What’s The 80 20 Principle In Business? 80/20 Book Review

Have you ever gone to work thinking you’ll check every single item off your to-do list? Do you find yourself not accomplishing your long-term goals? If you struggle with time management at work, you’ve come across multiple situations dealing with it. When it comes to success, what’s the 80 20 principle in business? It’s a concept that workers have tried in their daily routines to improve performance.

UPDATED: DECEMBER 31, 2022

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1. The 80-20 Principle: What Is This Principle All About?
2. The 80-20 Principle Meaning
3. How Does The 80/20 Principle Relate To My Work Situation?
4. Using The 80/20 Principle To Simplify Complexity
5. 80/20 Time Management Over Traditional Time Management
6. The 80/20 Principle Can Help With Work-Life Balance

The 80-20 principle: What is this principle all about?

Formerly known as the Pareto principle, Richard Koch himself has used the 80/20 principle in his own life. The idea behind it is “not by doing more, but by doing less.” 

For overall happiness and satisfaction, utilizing it in business and in personal life is crucial. In this post, I’m going to summarize the main points from Koch’s book, The 80/20 Principle: The Secret To Achieving More with Less (1999). 

The 80-20 principle meaning

You may notice most of your work gets done during the final hours before a deadline. Your best efforts are put in those last moments, compared to previous weeks when you had more time. 

The meaning of the 80/20 principle is that 80% of work results (meaning output) come from only 20% of the effort put in (that would be input).

So why the unbalanced ratio? Well, the minority has a more significant impact on results, whereas the majority will end up having a small effect.

Examples

An example that Koch provides is motorcycle accidents: around 20% of motorists cause 80% of accidents because most motorists drive carefully. So a small minority of motorists will be careless and cause accidents.

Another example would be the current unequal distribution of income and wealth (especially in the US). Someone may say 20% of the population owns 80% of the wealth.

How does the 80/20 principle relate to my work situation?

If you struggle with time management, you may find most of the tasks you complete may be wasting valuable time. So to improve your work process, cut out wasted time, and replace it with jobs that matter the most during the 20% period. 

For instance, if you do more practical tasks around the last minute, you’ll likely produce more effort and increase your productivity.

Also, cut out time spent on things such as overthinking a project, or obsessing over possible mistakes. 

Being worried about these small things can take away time. In other words, focus on tasks that will bring more significant results, instead of minor effects.

Using the 80/20 principle to simplify complexity

Many people would think that more substantial companies are more successful in executing their business strategies. But in one study that Koch brings up, 39 medium-sized companies (the least sophisticated companies) were much more successful than more significant, advanced firms. 

For this reason, the least complicated companies were able to simplify their businesses, reduce bureaucracy along with hidden costs as well. Among these are administrative and operational costs. 

That’s not to say that more prominent companies are ineffective at making profits. But it’s noteworthy to find that medium-sized companies are useful in building their businesses more comfortable to operate.

Also, the 80/20 principle can be useful for companies to ensure the best customer satisfaction possible. So when a company is developing a new service, it will target 20% of customers who regularly purchase their products.

This approach ensures loyalty and an incentive to provide exceptional customer service. More so, it increases market share for companies while selling to their same customers.

80/20 time management over traditional time management

One goal of time management is to increase efficiency by doing more tasks in a given period. The problem is most people don’t know which tasks to start on or which ones are more important. 

What Koch brings up is most of the functions on somebody’s to-do lists are considered nonessential and assumed as “high priority.” As a result, people will have busier schedules and work longer hours than average. 

The solution (as Koch suggests) is to use a “time revolution,” meaning that 20% of tasks will produce 80% of the achievements. So Koch suggests going back and focusing on the 20% that matters.

The 80/20 principle can help with work-life balance

In regards to how the 80/20 principle can be useful outside of work, Koch says the principle can be used to identify things that people don’t enjoy or make them happy.

As Koch lays out, identify 20% of the things you enjoy doing. After that, identify 80% of the things that make you unhappy. 

The result is to decrease the time you spend doing those things. If possible, someone can try to work fewer hours so they can spend more time with family and friends.

This approach may not work for everybody. But it’s an example like this that can bring more happiness and joy to an individual’s life.

Final Words

Overall, the 80/20 principle is an excellent book to read on time management. As mentioned earlier, using the 80/20 time management approach can be much more useful than a traditional time management approach (efficiency). 

But for the most part, identifying the 20% of tasks you do well in while separating the other 80% that may be a waste of time, can help save a lot more time and less frustration.

Your Turn: How can you apply the 80/20 principle?

Have you ever heard of the 80/20 principle before? Have you ever applied the principle in a similar situation? If not, how will you apply it moving forward?

Feel free to share your thoughts by leaving a comment below. I look forward to reading your comments, and I’ll gladly respond promptly.

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Eric is a content writer and the site owner of notimekillers.com. He takes great pride in helping people manage their time and grow their businesses. Eric is a firm believer in time freedom, as he believes in taking ownership of time. 

“Time is your most important asset. It can be your best friend or worst enemy. How you use your time can shape the future you desire to have.” In his leisure time, Eric loves to write and read whenever possible. He enjoys going for long walks outdoors while doing in-home workout videos every week. You can follow Eric on LinkedIn.