentrate your efforts on multiplying this small part.”

“Twenty percent of products usually account for about 80 percent of dollar sales
value; so do 20 percent of customers. Twenty percent of products or customers
usually also account for about 80 percent of an organizations profits.”
“It is almost certainly true that you make at least 80 percent of your profits and cash
in 20 percent of your activity, and in 20 percent of your revenues. The trick is to work
out which 20 percent.”

“Executives may suspect that some customers and some products are more
profitable than others, but when the extent of the difference is proved, they are
likely to be surprised and sometimes dumbfounded.”
Application

Do you know where your revenue is coming from?

Do you know where you are spending your time?

Find Out

Start cutting out the 80%

Double down on the 20%

*or just enjoy the free time

YouTube Business

This principle is a huge part of me building this business you're noticing on YouTube

The 80/20 Principle Informs

What books I choose to review

My Mind Mapping process

What I decide to include in my courses

How I spend my time

Be Unreasonable

“Everything you want should be yours: the type of work you want; the relationships you
need; the social, mental, and aesthetic stimulation that will make you happy and
fulfilled; the money you require for the lifestyle that is appropriate to you; and any
requirement that you may (or may not) have for achievement or service to others. If you
don’t aim for it all, you’ll never get it all. To aim for it requires that you know what you
want.”
Genius Quote.. Why shouldn't we be able to achieve everything we want? The
80/20 Principle is a valuable tool to help us get there
Comes from Chapter 11: "You Can Always Get What You Want"
 What do you want?

Be unreasonable

"The reasonable man adapts himself to the world. The unreasonable one persists
in trying to adopt the world to himself. Therefore, al progress depends on the
unreasonable man"

What do you absolutely love?

What comes to you effortlessly?

With whom would you spend your days?

What would you do throughout the day?

How much would you make?

Where would you live?

This is the essence of crafting your vision.. The first thing we go over together in my
self coaching course! One of the cornerstones to success that most people miss.
What's Easy?

“It is important to focus on what you find easy. This is where most motivational writers
go wrong. They assume you should try things that are difficult for you.”
“Pursue those few things where you are amazingly better than others and that you
enjoy the most.”
“I do not believe that you should devote overly much effort to correcting your
weaknesses. Rather, I believe that the highest success in living and the deepest
emotional satisfaction comes from building and using your signature strengths.” -
Martin Seligman

"You are the best you. You will always be the second best anyone else.” - Leo
Buscaglia
Find Your Passion

What do I enjoy doing the most?

What am I amazingly better at than others?

Relationships

“Relationships help us to define who we are and what we can become. Most of us can
trace our successes to pivotal relationships.”
20% of your friends/loved ones probably account for 80% of your enjoyment and
satisfaction.
This might sound harsh.. But why wouldn't you spend more time with the people
who bring you the most joy?
“The action implications should be plain. Go for quality rather than quantity. Spend
your time and emotional energy reinforcing and deepening the relationships that
are most important.”
 “Self-actualizing people have these especially deep ties with rather few individuals.
Their circle of friends is rather small. The ones that they love profoundly are few in
number. Partly this is for the reason that being very close to someone in this self-
actualizing style seems to require a good deal of time. Devotion is not a matter of a
moment... One subject expressed it like this: ‘I haven’t got time for many friends.
Nobody has, that is, if they are to be real friends.’” - Abraham Maslow

Koch's Relationship Exercise

Write down your top 20 friends

Take 100 points and allocate them according to how much value each friend gives
you
Take another 100 units and allocate them according to the amount of time you
spend with each friend
Look at the time you're spending vs the amount of value they give you.. Do they
match up? Why or why not?
*I tend to be less structured than this exercise.. I think it's a living and breathing
thing! Choosing to spend time with friends who give you value in particular
moments.. Just remember to be unreasonable! If they are not adding value don't
be afraid to defy social norms..
Learning

“Books can be read far faster... But never read a book from cover to cover, except for
pleasure. When you are working, find out what the book is saying much faster than you
would by reading through. Read the conclusion, then the introduction, then the
conclusion again, then dip lightly into any interesting bits.”
This comes from koch's Tutor at Oxford.. First he told him not to attend lectures
because books can be read much faster!
How do you read a book?

Often I find people get stuck when trying to read a lot of books because they read
them cover to cover..
This is how I read the books for this mind map!

Read The Introduction

Read The Conclusion

Listen To An Interview

Mind Map The Book Into Points Made

Fill In Points Made Following

Why

What

How

What If
 *Baetson Levels of Learning

Focus

“Whenever you spot a 20 percent activity, run to it, surround yourself with it, immerse
yourself in it, patent it, make yourself its expert, worshipper, high priest, partner, creator,
propagandist, and indispensable ally. Make the most of it. If the most appears to be
more than you can imagine, multiply your imagination.”

"Conventional wisdom is not to put all of your eggs in one basket. 80/20 wisdom is
to choose a basket carefully, load all your eggs into it, and then watch it like a hawk.”
"Keep all your eggs in one basket.. But watch the basket closely" - Warren Buffet

Are You Hedging?

Human beings naturally want to hedge our bets.. Limit our downsides and risks..

While this might be the right idea in theory.. By hedging our bets we lose out on
the power of the 80/20 principle.
Hedging

Waiting for the right time

Not focusing on one thing

Having too many projects

Not firing clients you should

Instead of Hedging

Discover what your passionate about

Focus your energy

Continue to use 80/20

Remember to be unreasonable