"THE 80/20 PRINCIPAL"
Vilfredo Pareto was the first person to talk about The80/20
principal. The other similar principals are Zipfs principal
of least efforts (1949) and Jusans rule of vital few
(1951).
The book “The 80/20 principal” is a fabulous work by
RICHARD KOCH. This book emphasis on achieving more with
less. Whether it is the money or success in business or
enjoyment, happiness or better relationship, self-
improvement or formation of better society or any thing
else. The 80/20 principal states that there is an inbuilt
imbalance between causes and results, inputs and outputs,
and effort and reward. Typically Causes, inputs or efforts
are divided into two categories: 1.The majority that have
little impact and 2.A small minority that have a major,
dominant impact. In other words 20% of all inputs provide
80% of total output, 20%of efforts provide 80% of results
and similarly 20% of causes are responsible for 80% of
consequences. The best aspect of this book is that it talks
in detail about the use of this principal in various facets
of life.
This Book says that corporate success is not a mystery if
the 80/20 is been applied properly to it. Application could
be used in finding those 20%potential market, the surplus
and rewards, which gives 80% of the profitability. Proper
segmentation can be done for driving up profitability.
Moreover this principal make things simplified. Another
area for corporate success is sales here one can find best
20% of customer, sales people and products which provide
80% of total sales. The top 10-business use of this
principal are in Strategy, Quality, Cost reduction and
service improvement, Marketing, Sales, Information
technology, Decision taking and analysis,Inventory
management, Project management, & Negotiations.This
principal also help to reduce work and earn more with
enhanced enjoyment. This principal is optimistic,
strategic, non linear moreover it combines extreme ambition
with relaxed and confident manner.
this book also changes the perception of time for
individuals. Generally the time is seen as sequence running
left to right, Robert Koch here make a paradigm shift by
saying that the time is a synchronized and cyclic device.
Time is the benign link between the past, present and
future. Also this is a fact that the 20% time spent fetches
80% of achievements. Similarly 80% of the happiness is
found in 20% of the lifetime. One has to find these 20% of
the time and should multiply the same to maximize the
happiness in life. Seven easy steps could help an
individual to detonating a time revolution. such as making
a difficult mental leap of dissociating effort and reward.
Giveing up guilt. Free yourself from obligations imposed by
others. Be unconventional and eccentric in your use of
time. Identify the 20% that gives you 80%. Multiply the 20%
time that gives you 80%. Eliminate or reduce low value
activities. One can always get what he want by applying
this principal to his life style, work, achievement,
relationship and in finding key allies. Ten golden rules
are also mentioned for ambitious people for their career
success. These are as.Becoming Specialize in a very small
niche; develop a core skill. Choose a niche that you enjoy,
where you can excel and stand a chance of becoming an
acknowledged leader. Realize that knowledge is power.
Identify your market and your core customers and serve them
best. Identify where 20% of effort gives 80% of return.
Learn from the best. Become self-employed early in your
career.Employ as many net value creators as possible. Use
outside contractors for everything but your core skills.
Exploit capital leverage. When it came to money Robert Koch
has given his 10 commandments as Make your investment
philosophy reflect your personality.Be proactive and
unbalanced.Invest mainly in the stock market.Invest for the
longterm.Invest most when the market is low.If you cant
beat the market, track it.Build your investments on your
expertise.Consider the merits of emerging markets.Cull your
loss makers.Run your gains.
Similarly to increase the happiness author has given seven
habits.Exercise.Mental stimulation.Spiritual/artistic
stimulation/meditation.Doing a good turn.Taking a pleasure
break with a friend.Giving your self a treat.Congratulating
yourself.
This principal also work beyond the individuals and how
the society and entire humanity can get advantage out of
this 80/20 principal. It also indicate that in our society
80% of the efforts are of very low value and if we can
improve upon them the face of the society will improve a
lot.
The 80/20 principal is very much applicable on this book
also. A reader can understand 80% of the matter by reading
just 20% of the text.