This is a review of Richard Koch’s The 80/20 Principle. I am participating in the Personal MBA project, and this is the third book that I have completed and compiled notes for. To read more about my involvement with PMBA, click here.
Book Details
Title: The 80/20 Principle
Author: Richard Koch
Page Count: 269
First Published: 1998
Most people fall into one or more of the following traps. They spend a lot of time with people they do not much like. They do jobs they are not enthusiastic about. They use up most of their “free time” (incidentally an anti-hedonistic concept) on activities they do not greatly enjoy.
The 80/20 Principle, which seeks to tackle the inefficiencies mentioned above, can be traced back to the work of a 19th century Italian economist. Vilfredo Pareto, in his analysis of income and wealth, discovered a unique imbalance in the distribution of English wealth—namely that most of it (~80%) was concentrated amongst a small number (~20%) of households. Once he started looking at data from other countries and in other time periods, he found the same mathematical imbalance to be quite predictable.
Today, Pareto’s theory is commonplace, and this book unravels its various applications. The key idea is that there is an inbalance between causes/inputs/effort and results/outputs/rewards. It’s a quick read, and while I would recommend it to anyone interested in business, I would also recommend it to anyone interested in personal productivity. It’s amazing, in just a few pages, how I started to think differently about all of the inefficiencies in my life.
What I Learned
My biggest takeaway: that most people need a “time revolution.” It’s not that we’re short on time (did you know time management is $1 billion industry?). It’s the way we treat it, the way that most of us don’t use our time effectively. By better exploring our productive inertia—how am I functioning in the 20% of time when I am most effective?—we can better adapt our lifestyle to become more effective users of time.
Examples of The 80/20 Principle
In business:
20% of products account for 80% of sales.
20% of customers account for 80% of profits.
In society:
20% of motorists cause 80% of accidents.
20% who marry comprise 80% of divorcees.
At home:
20% of clothes will be worn 80% of the time.
80% of the television you watch will be among 20% of the channels.
What other examples can you come up with?
Notable Quotations
Ultimately, the information revolution will help to destroy the profession of management itself, thus enabling much greater direct value creation by “doers” in corporations for their key customers.
Business people seem to love complexity. No sooner is a simple business successful than its managers pour vast amounts of energy into making it very much more complicated.
…not many decisions are very important.
The scope for entrepreneurial arbitrage is always underestimated.
It is very difficult to make good use of your time if you don’t control it…The point is to choose your partners and obligations extremely selectively and with great care.
It is not enough to know a lot about a little. You have to know more than anybody else, at least in something. Do not stop improving your expertise until you are sure you know more, and are better in your niche, than anybody else.
Miscellaneous Notes
-when reading non-fiction books, especially in the PMBA series, concentrate on 20% of the most important facts and skim through the remaining 80%
-80/20 wisdom suggests that 80% of investment wealth comes from 20% of one’s allocated investments—not sure how comfortable I am with embracing this attitude, but worth thinking about
-really annoyed with the author after he mentioned, for the third time, that this was the first book about the 80/20 Principle…who cares? he should let the book speak for itself
Have you read this book? What are your thoughts?
John Bardos - JetSetCitizen on September 2nd, 2009
1
Hi Alan,
Some stimulating ideas here. This is a post worth coming back to regularly to evaluate my personal progress. I like the concept of a “time revolution.”
I don’t understand what is meant by “entrepreneurial arbitrage.” What is that about?
Also, do you recommend the book to others or does your summary cover it well enough?
John Bardos – JetSetCitizen´s last blog ..Is Work Really That Bad?
Diggy - Upgradereality.com on September 2nd, 2009
2
Hey Alan!
Never heard of this book but I’m very aware of the 80/20 principle.
ALso, I know about time management, and how capable we all are of achieving much more. Yet, even while I know this, I find it hard to execute.
It is more fun being lazy and wasting time, even though it doesn’t make sense, because it is much more fun being able to do what you really want, and enjoying every single moment of life.
Work hard and play hard.
I’ll make a note of this book, I already have a whole list of must read books, this one can join the queue
Thanks for sharing!
Diggy – Upgradereality.com´s last blog ..Whether you think you can or can’t…you are right.
Nate on September 2nd, 2009
3
Great review. This is in my “books” folder under my bookmarks, so I’ll probably be picking it up soon. It’s funny that you reviewed this today because I was about to record a video post from my blog talking about the PMBA, and I was going to mention how you are taking part in the program!
Nate´s last blog ..Another case of elimination
Colin Wright on September 7th, 2009
4
This is a great book, though (perhaps not ironically) I found that about 20% of the information was fantastic and mind-expanding, while the other 80% was kind of mushy…more or less that author reiterating something he had already said or, as you mentioned, telling you about how awesome the book you are reading is.
That being said, the 20% I did get something out of was incredibly valuable. This is a concept I was familiar with before I read the book, but the way he applies it is quite unique, and even partway through the book I was already able to take his lessons and apply them to my life and job.
At this point, I’ve already chopped a solid 20 hours or so of work from my week, leaving me with about 10 or so hours (I did some chopping beforehand, too, which is why I’m not cutting 20 hours from 60 hours
I’d be interested to know if you’ve managed to apply any part of the principle to your life yet, and if so, with what results?
Colin Wright´s last blog ..How To See Like A Traveler All The Time
sean on September 9th, 2009
5
I had never heard of this book, however have been able to use the 80/20 principal in many aspects of my life. It is amazing how explain so many different types of situations.
I do share similar question as John though, do you recommend the book to others?
Mark on September 13th, 2009
6
I got 80% of what I needed to know about these comments from just one of them. Not to mention four of them were full of mush!