Short on time, money, resources? Here’s a way to tackle this perpetual problem.
Something leaders have to deal with all the time is limited resources – there’s never enough people, time, money, or other things you need to get done everything you want to do. The best leaders are the ones that can figure out what to do with the resources that they do have, and focus their efforts there.
In this post you will find a new way to approach your work so that you’ll know where to focus your efforts to get the maximum results.
Small Things Have Big Impacts
It starts with recognizing a simple relationship between effort and effect that exists all around us. Take my video camera for example. It’s pretty new, and loaded with a whole bunch of features. I like the camera, I use it a lot, but I don’t really use all of it.
Despite all the features, on a regular basis, there are really only two settings that I use. One for outdoors, where I basically just push the “do everything automatically” button (aka the “PhD” button – Push Here, Dummy). And one setting for indoors on the tripod, where there’s a specific setting and a certain lighting level that I like. To get to this other setting, I have to negotiate the small touch screen and pass by the loads of the other features I’ll probably never use. I know probably 20% of what the camera can do, but that that turns out to be sufficient to accomplish 80% of what I want to do with it.
I guess I could take the time to learn about all those features, and occasionally that knowledge might help me take better video, but the little I know seems to be enough to be effective, and it would probably be a waste of time to try and master all those other features I may never use. So I don’t.
This ratio of a small amount of things that yield the bulk of the results exists all around us if you think about it. My daughter has dozens of “friends” on Facebook, but really only hangs out with a select few. There are hundreds of channels to choose from (and that I’m paying for) on the TV downstairs, but we really only watch a few of them. The vast bulk of the email I get is trashed almost immediately; I only take the trouble to actually read or respond to very few.
Prioritizing According to Pareto
Back in 1896 Italian economist Vilfredo Pareto discovered this idea when, in the midst of a study he was doing, he noticed that 20% of families owned 80% of the land in England. He wrote about it, and soon others latched on to the idea. Over time the concept came to be expressed as the Pareto Principle, or the 80-20 rule. Eighty Percent of the effects come from twenty percent of the effort.
It turns out this ratio is everywhere. Twenty percent of the world’s people own 80% of its wealth, 20% of criminals commit 80% of crimes, 20% of medical patients use 80% of the resources, 20% of computer bugs cause 80% of the computer errors, 20% of salesmen bring in 80% of the sales. And in the case of my camera, 20% of the features produce 80% of the video.
Or something close to that. These are not all exact numbers. But that’s not the point anyway. The thing here is to recognize that this relationship exists, because it can be a great leadership tool for you.
How Can Pareto Help You Lead?
Something you will face all the time as a leader is the fact that you don’t have infinite resources. Time is always limited, there aren’t enough people to do all the work, you need more money than you have, on and on.
Dealing with scarcity means having to make choices. If you only have one hundred dollars, or one hour, or one person to put onto a project, how do you decide how to use that resource? You guessed it – use the Pareto Principle. How does it apply? Here are three ways you can use it to be a better leader.
1. Use it to focus efforts. In the case of the computer bug problem mentioned above, if 80% of the problems are caused by 20% of the bugs, then focusing your team on fixing those few bugs that are causing most of the problems is a good place to start. If you are a traffic engineer and you see that 80% of your accidents are happening at 20% of your intersections, those are the places you want to focus on to improve safety. If you are running a business, maybe 20% of your accounts bring in 80% of your revenue. Those are the accounts you want to make sure get top-notch service every time.
2. Use it to reduce excess. Let’s say you have to cut costs because your budget is lower this year. You can look for the 20% of your expenses which are eating up 80% of your account. Focus on reducing or eliminating them to meet your budget. If you are cleaning out your team’s storage closet, you’ll probably find that 20% of your stuff gets 80% of the use, so focus on everything else to figure out what to pitch.
3. Use it to reduce risk. Earlier you discovered that 80% of your business comes from 20% of our customers, so of course you’ll focus on taking good care of them, but this example highlights another way to apply the Pareto Principle: identifying risk. If such a small number of customers is responsible for all that business, you could be in trouble very quickly if they decide to go somewhere else. In this case, you can use the Pareto Principle to tell you where you might need to diversify, broaden your customer base and reduce your risk.
The Ripple Effect
And here’s another benefit to using the Pareto Principle that you don’t hear so much about: the ripple effect. When you focus in on something and get very good at it, other things tend to fall in line, almost without you having to make any additional effort. The focus and momentum seems to just bring them along.
An example is the Scouts I work with. Like any organization of people, on any given day you could list lots of things to do, to focus on, to teach, and they are all valid and worthwhile. But pretty soon you will find yourself spread thin trying to do everything at once and growing frustrated in the process.
That’s doing it the hard way. For us, our 20% is going camping. When we focus on doing that right, lots of other things start to naturally fall into place – we get better at planning events, at organizing our people, keeping track of our gear, learning to cook, attracting new members.
Focusing on our 20% has helped us get better in lots of other areas, even outside our primary focus area, by virtue of the ripple effect. It can do the same for you.
A Word of Caution
Of course, you will have to use a little judgement when you employ this principle. If you are building a bridge, you are going to have to have 100% of it, not just 80% for it to work.
I also don’t think this works in the realm of values and integrity. Would you trust someone who was truthful with you 20% of the time? Even 80%? No, 100% is the number you are shooting for here. All the time. And safety is another area you want to be certain you are doing everything right.
As a leader, it pays to be aware of this Pareto Principle. When you start running out of resources (and you will), you will have a better idea of where to start making cuts, what to focus on, and how to guide your team.
So ask yourself: what is the 20% you are doing that is contributing to 80% of your success? Do more of that, and you will find ways to excel as a leader in a competitive world.