The vital few and the useful many… this guest post by Tim Belber, JD, introduces how the ages old 80/20 principle can be applied as a high performance business practice.
Everyday we hear that less is more, simple is better and of the benefits of a minimalist life style. In fact, this observation has been around in an articulated form since 1906 when Italian economist and philosopher Vilfredo Pareto (1848 – 1923) observed that 80% of the land in Italy was owned by 20% of the people.
This idea became conceptualized in 1937 as the Pareto Principle by Joseph Juran (1923 – 2008). A management consultant, he observed that 80% of the peas in his garden came from 20% of the pods and thus was born the idea of the vital few and the useful many. Said another way, 80% of the results are the product of 20% of the causes.
The principle is very much alive in the world around us. Interestingly, it does not need to add up to 100%. For example, 15% of your clients may account for 95% of your revenue. 5% of your library may be source of 75% of your wisdom. Richard Koch, in his excellent series of books on the “80/20″ idea, goes into great detail of how you can bring this focus to your own individual life. For those interested I recommend all three but in particular Living the 80/20 Way.
Applying “Pareto Analysis” can have a tremendous impact on our daily lives and on our business practices. Stay tuned for Part Two of this post when Tim will explore:
What does this have to do with being a high functioning advisor? More importantly, how does Twitter factor in?
Tim Belber, JD, writes and speaks on a variety of topics impacting families and their financial assets. Contact Tim at: Tim Belber
