80 : 20

(Also known as the Pareto principle or the 80-20 rule)

“For many events, roughly 80% of the effects come from 20% of the causes”

I am sure many of you have heard about the eighty – twenty rule. In regards to efficiency it is based on the observation that the last 20 percent of a task require 80 percent of the time and effort (and many times budget).

This observation holds true for many other relationships in business such as:

•          80% of your revenue comes from 20% of your customers

•          80% of your profits come from 20% of the invested effort

•          80% of your complaints come from 20% of your customers

•          80% of your sales come from 20% of your products

•          80% of your innovations are made by 20% of your staff

This shows the vast areas of possible improvements by concentrating on the first 80% rather than the remaining 20%.

Still many managers want to be perfect. Reach one hundred percent in whatever they are doing – finish that task or project completely. These are your control freaks and perfectionists.

The problem with this approach is – it is not possible! You’ll never have enough time to finish and reach those one hundred percent. There will never be enough time for the perfect product or the perfect project.

At any given time, you have many different tasks to prioritize and get done, people to supervise, disasters to avert. This is the reason why your job exists! You are a manager of scarce resources. Face it – if the perfect project, finished in time and budget, producing the best possible product would be possible – we wouldn’t need managers.

Eighty percent sounds pretty good to me. Most of the time eighty percent is just enough. Those last twenty percent of polish and over engineering will cost you eighty percent of your time and budget. It is not worth it.

By following this concept you’ll get much accomplished and will establish yourself as someone who “gets stuff done” in your organization. This is important for a leader. Complexity and Over-engineering are your natural enemies – they bog you down and stop you from being efficient.