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The 80/20 Principle

The Secret to Achieving More with Less

By Richard Koch
  • Read in 16 minutes
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  • Contains 10 key ideas
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The 80/20 Principle by Richard Koch

The 80/20 Principle (1997) was named one of GQ's Top 25 Business Books of the Twentieth Century. It's about the 80/20 principle, which says that 80 percent of results are generated by just 20 percent of effort. This phenomenon has huge implications for every area of life, as it helps single out the most important factors in any situation.

Key idea 1 of 10

Usually, the largest share of the results (output) is produced by just a small part of the work (input).

Have you ever looked back on a project you worked on and found that most of your work was done right before the final deadline? Perhaps in the few days when you were almost out of time you achieved more than in all the previous weeks put together.

In fact, similar imbalances between effort and reward can be observed in a variety of different settings.

For example, many businesses have found that 20 percent of their product range actually accounts for 80 percent of their profits.

Similarly, 20 percent of motorists cause 80 percent of accidents. Most motorists drive carefully, while a small minority is careless and causes the majority of accidents.

This phenomenon is better known as the 80/20 principle: roughly 80 percent of work results – or output – are produced by 20 percent of the work effort, or input.

Why is this ratio not more balanced? Because not every cause has the same impact on results. In fact, causes can be roughly divided into two categories: a minority that has a great impact on results and a majority that has only a small impact. This results in an 80/20 split.

It should be noted, however, that the 80/20 principle is a simplification, and in reality the ratio tends to differ – for example, it could be 70/30 or 99.9/0.01.

Of course, the numbers may not always add up to a hundred either. For example, a 1997 study demonstrated that of 300 movies, just four (1.3 percent) generated 80 percent of ticket sales.

As you can see, manifestations of the 80/20 principle can be found in a variety of settings and as you will find out, this is valuable knowledge.

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