80/20 Rule Explained: How to Do Less and Achieve More (Pareto Principle)

How do I achieve more success in my career?

When Warren Buffet’s personal pilot, Mike Flint asked him this question, he shared a three-step prioritization strategy.

Watch the video here on How to Do Less and Achieve More.

Step 1: Write down 25 career goals

This is based on Flint’s question. You can adjust your list based on your goals.

Step 2: Review the list and pick out the top five goals

Warren Buffet asked Mike Flint what he was going to do with the list. Flint said he’ll focus on the top five goals since they are his primary focus. Then he’ll work on the other 20 intermittently because they’re not as urgent, but he still wanted to give them a dedicated effort.

Step 3: Avoid the remaining 20 goals at all costs

Warren Buffet told Mike he had it all wrong. Everything that isn’t part of his top goals is the “avoid at all costs” list. No matter what, these goals should not get any attention until the top five have been accomplished.

The 80/20 rule is frequently cited by successful entrepreneurs. When I learned about it in management consulting, I realized it sharpened my thinking immediately and improved my productivity.

What is the 80/20 rule?

It’s a rule of uneven distribution where 80% of the desired results come from only 20% of your efforts. It’s also called the Pareto Principle because it was first coined by Italian economist Vilfredo Pareto. He saw that 20% of his pea plants produced 80% of the healthy pea pods. He started to look around and realized that 20% of the people owned 80% of the land. Today, it’s 20% of the people who hold 80% of the wealth, and 20% of the apps on your phone are used by you 80% of the day. And of course, in Buffet and Flint’s case, 20% of the goals were going to lead to 80% of success. The actual ratio might not be perfectly 80/20, even though it comes up a lot. It could be a 90/10 ratio, or even 99/1 in some cases. But the idea here is that it's an uneven distribution of effort versus result.

It’s not all about working hard. It’s about working smart, working on the right 20% to get 80% of the results. And it boils down what you focus on. Steve Jobs said, "People think focus means saying yes to the thing you've got to focus on. But that's not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully." Just like how Warren Buffet advised Mike Flint to not focus his attention on the remaining 20 goals until he succeeded with the top five goals. That’s what focus means.

We don’t want to give things up because we unconsciously think 80% of success isn’t good enough. We don’t want to give up the 20 other goals because together with the first five, things will be perfect. But only 20% of your effort will lead to 80% success. If you work a 9-to-5 job, for example, it means spending less than two hours a day to achieve 80% of the success of the financial rewards that you want. And if you’re still not convinced: the last 20% of your success takes 80% of our effort. Is it really worth it for you to spend 80% of your effort only to be rewarded with the last 20%?

How can we apply this in life?

I’ll separate this into two categories: time management and productivity, and sharpening your thought process.

Time Management and Productivity

First, you want to use Buffet’s prioritization strategy and go through the three steps to identify the goals you want to work towards. Then take a look at your to-do list every day and apply the 80/20 rule.

If you have 10 things on your to-do list, what do you usually start with? The easy and urgent ones are usually the ones that are dealt with first.

If a task is easy, it usually means it doesn’t require your expertise. For example, setting up a meeting is not something that you uniquely can do. So even if the meeting is to talk about something within your expertise, someone else can set up the meeting. In this case, setting up the meeting does not belong to the 20% of effort you need to use in order to achieve 80% of the success.

If the task is urgent, it’s usually because someone else is pushing you to respond to something so they can succeed and move on with their day.

Lots of people spend their morning going through easy and urgent emails. But does that really contribute to their success? Usually, no. That’s why CEOs and entrepreneurs wake up early - Tim Cook wakes up at 4:00am and Disney’s CEO wakes up at 5:00am - to carve out that 20% of time so they can achieve 80% of their impact.

How do you make sure you find the right 20% of tasks to focus on? Hint: these tasks are usually the ones only you can do. By identifying one thing that you can do each day, it will completely change the result. If you want to learn more about this, there’s a great book called The One Thing by Gary Keller.

Sharpening Your Thought Process

This is about understanding that while the  world is complex and it’s difficult to understand every detail in it, we can still identify 20% of leavers that impact 80% of how something works. This is how Elon Musk approaches the complex problems he faces in space, electric vehicles and education.

Here’s an example of how Elon Musk thinks about reducing the price of lithium batteries to increase electric vehicle adoption. See here [link] for the transcript, or watch the YouTube video.

By applying the 80/20 rule to this problem, you see the essence of the problem. As Elon Musk said, the basic materials of lithium batteries are pretty cheap. The cost is not due to the components, the materials. You don’t have to think about changing the materials. The 20% of your effort won’t be focused on how to make the cheap materials cheaper. Instead, your focus will be on how to combine the materials in a smart way to bring down battery prices.

TL;DR

The 80/20 rule is a rule of uneven distribution where 80% of the desired results come from only 20% of your efforts. It changes how you approach your time and problems. The rule helps you understand what to focus on, increases productivity and sharpens your thinking. Find the 20% of the effort that’s going to affect 80% of the results.

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