Seeing the wood for the trees

Tuesday, May 19th, 2009

Many of you will have heard about the 80/20 Principle, and even unconsciously, applied it in your own lives from time to time. Without going into extensive detail for those who are not sure how this principle applies, in essence, it asserts that a minority of causes, inputs or effort usually lead to a majority of the results, outputs or rewards – that there is an in-built imbalance between them – and that it is contrary to what people normally expect!

Richard Koch, in his book on the subject, recommends adopting what he calls 80/20 Thinking, all the time, to maximise your ability to achieve more with less. He says it is.. “my phrase for the application of the 80/20 principle to daily life, for non-quantitative applications of the principle….It teaches us to spot the few really important things that are happening and ignore the mass of unimportant things. It teaches us to see the wood for the trees.”

He quotes from General Von Manstein on the German Officer Corps:

“There are only four types of officer. First, there are the lazy, stupid ones. Leave them alone, they do no harm… Second, there are the hard-working intelligent ones. They make excellent staff officers, ensuring that every detail is properly considered. Third, there are the hard-working stupid ones. These people are a menace and must be fired at once. They create irrelevant work for everybody. Finally, there are the intelligent, lazy ones. They are suited for the highest office.”

Koch goes on to say,

“it might be thought that intelligence and propensity to work are fixed properties, in which case the Von Manstein matrix, although interesting, is useless. But the position advanced here is slightly different. Even if you are hard-working, you can learn to become lazy. And even if you, or other people think you are stupid, you are intelligent at something. The key to becoming a star is to simulate, manufacture and deploy lazy intelligence. Lazy intelligence can be worked at. The key to earning more and working less is to pick the right thing to do and to do only those things that add the highest value. From this it is instructive to see how the 80/20 principle distributes rewards to those who work. Rewards are both imbalanced and unfair. We can either complain about this or align ourselves to take advantage of the Von Manstein matrix.”

With this in mind we can list the following golden rules for success, in either your careers or in your business:

  • Specialise in a very small niche and develop a core skill.
  • Choose a niche that you enjoy, where you excel and stand a chance of becoming an acknowledged leader.
  • Realise that knowledge is power.
  • Identify your market and your core customers and serve them best.
  • Identify where 20 percent of effort gives 80 percent of returns.
  • 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 skill.
  • Exploit capital leverage.

In the ensuing newsletters, I’m going to try and unpack these ‘rules’ for you, so they become a lot more meaningful. Give these some thought, and try and apply them to your own peculiar circumstances. OR – if you’d like to discuss them more fully, please feel free to contact me.