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March 2013
USING THE 80/20 PARETO RULE TO
MANAGE GROWTH COMPANIES &
YOURSELF- Not Enough $ or Resources?
Are You Too Busy?
White Paper
By THOMAS E MEYER
www.linkedin.com/in/thomasmeyer63
VENTOM HOLDINGS LLC
March 2013 Page 2 Thomas Meyer, Ventom Holdings LLC
Contents
Executive Summary .................................................................................................................... 3 Introduction ................................................................................................................................. 4 The Challenge-Too Little Time, Money, or Resources ........................................................ 5
Parkinson's Law ................................................................................................................... 5 Perfect is the enemy of good enough ................................................................................ 6
The Symptoms and Consequences .......................................................................................... 7 The Answer-Pareto & Personal Experience ........................................................................... 8
80/20 Principle ....................................................................................................................... 8 School of Hard Knocks- Personal Experiences ............................................................. 10
How to-Applications of 80/20 ................................................................................................. 11
Tom Meyer 80/20 Checklist-Table 1 ...................................................................................... 14 The 80/20 Principle Summarized ........................................................................................... 18
Conclusion ................................................................................................................................. 21 Bibliography .............................................................................................................................. 22
Appendix A : TOM MEYER BIO ..................................................................................... 23
March 2013 Page 3 Thomas Meyer, Ventom Holdings LLC
Section 1
Executive Summary
Verne Harnish, in his book, Mastering the Rockefeller Habits-What You must Do
to Increase the Value of your Growing Firm, points out that Fast Growth companies
must make four major decisions well to succeed: People, Cash Flow, Strategy, and Execution.
Studies have shown that most firms fail to execute their plans successfully, some indicating as
high as 90+%. Often the defense given by management is that they did not have the necessary
resources to complete the job on time and on budget. Additionally, as individuals, most people
often think they do not have the time, $, or other resources to complete their personal tasks
properly or as well as they would like.
80/20 Principle per Pareto
The Pareto principle (also known as the 80–20 rule or the Law of the Vital Few) states that, for
many events, roughly 80% of the effects come from 20% of the causes.[1][2]
This white paper demonstrates how this principle can be successfully applied to managing time
and work more effectively both in your business and personal life. In the opinion of the author,
the five strongest applications of 80/20 principle are: Saying NO; Delegating; Leverage; the W3
(What, Who, & When) process; and effective Time Management.
The major point of this study is that by using the Pareto 80/20 principle thinking and disciplined
decision making, much more can be accomplished, efficiently and effectively, by making the right
choices of how to use time and resources. The result will be: Execution will be greatly enhanced
with available time and resources. Use the Table 1 Checklist, Section 7 to ensure you are
effectively applying the 80/20 principles in your organization and personal life.
References
1. ^ Bunkley, Nick (March 3, 2008), "Joseph Juran, 103, Pioneer in Quality Control, Dies", New York Times
2. ^ a b What is 80/20 Rule, Pareto’s Law, Pareto Principle
March 2013 Page 4 Thomas Meyer, Ventom Holdings LLC
Section 2
ectio
n 2
Introduction
Do you work for or manage a high growth company (growing>15% per year)? If so you are very
fortunate, but I am sure you also are familiar with the sometimes-frantic pace of decision making
that is required, the cost of errors, that follow, and the time stress that you regularly experience
just to “run the business” like you know how it needs to run.
The purpose of this White Paper is to give some guidelines and practical examples illustrating
how you can get more done in less time by using the Pareto 80/20 principles to manage your
company and your life more effectively and efficiently.
The Problems and Symptoms of “too much to do, and too little time to do it” are given in Section
3 & 4 respectively followed by the very basic definition of 80/20, in Section 5 along with some real
life examples from the life of the author. The author’s Top 5 Applications are in Section 6
followed by a checklist in Section 7 Table 1, for your own personal use of items relating to Time,
Business, and Personal activities. Ten summary guidelines are defined in detail in Section 8 based
upon a summary of the basic principles from Rich Koch’s The 80/20 Principle- The Secret to
Achieving More with Less, which is considered by many to be the best written presentation on
80/20.
March 2013 Page 5 Thomas Meyer, Ventom Holdings LLC
Section 3
The Challenge - Too Little Time, Money, or
Resources
How many times have you wished for more time or more money, or said“ I don’t have time,” or
heard your wife, friend or child say, “TOO BUSY, “ when you ask how they are doing?
Most of us experience these time issues and stresses in our personal and our business lives on a
daily basis. In fact, sometimes it can cause some of us to come close to a panicky feeling. Do you
have too many emails, phone calls, meetings, items on the to-do lists, kids sporting events,
conflicting demands for your time, etc.? How many times do you work 60+ hours a week
including on the weekend? How many times, must you say at home, “we can’t afford that” or at
work, “Guess we will have to do that next year” for a capital expenditure that you know is
needed to remain competitive?
The list goes on and on for most of us. Yet we each have 24 hours in the day, and some are much
more successful in using those 24 hours, are having more fun, and are having their companies
grow faster and more profitably than their competitors! How? Let’s spend just a little time
setting up the “how”.
Parkinson's law- (Work expands so as to fill the time available for its completion)
explains much of the problem and symptoms of not having enough time, money or resources!
From Wikipedia- “It is the adage first articulated by Cyril Northcote Parkinson as part of the first
sentence of a humorous essay published in The Economist in 1955:[1][2]
It was later reprinted together with other essays in the book Parkinson's Law: The Pursuit of
Progress (London, John Murray, 1958). He derived the dictum from his extensive experience in
the British Civil Service. Much of the essay is dedicated to a summary of purportedly scientific
observations supporting his law, such as the increase in the number of employees at the Colonial
Office while Great Britain's overseas empire declined (indeed, he shows that the Colonial Office
had its greatest number of staff at the point when it was folded into the Foreign Office because of
a lack of colonies to administer). He explains this growth by two forces: (1) "An official wants to
multiply subordinates, not rivals" and (2) "Officials make work for each other." He notes in
particular that the total of those employed inside a bureaucracy rose by 5-7% per year
"irrespective of any variation in the amount of work (if any) to be done".”
References
1. ^ Parkinson, Cyril Northcote (November 19th, 1955). Parkinsons Law. The Economist.
2. ^ Fowler, Elizabeth M (May 5, 1957). It's a 'Law' now: Payrolls grow. The New York
Times.
March 2013 Page 6 Thomas Meyer, Ventom Holdings LLC
Perfect is the enemy of good enough also explains why people and
organizations too often spend too much time on completing a project or task. From Wikipedia,
“It is an aphorism or proverb meaning that insisting on perfection often results in no
improvement at all. The phrase is commonly attributed to Voltaire. Aristotle, Confucius and
other classical philosophers propounded the principle of the golden mean, which counsels
against extremism in general.[2] The Pareto principle or 80–20 rule explains this numerically. For
example, it commonly takes 20% of the full time to complete 80% of a task while to complete the
last 20% of a task takes 80% of the effort.[3] Achieving absolute perfection may be impossible and
so, as increasing effort results in diminishing returns, further activity becomes increasingly
inefficient. “
References
1. (Omitted from text)
2. ^ Tal Ben-Shahar (2009), The Pursuit of Perfect, McGraw Hill Professional, ISBN 978-0-
07-160882-4
3. ^ E. Gandevia, S. Breakspear, Equip
March 2013 Page 7 Thomas Meyer, Ventom Holdings LLC
Section 4
The Symptoms and Consequences
“The reasonable man adapts himself to the world. The unreasonable one persists in trying to adapt the
world to himself. Therefore, all progress depends on the unreasonable man.” George Bernhard Shaw
Symptoms Some of the many symptoms of not carefully choosing the right things to work on and doing
them the right way using 80/20 thinking include: complaining and feeling you need more time,
more resources, or more $; not meeting time deadlines; always being “Too Busy”; to-do lists are
too long; too much partially completed work on the desk or in the briefcase; families are
complaining that you spend too much time working and not enough time with them. You have
your own list of not having enough time or getting enough done!
Consequences The consequences can be dire. Companies fail to meet their objectives, to remain competitive, or
to grow like they should; some go bankrupt; their products cost too much; they are inefficient,
and employees are unhappy. People are stressed, overworked, unhappy, and don’t meet their
personal objectives. For all, they are inefficient and ineffective compared to what they could
accomplish in their businesses and their personal lives.
March 2013 Page 8 Thomas Meyer, Ventom Holdings LLC
Section 5
The Answer- Pareto & Personal Experience
80/20 Principle per Pareto
(Quoted from Wikipedia)
“The Pareto principle (also known as the 80–20 rule or the Law of the Vital Few) states that, for
many events, roughly 80% of the effects come from 20% of the causes.[1][2]
Business-management consultant Joseph M. Juran suggested the principle and named it after
Italian economist Vilfredo Pareto.
It is a common rule of thumb in business; e.g., "80% of your sales come from 20% of your clients".
In economics
The original observation was in connection with population and wealth. Pareto noticed that 80%
of Italy's land was owned by 20% of the population.[4] He then carried out surveys on a variety
of other countries and found to his surprise that a similar distribution applied.
Due to the scale-invariant nature of the power law relationship, the relationship applies also to
subsets of the income range. Even if we take the ten wealthiest individuals in the world, we see
that the top three (Carlos Slim Helú, Warren Buffett, and Bill Gates) own as much as the next
seven put together.[5]
A chart that gave the inequality a very visible and comprehensible form, the so-called
'champagne glass' effect,[6] was contained in the 1992 United Nations Development Program
Report, which showed the distribution of global income to be very uneven, with the richest 20%
of the world's population controlling 82.7% of the world's income.[7]
In business
The distribution is claimed to appear in several different aspects relevant to entrepreneurs and
business managers. For example:
80% of your profits come from 20% of your customers
80% of your complaints come from 20% of your customers (Author’s note: there are many
exceptions to this one, e.g. semi-conductors and other high volume manufacturing firms selling
to large customers may just cover overhead with the top 20%).
80% of your profits come from 20% of the time you spend.
80% of your sales come from 20% of your products
80% of your sales are made by 20% of your sales staff
Therefore, many businesses have an easy access to dramatic improvements in profitability by
focusing on the most effective areas and eliminating, ignoring, automating, delegating or
retraining the rest, as appropriate.”
March 2013 Page 9 Thomas Meyer, Ventom Holdings LLC
References
1. ^ Bunkley, Nick (March 3, 2008), "Joseph Juran, 103, Pioneer in Quality Control, Dies", New York Times
2. ^ a b What is 80/20 Rule, Pareto’s Law, Pareto Principle
3. (Omitted from Text)
4. ^ Pareto, Vilfredo; Page, Alfred N. (1971), Translation of Manuale di economia politica ("Manual of political economy"), A.M. Kelley, ISBN 978-0-678-00881-2
5. ^ The Forbes top 100 billionaire rich-list, This is Money
6. ^ Gorostiaga, Xabier (January 27, 1995), "World has become a 'champagne glass' globalisation will fill it fuller for a wealthy few", National Catholic Reporter
7. ^ United Nations Development Program (1992), 1992 Human Development Report, New York:
Oxford University Press
8. ^ Human Development Report 1992, Chapter 3, retrieved 2007-07-08
9. ^ Living Life the 80/20 Way by Robert Koch
March 2013 Page 10 Thomas Meyer, Ventom Holdings LLC
School of Hard Knocks -Personal Experiences Shared by the Author (See Bio of Thomas E Meyer in Appendix A) I have a passion for the 80/20 Principle, not just because it is an intellectually stimulating study,
but also because it has helped me immeasurably throughout my personal and professional life. I
therefore offer a few of my personal real life applications.
Harvard Business School- How could I successfully prepare for 5 case studies each
night, at HBS while going to classes, working part time, and being a Husband and a
Father, when each case could easily take 1.5 -2 hours to prepare?
Answer: I prepared one case well; actively participated in class discussion on that one;
and skimmed or became familiar with the other 4. I was only called-on twice that I was
not prepared, with minimal academic impact. I also learned about delegation and
empowerment when I was asked to continue my summer 40-hours/week job into the
school year. I did that by working 20 hours/week and delegating copiously to my
secretary. We got through the year successfully, and she ended up taking over the job
when I graduated.
Nuclear Submarine life “This is no fun” is how my resignation letter read. Admiral
Rickover and most of the Commanding Officers and XOs insisted that everything be
done 100+%. I worked 15-18 hours/day at sea, 7 days a week for months at a time. I
argued with my CO & XO that many things could be done 80% as good enough other
than nuclear and safety, and that jobs like tabulating the news were not important while
chasing a Russian Submarine. The CO and XO directed everything aboard ship in minute
detail, which I found stifling and unrewarding. I was told I had a bad attitude, about
doing some things 80% and having fun.
Answer: I left the Navy, gave up my plans to be an Admiral, and have been having fun
ever since! At my first job out of the Harvard Business School at Hewlett Packard, I
received a seminar from William Oncken (see Bibliography) about “How to Get the
Monkey Off Your Back" by delegating and building trust. I found out that Oncken’s
principles were right at least for me. David Marquet, former Nuclear Submarine
Commander has subsequently verified my beliefs in his book, Turn the Ship Around.
He had to delegate and give up control in order to build trust, improve performance,
and reduce turnover of his officers and crew of the worst performing submarine in the
Pacific Fleet in order to turn it around to be the best.
Force Reduction at a Fortune 500 company Shortly after taking over as Chief Financial
Officer of the Computer Terminal Group of a Fortune 500 company, I was directed to
reduce my Finance Department workforce from 105 to 90 employees. My staff told me
that we could not do the job and would be out of control if we cut more than 8.
Answer: I told the Group VP that we could only reduce by 8 employees. He directed me
to find a way to cut 15, or he would find my replacement. I agreed to cut 15 with the
provision that we could hire back, if we got out of control. We did the full layoff of 15,
cut out many extraneous duties, and redefined our processes very successfully. We did
not increase the workforce afterwards. We continued to do all required finance and
accounting activities, and the employees liked their jobs better after full implementation.
March 2013 Page 11 Thomas Meyer, Ventom Holdings LLC
Section 6
How-to Applications of 80/20
“God plays dice with the universe. But they’re loaded dice. And the main objective is to find out by what
rules they were loaded and how we can use them for our own ends.” Joseph Ford
This section will focus on the top 5 applications in the opinion of the author that will bring you
immediate results and hopefully allow you to work less, get more done, and ideally be able to
become somewhat “lazy”.
The top five are:
1) JUST SAY NO
2) DELEGATE
3) LEVERAGE
4) W3’S
5) MANAGE YOUR TIME
Just say “NO” “There is nothing so useless as doing efficiently that which should not be done at all.” — Peter Drucker, father of modern management theory.
How often do you say, NO? Do you have a set of filters that allow you to easily decide when to
say yes or no? Say NO, when you or your organization do not have the time or the resources to
do something, and use filters that will help you decide whether to accept a new task or
assignment. A filter is a conceptual tool like a funnel that says, “Does this meet my or our
objectives and strategy. “ Ok, so just saying NO, may be a little extreme in some situations!
Recognize that sometimes that is not an option, but consider, putting that request in Backlog to
be done at a future date, when time and resources are available; or request that another party or
organization may be able to do it better or sooner; or at least give or negotiate a date by when
that request can be met, but don’t always stop what you are doing and start a new task. Also,
consider regularly doing an exercise of deciding what to stop doing that is of low value, i.e.
Cessation.
Delegate Next to the word NO, effective delegation to others may be the most underutilized management
skill in many organizations. Too often the attitude is, “If I want it done properly, I must do it
myself.” And how often do the people reporting to you, delegate upward jobs to you that they
should be doing themselves? Management Time: Who’s Got the Monkey? by William
Oncken, Jr. is the most reprinted Harvard Business Review article ever. His basic concept is that
you must get control over the timing and content of what you do, and the first premise is that
you can get some of that by eliminating subordinate-imposed time. This should be mandatory
reading for every member of your management team. See the Bibliography.
March 2013 Page 12 Thomas Meyer, Ventom Holdings LLC
Leverage We know how to use mechanical levers and gears to multiple the effect and power of our
physical efforts. Figure out how to effectively use leverage to multiply the effects and results of
all of your work, both physical and mental. Use COLs (Cycles of Learning) from other people to
find out how things have been done efficiently rather than “re-creating the wheel.” Pay others to
do things that you don’t know how to do well both personally and by outsourcing the things that
your organization does not do well or are of low value, but necessary. Collect a group of similar
tasks to do all at one time where you can stay focused and get momentum, such as paying your
bills all at one time rather than as they come in the mail. Define processes that are effective, so
that each time something is done, it is done in the most effective and efficient manner; it is not
dependent on who is doing it or supervising it; and the results are consistent.
W3s (What, Who, When) Perhaps the most significant tool that can impact organizational effectiveness and execution may
be the W3. W3’s provide for Accountability by clearly identifying not only what is going to be
done, but by whom, and by when. Ensure that there is a list of W3s clearly identified at the end
of every meeting and event. Scrupulously do not permit W2s (no “When”), and attempt to avoid
multiple who’s, or at least make one person the owner. Somewhere near the beginning of the
next meeting, review the status of the outstanding W3s. A valuable extension of the W3 process
is to have Work Packages, a type of project plan, done in W3 format for short term projects that
do not require an extensive project plan using more sophisticated tools.
Time management Note that there are many time management tools and books that address the issue of how to
prioritize and manage time based on categorizing tasks into a matrix of Urgent/Not Urgent and
Important/Non Important. Below is an excerpt from Steven Covey’s Book, First Things First.
You can learn more from this book, some of the references in the Bibliography, or web sites such
as http://www.businessballs.com/timemanagement.htm &
http://www.mindtools.com/pages/article/newHTE_91.htm
March 2013 Page 13 Thomas Meyer, Ventom Holdings LLC
TIME MANAGEMENT MATRIX from Stephen Covey’s book “First Things First”
Urgent Not Urgent
I
(MANAGE)
Crisis
Medical emergencies
Pressing problems
Deadline-driven projects
Last-minute preparations for scheduled activities
II
(FOCUS)
Preparation/planning Prevention Values clarification Exercise Relationship-building True recreation/relaxation
Quadrant of Necessity Quadrant of Quality & Personal Leadership
III
(AVOID) Interruptions, some calls
Some mail & reports
Some meetings
Many “pressing” matters
Many popular activities
IV
(AVOID)
Trivia, busywork
Junk mail Some phone messages/email Time wasters
Escape activities
Viewing mindless TV shows
Quadrant of Deception Quadrant of Waste
March 2013 Page 14 Thomas Meyer, Ventom Holdings LLC
Section 7
TOM MEYER 80/20 CHECKLIST
Following is a checklist of action items personally used by the author to
manage in his previous Executive and Consulting roles that incorporate
80/20 thinking and have proven to be effective over his career.
Table #1
ALL=All T= Time B=Business P=Personal
CATEGORY ITEM DETAIL
ALL JUST SAY NO Say “NO” more often if requests from others do not meet your
objectives or strategy, or delegate or Backlog
ALL DELEGATE where appropriate Train others and delegate where it is not on your priority list
and others can do as well or better. Practice William Oncken
The care and feeding of Monkeys
http://hbr.org/1999/11/management-time-whos-got-the-
monkey/ar/6 and Leader-Leader per David Marquet, Turn the
Ship Around
ALL LEVERAGE Figure out how to Leverage your time and work; use processes
ALL W3s (Who, What, When) Insist on W3s from every meeting and Use Work Packages
ALL TIME Manage your time per all T items below
ALL Assessments- Understanding yourself
and others
Do and conduct assessments personal and business
assessments to get understanding of what needs fixing
ALL Perfect is the Enemy of Good Enough Decide which tasks where 80% is good enough
T Bills-Paying Use your bank auto bill pay feature or have auto charge to
Credit Card to save time each month
T FOCUS, FOCUS, FOCUS Many people have trouble focusing for more than 6 minutes.
Pick the right things to work on and avoid distractions!
T Magazines and Newspapers Discontinue those not read regularly; subscribe to online
summaries or alerts; toss old one when new arrive
March 2013 Page 15 Thomas Meyer, Ventom Holdings LLC
T Mail I do personal mail 2 times weekly. Sort into actions, info, and
toss. Get somebody else to sort where possible & appropriate.
Discontinue Junk Mail or items not read regularly.
T Planning & preparation vs.
procrastination
Do proper planning; start with the just the right amount of
resources and time to do adequately. Allow a little extra time,
but DON’T start too early as conditions change & remember
Parkinson’s Law. Set deadlines to help you focus.
T Reading Speed read books and use book summaries such as First
Friday Book Synopsis. (www.15minbb.com). Don’t read every
word! Read 2 books monthly for thought leadership & growth
T Reboot your mind for 90 seconds
regularly just like your computer
Reference: The 90-Second Rule- Jim Fannin
Do what the great athletes do to get refocused
T Start the day with to do list Identify the top 3 and start with the most important one.
Consider a 1 hour privacy period to focus on the priorities,
problem solving, and starting on #1 without interruption.
T Work Flow Management Use Filters and Start Rules to determine what to accept or
reject & when to start. Put things in backlog 1st vs. start now.
B Accountability Have clearly assigned owners for all projects and tasks.
Ensure regular feedback & evaluations. Use metrics.
B Accounts Receivable Focus on the high $ accounts, those >60 days, and use
collection agencies for small ones and long overdue.
B Advertising- Content- 4 items: who we are, features, picture, & price
B Branding Ensure your strategy and marketing enables you to
differentiate favorably from your competitors and stand out.
B Business Partner When picking a business partner, figure out not only what are
the good traits, but also their bad ones, and CAN YOU TAKE
THEM AT THEIR WORST.
Never a 50/50 Partnership; somebody must have final word.
50/50 partnerships seldom last permanently.
B Cash Flow Conduct Cash Flow Process Reviews regularly; have Finance
do cash flow projection weekly.
B Change Management Leverage Change the Culture is highest payoff.
Focus on Process change vs. subject Matter.
Pick the highest leverage Barriers to fix first using Figure of
Merit Tools.
B Customers Avoid too much concentration with 1 or 2 customers; it is high
March 2013 Page 16 Thomas Meyer, Ventom Holdings LLC
risk. Consider “firing” bad customers and some of those in the
80 % with such low volume as to be high time & service cost.
B Execution Use Work Packages/project plans; install metrics; improve
communications; implement good meetings; do daily huddles.
B Inventory Focus on control of the 20% that are the high usage and high
$; write off or dispose of excess at least annually. Review
Turnover at least monthly. Insist on great Supply Chain
Management from Vendors and Purchasing
B Layoffs 16/1 Using the 80/20 rule for employees, then the top 20% often
produce 4 times as much value as the other 80 %; that is a 16/1
ratio; then remember your top 20% players are as much as 16
times as productive as your other players when doing layoffs.
B Leadership Team Time Management. Do a Start/Stop/Keep Doing Exercise regularly.
B Meetings You should always contribute in some meaningful way. Never
just sit quietly unless you have nothing to say or contribute.
Un-invite those who never contribute or give coaching; they
may not be needed unless meeting is info only
B Metrics Manage with a key few key metrics rather than pages of
reports. Show time trend graphs. Every person has a
personal metric.
B Networking Get to know 1-3 new people well at networking events vs.
collecting a lot of cards. Select which events to attend
carefully; not all are good uses of your time. Get on LinkedIn.
B ONE THING- (Execution focus from
the Gazelles International best
practices as used by Gazelles Coaches)
Identify ONE THING learned from a Strategic Planning
Workshop & ONE THING to be the single most important
priority for the year: limit the top priority actions to 3-5
Priorities (Rocks) for both the Annual & Qtly plans.
B Outsourcing Use outsourcing for things your organization doesn’t do well
and to save $.
B People – having the best team Jack Welch said drop the bottom 10% annually; at least get
rid of C players that can’t be quickly moved to B players;
spend 80% of your time on A & top B players, not C players.
Hire the best and pay them more!
B Presentations & Speeches- Attending Take notes of 3-5 key ideas when attending; use electronics
such as iPhone or iPad to have an easily saved permanent
record; always ask a question if an option- you can stand out.
B Prospecting Focus on getting to CEOs and Decision Makers
B R&D projects Focus on a few high payoff projects using FOM ranking;
March 2013 Page 17 Thomas Meyer, Ventom Holdings LLC
consider 50% reduction of current number.
B Relationship building 1x1 meetings are much better than having 3 or 4 people.
B Relationship management Make this a key for dealing with your customers and evaluate
your leadership staff & Sales on relationship management.
B Staffs Keep staffs small, lean & mean; Note Warren Buffet runs a
Multi-Billion $ organization with a staff of 24.
B Strategy Annually do a 3-5 year Strategic Plan that incorporates a One
Year plan and 1st QTR plan. See www.Gazelles.com for a
sample.
B Work packages for projects Insist on project plans in W3 format (what, who, & when for
all significant projects including Successful Completion
Criteria and a List of Physical Deliverables
P Coaches & Mentors Have a Coach or Mentor to help you grow and hold you
accountable. See Google CEO Erich Schmidt Everyone Needs
a Coach http://www.youtube.com/watch?v=xHmyVL02gGE
P Friends Focus on a few good friends you can count on as true friends
and TRUST
P Journal or blog Do a regular journal or blog to unclutter your mind and focus
your thoughts.
P Pay others Pay others to do the things you don’t do well, don’t enjoy, or is
not good use of your time.
P Personal strategic plan Do Annual Plan and Written Objectives. People with written
goals are far more successful in general than those without.
P Spouses When picking a future spouse/life partner, figure out not only
what are the good traits, but also their bad ones, and CAN
YOU TAKE THEM AT THEIR WORST?
P Strengths & Weaknesses Strengths- Focus on using your strengths & in areas where you
can excel.
Weaknesses- Spend 20% or less time here and primarily
where they are holding you back from meeting your objectives.
Gather people around you who complement your weaknesses
with their strengths.
P Weekends
Plan not to work weekends unless a crisis or part of your
defined work week
March 2013 Page 18 Thomas Meyer, Ventom Holdings LLC
Section 8
The 80/20 Principle Summarized
RICHARD KOCH This summary was created by Josh Kaufman, a business advisor and author of The Personal MBA: Master the Art of Business EDIT the items below to delete some of the ex
#1: A minority of inputs lead to a majority of outputs. Think of all of the clothes
you own. Think of how often you wear each of them. It’s very likely that you have a few favorites
that you wear over and over. Now consider the contacts you have in your address book or cell
phone. It’s very likely that a small group of contacts represent most of the time you spend on
personnel issues..
#2: A minority of causes create a majority of effects. Think of the decisions you’ve
made over the course of your life. You make hundreds (thousands?) of decisions every day, but
where you find yourself now can be traced back to just a few critical choices that have led to your
present state. The same goes for things like investments – most of the returns a portfolio
generates comes from a few critical decisions to purchase or sell certain securities. Most of the
losses a portfolio generates also come from a few small decisions.
#3: A minority of efforts lead to a majority of results. Think of everything you’ve
accomplished in your education and career so far. It’s very likely that the skills you need to
do your job well are a small fraction of what you know and what you can do well, but they
produce the majority of your income. Even the projects you’re working on follow the same
principle: the vast majority of the value of any project lies in just a few critically important tasks.
The rest of the tasks involved don’t matter nearly as much to the end result.
#4: There are many names for this common phenomenon: The 80/20 Principle, Pareto’s Law, Zipf’s Principle of Least Effort, Juran’s Law of the
Vital Few. The 80/20 Principle has been articulated in all sorts of ways by many different
people, but the central idea is the same: a few things matter a lot, and most things matter very
little. Personally, I prefer to refer to this concept as The Critical Few.
#5: The Critical Few – identify and build upon the 20% of efforts that produce 80% of the results. If you want to improve your effectiveness at anything,
focus only on what matters most. It doesn’t matter if you’re conducting business, working on a
personal project, trying to get into a competitive position, or finding a romantic partner, or
strengthening a personal relationship. There are a few things that matter a lot, and much that
doesn’t matter at all. If you intentionally set out to study what matters most, you can
March 2013 Page 19 Thomas Meyer, Ventom Holdings LLC
tremendously improve your effectiveness. You’ll spend less time, less money, and less effort –
and get better results at the same time.
#6: Most of what we do is low value – eliminate or reduce the 80% of efforts
that produce poor results. The flip-side is also true: in every endeavor, there are many
ways to waste your time and resources. You only have so much energy to use, so it pays to use it
wisely. If something is only marginally useful, delegate or delete it. This advice is sometimes
difficult to put into practice, because it requires what Tim Ferris (author of The 4-Hour
Workweek) calls, “the art of letting bad things happen.” If it’s largely a waste of time to answer
every last e-mail or tie up every loose end, that doesn’t mean you won’t experience repercussions
from skipping them. On the balance, you’ll come out ahead, but it’s easy to not feel that way in
the moment.
By making some hard decisions about what to focus on and what to delete, you’ll free up huge
amounts of productive time and energy to focus on what will really get you where you want to
go. Create a “not-to-do” list – by deciding in advance what’s not worth their time and energy, it
becomes much easier to say no to low-value tasks and requests when they’re presented to you.
Cessation is often the best (and easiest) way to improve your performance.
#7: In business, focus on the products and customer that make you the
most money, and minimize or eliminate the rest All people are created equal, but
all customers are not. Some customers will feel like gifts sent from heaven – they’ll be excited,
considerate, and will enthusiastically purchase everything you offer. Other customers will feel
like they were sent from hell – they’ll buy what you’re selling, but they’ll never be happy, they’ll
clog you will complaints, and they’ll demand special treatment or exceptions to your business
practices. Here’s the rule: discover who your best customers are, and focus on doing everything
you can to give them the best experience and service possible. Also discover who your worst
customers are, and fire them – they represent a huge Opportunity Cost in terms of time and
effort. By politely inviting bad customers to not do business with you anymore, you free yourself
to focus on customers who will actually help you meet your business goals. (Side note: if anyone
asks you for a refund, don’t fight them – grant their request immediately, and be happy doing it.
They are not your best customer.)
#8: In life, focus on the activities that produce the majority of life
satisfaction. The 80/20 Principle also extends to your life satisfaction – a few things will
contribute the most to your overall happiness and inner peace. Those are the things that you
should build your life around: for me, they’re spending time with family and friends, having
deep conversations with people, sharing what I know with others, doing fun experiments, and
reading everything that piques my interest. If I want to lead a happy life, that’s how I should
spend most of my time. A wide body of research indicates that daily experiences contribute far
more to your overall happiness and life satisfaction than possessions do. That means you’re far better off investing in a trip around the world with friends than a huge house or luxury car.
On the flip side, you should ruthlessly eliminate things that don’t contribute to your happiness or
life satisfaction. The classic example for most people is commuting: very few people love the
feeling of sitting in a car or train for 1-3 hours every day. If you eliminate your commute by
moving very close to where you work you both eliminate a source of dissatisfaction AND free up
March 2013 Page 20 Thomas Meyer, Ventom Holdings LLC
more time and energy to do things you find far more rewarding. That decision can be a net
positive, even if it’s more expensive.
#9: A minority of decisions will produce the majority of your results: choice
of work, debts, investments, & relationships. There are a few specific decisions it
pays to take special care before making: what you do for a living, borrowing money, contractual
commitments, and who you spend the most time with – particularly the transition from
romantic partner to marriage or civil union. Think of these decisions as inflection points – you’re
making a commitment that’s very difficult (not impossible, but difficult) to reverse or change.
They also effect how you will be spending your time and energy on a very fundamental level,
such that they can drastically alter your income, priorities, and life satisfaction.
Accordingly, it pays to spend a disproportionate amount of time and energy making sure these
decisions are made well, and you put yourself in the best position you can in the process. For
example, purchasing a home is one of the biggest financial decisions people make, so if you want
to buy a house, don’t do it quickly or lightly. Do your research, understand the complete
financial picture, create a masterful budget, improve your credit, and negotiate hard with the
bank if you’re taking on debt. What can look like small improvements can end up producing
huge results: negotiating 1% off of your interest rate can save you hundreds of thousands of
dollars on a 30-year mortgage, so it pays to push as hard as you can.
#10: More effort does not equal more reward – focus only on what is
crucial, and ignore the rest. Here’s the ultimate lesson, and it’s an important
one: YOU ARE NOT REWARDED FOR EFFORT. People ultimately don’t care how long you
spend doing something – it cares far more about how important and meaningful your work is.
You can spend 50 years digging a pit in the Sahara desert, and no one will care a bit. Spend those
50 years doing something like curing cancer, and EVERYONE will care. Whatever you decide to
do, spend some time at the beginning Deconstructing the goal – what appears to be critically
important to master, and what appears to be a waste of time? You’ll certainly have an
incomplete list until you actually get started and start learning as you go, but establishing your
“focus-on” and “Not-To-Do” lists from the outset can save you huge amounts of time and effort
in the long run.
March 2013 Page 21 Thomas Meyer, Ventom Holdings LLC
Section 9
Conclusion
Applications of the 80/20 principle can and will make both you and your organization much
more effective, particularly in the use of your time and resources.
Be conscious of the decisions you make daily and that you are using 80/20 thinking and making
choices that give you LEVERAGE; that you are DELEGATING where appropriate; using W3s
for your meetings; managing your TIME effectively, and just saying NO more often. Go thru
the 80/20 checklist in Table 1, and do a Cessation (stop doing) exercise, regularly. Be sure you
read Verne Harnish’s Mastering the Rockefeller Habits on how to manage your fast growing
business and the HBR reprint of William Oncken The Care and Feeding of Monkeys. Also,
certainly consider the other items in the Bibliography.
If you do all or most of these applications, you and your organization will be far more effective
and efficient; you will require less resources; you will have more free time and less stress over
time and $; and hopefully will achieve the state of allowing your yourself to “be lazy” sometimes
and certainly having more FUN!
This White Paper is for informational purposes only. Tom Meyer and Ventom Holdings LLC MAKE NO WARRANTIES,
EXPRESS OR IMPLIED, IN THIS WHITE PAPER.
©Copyright 2013 Thomas Meyer. All rights reserved. Reproduction in any manner whatsoever is not permitted without
the express written permission of Thomas Meyer at Ventom Holdings LLC. For more information, contact Thomas at
Information in this document is subject to change without notice.
March 2013 Page 22 Thomas Meyer, Ventom Holdings LLC
Section10
Bibliography
1) Covey, Stephen. Seven Habits of Highly Effective People New York: Simon and
Schuster 1989 and First Things First New York: Simon & Schuster 1994
2) Harnish, Verne Mastering the Rockefeller Habits New York: Select Books Inc. 2006
3) Koch, Richard The 80/20 Principle-The secret to Achieving More with Less New York:
Doubleday 1998
4) Marquet, David. Turn the Ship Around Austin, TX: Greenleaf Book Group Press 2012
5) Onken, William The care and feeding of Monkeys http://hbr.org/1999/11/management-
time-whos-got-the-monkey/ar/6 Boston, MA: Harvard Business Review Press 1999
OTHER RELEVANT BOOKS NOT REFERRED TO IN WHITE PAPER
1) Delong, Thomas J. Flying without A Net Boston, MA: Harvard Business Review Press
2011
2) Miller, Keith J. Compelled to Control Deerfield Beach, Florida: Heath Communications
Inc. 1997
March 2013 Page 23 Thomas Meyer, Ventom Holdings LLC
Appendices
Appendix A: Bio of Thomas E Meyer
Thomas E Meyer Business Advisor & Executive Coach
Thomas Meyer is the founding President and Principal of VENTOM & Associates, founded
in 1985. Mr. Meyer has been a business advisor and consultant for over 25 years. He is a
Certified Gazelles International Coach, and has provided management coaching and
mentoring to CEOs, COOs, Admirals, and Senior Level Executives in the US and China. He
is an expert at: coaching CEOs and management teams of fast growing businesses; helping
clients achieve enterprise transformation through process improvement; strategic planning
and implementation; cost and expense reduction; and sales force hiring and training.
His clients have included EDS, Data Products Corp, Olivetti, the US Navy, Clipsal (a major
supplier of electrical products in Hong Kong), Hengan (a large manufacturer of paper
products in China), AMTRAK, and a number of medium size fast growing businesses.
He has extensive experience with managing Naval Enterprise process improvement programs
including Enlisted Recruiting and Training, Naval Aviation Pilot Training (resulting in
significant reductions in time to train Naval Aviators and increases in output), Naval Surface
Ship Maintenance (cost savings of $200 million over 3 years), and Nuclear Submarine
maintenance in public shipyards.
Management experience in the industrial sector includes CEO of an office products company
in a LBO partnership with a major venture capital firm, plus general management, financial
management, and marketing roles with two Fortune 500 companies, Hewlett-Packard and
Harris.
Mr. Meyer’s Naval career began as a graduate of the US Naval Academy, where he
graduated with honors. Following seven years aboard SSBN and Nuclear Attack
Submarines, he attended and received his MBA from the Harvard University School of
Business with majors in Marketing and Finance.
Mr. Meyer is an Independent Consultant to Booz-Allen Hamilton in the area of Supply Chain
and process change implementation. Past positions include Managing Director of BDO
Seidman Consulting Corporate Advisors, LLC for Dallas, and the Cassidy & Associates
consultant in Texas providing clients with US Government financing and marketing to
government agencies in DFW and Austin.
