The Pareto Principle Summary

How To Achieve More By Doing Less (The 80/20 Principle)

Want to achieve more? This is the book you need.

The 80/20 Principle is one of the most important books of this century.

In fact, the principle comes from an economist called Vilfred Pareto who wanted to understand why 80% of Italy’s land was owned by 20% of the population.

What he discovered became known as “The Pareto Principle” – the idea that 80% of effects come from 20% of causes. For example:

  • 20% of criminals commit 80% of crimes.
  • 20% of employees are responsible for 80% of the results.
  • 20% of drivers cause 80% of all traffic accidents.
  • 20% of the investments in a portfolio are responsible for 80% of the portfolio’s growth
  • 20% of a companies products represent 80% of sales.

The fact that just 20% makes the difference has caused this principle to also be known as “The Law of the Vital Few”. Since Pareto’s ground breaking work, millions of CEOs, entrepreneurs, sportsmen and coaches have used the 80/20 principle to achieve more by doing less.

In 1999, Richard Koch released The 80/20 Principle book which took Pareto’s principle and applied it to modern life and business.

Here’s the 4 most important lessons from the book:

#1 – A Small Portion of Your Efforts Produce The Majority of Your Results

Achieve more with the pareto principle

In everything you do, there are a vital few things you do which make the difference:

  • Your Relationship: Sending your significant other a thoughtful message during the day
  • Your Career: Becoming a good public speaker earmarks you for executive positions (Warren Buffett said “The one easy way to become worth 50 percent more than you are now — at least — is to hone your communication skills — both written and verbal.”)
  • Your Health: Get 8 hours sleep a night (you’re twice as likely to get in a car accident with 6-7 hours of sleep compared to if you get a full 8 hours.)
  • Your Wealth: Automate your investments. Deduct at least 10% of your pay check each month and invest it into the S&P500 (investing $500 a month for 10 years with an 8% return each year gives you $91,473).

These small choices set you on a trajectory toward a more successful future. The opposite choices deteriorate those same areas – the effort is the same.

The output you get is related to the input – tp achieve more, make good choices.

#2 – A Few Vital Decisions in Your Past Are Responsible For Where You Are Today

Think back to when you accepted that job you hate, or when you swiped right on Tinder and had to suffer through 9 months of hell with your crazy ex.

Those micro-decisions made a huge impact on your life.

Some decisions are crucial and you should meditate on them deeply. Take your time, consider what could go wrong as much as what could go well.

This especially applies to decisions which are irreversible (e.g. should I drive home after one too many drinks?) or have a long-term impact (e.g. should I join ISIS?).

The answer to both is no by the way. 😆

#3 – A Small Number of Abilities are Responsible For The Majority of Your Success

The 80/20 Principle

Have you heard the saying “A jack of all trades, a master of none”?

Its normal (and helpful) to explore lots of avenues and gain competence in many areas, but focusing on mastering a few specific areas will serve you best.

The good news is, you already have some abilities that are better than average. Those abilities are responsible for the results you’ve already experienced.

They are also your ticket to even greater success.

Find the specific skills that are most valued by your clients or the people you serve and double down on them. That 20% of activities are responsible for 80% of your income so it makes sense to do them more.

As an example I realised my 20% activity was consultation calls with prospects. Here’s why…

By listening to the problem the prospect is trying to solve, then showing them how they can achieve it better/faster/cheaper they usually hire me to do it for them. A new client is typically worth $1000-10,000 a year.

Once I did that I grew my client base. I then asked “How can I use this 20% activity to generate even more cash?”

I realised that many Marketing Agencies could generate leads, but they struggled to close the deal on the consultation calls. So I started offering my services to other agencies – they’d put me on the phone with their prospect, I’d close the deal and take 10% of the total project fee and best of all, I didn’t have to do any of the implementation.

Think about your 20% activity and how you can expand it to generate more income.

#4 – Kill Unimportant Tasks To Free Up Your Time For The Crucial Few Tasks That Matter

Do you always feel like you don’t have enough time?

You’re in good company. Everyone feels the same way. Here’s why…

They say yes to everything. To achieve anything, you have to focus on the vital few – that means saying no to anything else. People pleasing be damned (or at least held off until the essential few are done).

The activities that are responsible for the bulk of your happiness and results must be your focus. Spend 80% of your time on these core activities.

To make space for your vital few you can:

  • Delegate it – If someone else can do it (hire on Upwork)
  • Delete it – If it doesn’t need to be done
  • Delay it – If you have to do it

For tasks you have to do, put them on your calendar for later in the day. That way your mornings are for your vital few activities and you can tackle them when you have the most energy.

If you do this, the extra money you generate will allow you to delegate almost everything else. When you use your new free time to expand the vital few tasks again, your income will rise again.

How To Achieve More: Next Steps

If you want to dig deeper into The 80/20 Principle, get the book here.

What changes are you going to make to optimise your life? Let me know in the comments below:

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