Sometimes the split is 70/30 or 90/10, but most of our results always come from only a few actions. This is the 80/20 principle. It’s interesting all by itself, but its immense business value is revealed when we apply the principle to itself, over and over again. Doing so produces a lens that allows us see how extraordinary results are achieved.
We start by applying the 80/20 principle to the 20% of our actions that bring 80% of our results. We need to carve up that 20% into another 80/20 split. We’re looking for the 20% of the original 20% that delivers 80% of its results. This will enable us to know the percentage of our total results that come from the actions that make up this second 20%.
Are you still with me?
According to the 80/20 principle, 20% of the smaller 20% generates 80% of the larger 80% of results. It’s okay if you didn’t follow that completely. Basically, 20% of the smaller 20% is extra-concentrated goodness. How much goodness? Well, when we calculate out 80% of 80%, we get 64%. That’s how much goodness. This means that the smaller 20% (20% of the original 20%) is responsible for 64% of our total results. What percentage of our actions is 20% of 20%? It’s 4%. So about 64% of our weekly results come from only 4% of our actions. That’s 1 hour, 36 minutes of a 40 hour workweek!
If you’re head is spinning a little, this might be a good time to get a coffee refill… because we’re about to dive even deeper.
Now let’s see what happens when we repeat the process a third time on the 4%. This produces a third 80/20 pie chart from the 20% of the second pie chart, and gets us to the extraordinarily-concentrated goodness.
Up to this point, we figured out that 80% of 80% is 64%, and that means 64% of our total results comes from only 4% of our actions (20% of 20%). Now we’re taking it one pie chart further. We need to find 80% of 80% of 80%, and 20% of 20% of 20%. Visualize a pie chart within a pie chart within a pie chart.
By applying the 80/20 principle to the 64% we can find the percentage of our total results that come from this third 20% (20% of 20% of 20%). So, when we do the math, we see that 80% of 64% is 51.2% (80% of 80% of 80%). This means that about half of our total business results come from 20% of 20% of 20% of our actions. And 20% of 20% of 20% is 1%!
So, on average, roughly half of our weekly results are produced from about 20 minutes of activity.
Another way to look at it is that 1% of our actions are 200 times more value-producing than the others!
It’s crazy. I know. But this is how some people get much more out of each day, or how that guy that never seems to be working manages to pay his bills. They each find and leverage actions that generate massive value.
To find and leverage the extraordinary 1% we need to create systems & measures that allow us to step back and see the business as a whole; systems & measures that empower us to make the best strategic decisions possible. We can also think of them as routines (or habits) and feedback loops.
To sum up, we each have the same amount of time to work with. The results we achieve come from a tiny handful of actions. Therefore, we can produce far better results by dedicating time to exposing the actions that create expansive value.
The world doesn’t pay us for the hours we put in. It pays us for the value we create.
However, to leverage the power of the extraordinary 1%, we need to know where we want to go.
Feature photo by Fortune Live Media on Flickr
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