Know The 80/20 Principle and How To Use It With This Book Summary

Most of us do hard work, but we achieve less. Why is that?

To understand it better, we need to know one of the common techniques, which is called the Pareto principle, also known as the 80/20 rule.

Richard Koch’s 80/20 book summary can help you understand this better. It shares with us the secret to achieving more with less.

This rule can not only apply to business but also to our society, our personal lives, and many more.

So, let’s begin our journey to understand this 80/20 rule and how to use it in our lives to achieve success.

What Is The 80/20 Principle?

The 80-20 rule, also called the Pareto Principle, says that 80% of outcomes (or outputs) come from 20% of all the causes (or inputs) for any given event. But it does not mean it exactly is 80/20; it may be 70/35, 85/25, or any unequal.

It is because, in this world, nothing is perfect nor balanced; everything has an inbuilt imbalance between them. You can understand this through an example.

• In business, 20% of products account for 80% of sales, and 20% of customers account for 80% of the company’s profit.
• In our modern society, only 20% of criminals commit 80% of crimes. 20% of drivers cause 80% of accidents.
• In this world, only 20% of children have gained 80% of educational qualifications.

And there are endless examples in which the 80/20 rule can be applied.

Pareto Principle Discovery and Its Importance

The 80/20 rule was discovered in 1897 by the Italian economist Vilfredo Pareto. He found this principle when he was studying the wealth pattern of the whole world.

When he roughly calculated it, he was amazed to see that 20% of the population enjoyed 80% of the wealth, 10% of the population enjoyed 65%, and 5% had 50% of the wealth.

What he discovered next was even more amazing. He saw that in almost every case, this principle can be applied.

You may wonder why this can be applied in most cases. Why not ‘all’ cases? That’s because, as we told you before, this world has an imbalance. It may be 60/40, 70/30, 90/10, etc. The imbalance can also be as follows: 80/1, 30/31, etc. It is because the fraction doesn’t need to always account for 100%.

After Pareto, many people revised this principle with different names. But, in short, we can say that it’s the 80/20 principle only.

How Author Use This Principle

The people who used this principle proved to gain success in their lives later. So, you can also use this in the field that you think will help you gain success. You can understand this by the author’s real-life example.

When he was a student at Oxford University, his tutor told him that reading the book cover was unnecessary because, in this way, we could save time and understand better. 

The author also explains to us that we should read the conclusion first, then its introduction, and then again the conclusion and some main points or interesting bits of that book. 

That’s because 80% of a book’s value lies in its 20% or fewer pages. He himself used this method in his college years, and in his finals, he also analyzed that 80% of his exam paper was based on 20% of topics.

How To Use The 80/20 Principle In Study

This principle can be used in two ways:

1. 80/20 Analysis
2. 80/20 Thinking

80/20 Analysis

It provides us with precise, quantitative, investigative facts and is highly valuable. This analysis is used to compare two different sets of data in percentage.

Out of those two data, one is always about the number of people and the second accounts for 

Some fascinating characteristics or objects that those people possess. And it’s shown pictorially.

For example,

• It was shown that 70% of beer was drunk by 20% of beer drinkers, and the other 80% of beer drinkers consumed 30% of beer.
• Also, in colleges, it was noticed that 80% of questions asked by professors are answered by only 20% of students.

Like any other thing, it has its pros and cons, and this analysis can also be misunderstood or misapplied by some people. And instead of creating profit for that person, it can also result in his/her loss.

For example, the author observed that in some bookstores, booksellers only keep 20% of bestsellers books, creating 80% profit. 

But instead of creating profit, it results in their loss because most customers are not seeking those books. Furthermore, according to a study, bestsellers represent about 5% of total sales.

That’s because some books never appear to be bestsellers, but they are always sold throughout the year, and they are the real 80% that creates the lion’s share of sales.

80/20 Thinking

It is a bit fuzzy but qualitative; it requires thought, provides us with insight, and is highly valuable.

It is easy to apply the 80/20 principle because it only requires mental work, and most of us are not natural analysts. So what is readily available to us is 80/20 thinking.

We must ask ourselves what is the 20% leading us to the 80%. But we shouldn’t force our mind to think about it instantly but give it some time to think about the problem creatively and slowly.

How To Use The 80/20 Principle In Business

Although the 80/20 rule has been used since ancient times, not many people know about it.

But those who knew about it have always gained profit. For example, the sellers who reduce their product price by 20% will generate 80% or more profit than others. And as time passes, 80% of customers will visit those 20% of shops that sell their higher quality products for less money.

Irregular Insights From The 80/20 Principle

If you want to use this rule to its fullest potential, then you should be able to know that it has irregular patterns. It’s because after explaining, many people will still show rigidity and will always expect that 20% of actions will result in 80% of consequences. But it can also be 60%, 40%, 90%, etc.

If milk is boiling in a pan, it depends only on the person who will switch off the stove because it will only take seconds for that milk to become a Cappuccino or a mess on your kitchen counter. 

It’s the same thing in business, but it’s going to take longer. It will take many small causes in business to combine and have a significant result, like IBM’s, which started with small causes and is now a dominating face in the computer industry.

From this, we can derive the fact that we don’t always get what we put in; sometimes, we can get much less and sometimes much more.

If you want to gain profit in business, then think where you are making the most money, and for this, you have to conduct the 80/20 analysis. Analyze which product is gaining you more profit and which is disastrous for your company. Identify the customer’s needs.

How To Use The 80/20 Principle In Your Life To Make It More Enjoyable

As we have already seen, we can use it in our business and our daily lives. 

We all have a habit of doing things we don’t like, and our parents are also responsible for some of it. 

We usually do the work or job we don’t like. Likewise, we are surrounded by people we don’t like (our bosses or colleagues). Even if we get promoted or get a reward, we will only get temporarily happy, but when we realize that with greater power comes greater responsibility, we will be sad again. 

That’s why the author suggests that we become hedonists (Hedonism or hedonism refers to the prioritization of pleasure in one’s lifestyle, actions, or thoughts) but not selfish.

Now, he also tells us what he thinks about time! For the people who say that they are busy or idle, this phrase is for them.

• 80% of achievements are achieved through 20% of hard work and vice versa.
• Also, 80% of happiness is experienced in 20% of life.

Eliminate The Low-Value Activities

In this, the author explains that 80% of activities that give us only 20% of results should be eliminated because they only reduce our productivity and do not follow the herd; instead, be conventional with your use of time. 

Most of you will say that most of your low-value activities are inevitable. However, after eliminating them, a change will come in your circumstances; to cope with them, you must plan. If you would rather not eliminate or reduce them, your potential for achievement and happiness will never be attained.

Now, he shares with us the top 10 low-value uses of time and the top 10 highest-value uses of time.

Top 10 Low-Value Uses Of Time

1. Things other people want you to do.
2. Mindlessly doing the same things in a particular way without understanding its logic.
3. Things that you are not good at doing.
4. Things you don’t enjoy doing.
5. Things that are always interrupted.
6. Doing things just because others are doing it.
7. Doing things that take twice as much time as you expected.
8. Things where your collaborators are unreliable.
9. Things that have a predictable cycle.
10. Answering your phone call.

Top 10 Highest Value Uses Of Time

1. Things that advance your overall purpose in life.
2. Things that you have always wanted to do.
3. Things that already follow the 80/20 principle.
4. Innovative ways of doing things to increase the quality of results.
5. Doing things that other people tell you ‘can’t be done.’
6. Things other people have done successfully in different fields.
7. Things that use your creativity.
8. You can get things by making other people do it for you.
9. Using high-quality collaborators.
10. Doing things now or never.

Now, the author explains to us that most of us who are successful in business are not good at keeping up with our relationships and vice versa. To overcome this issue, we should choose the most enjoyable work.

“Things the matter most must never be at the mercy of things that matter least”
Johann Wolfgang von Goethe

Now, the author shares with us the 7 habits that we should do daily to be happy:

1. Doing exercise.
2. Mental stimulation.
3. Doing meditation either for spiritual purposes or just for gaining peace.
4. Doing a good turn.
5. Taking a pleasure break.
6. Give yourself a treat.
7. Congratulate yourself.

How To Use The 80/20 Principle In Work Life

Koch says that we are wasting 80% of time and effort on low-value outcomes, and that’s the reason that we only get 20% happiness in our lives. We indirectly increase our happiness by deciding the career or work we like the most.

But most of you can’t leave your current job to pursue what you really want because of many other factors.

So allow me to explain it to you with the help of your imagination. Suppose you are a rat, and your job is a ‘rat race,’ and you can’t drop out immediately. You have two options: make it more interesting by adding cheese or changing your race.

Most of you will pick the first option, and what if we tell you that you can really use it in real life by ‘making it more interesting.’ 

Maintain a good relationship with your current colleagues or bosses and complete as much work as possible without showing dependency on them. In this way, you can also make your current job your best job.

Now, the author tells us about the kind of people suitable for becoming the best employee or boss. There are mainly four types of employees.

• One that is lazy and stupid, this type of person should be left alone to do their work, and they also don’t do you any harm.
• The second type of employee is hard-working and intelligent; these people are well-suited to become good employees.
• Third, they are hard-working but stupid, and they should be fired at once because they create unnecessary work for everybody.
• The fourth ones are intelligent but lazy and suited for the highest office.

You may be thinking about why the fourth ones are suited for the best or the highest position.

That’s because, as the author explains, if you are hard-working, then you should also instill some laziness into you. And if people call you stupid, they don’t know that you are more intelligent than them at some other thing.

The fourth one is hard-working but not stupid enough to do low-value work. They are lazy, so they always find ways to reduce their work. They do this by doing less work, but it contains the highest value, which is why they are suited for the highest office.

In this way, they directly or indirectly use the 80/20 principle because they are doing only 20% productive work, producing 80% results.

How To Use 80/20 Principle In Relationship

Now, the author explains how to keep our relationships with our friends and family members healthy, happy, and satisfactory. We can only feel these states of emotions if our relationships are few and deep. 

And we should eliminate those relationships that take up most of our time but are still unsatisfactory and seriously flawed. That’s because our bad relationships affect our good ones. You can understand this better by viewing our previous book summary of 48 Laws of Power.

Some slots in our relationships are reserved for different people, and slots are few, but some are many. Like the mother slot is reserved for only one woman, which is your real or biological mother, it can’t be taken by anyone else and that’s why the author says that our relationship slots are permanent.

And that is the reason we should not fill our relationship slots with low-quality relationships.

10 Golden Rules Of Achieving Success

Now, we will share with you the 10 golden rules of achieving success in your career. But first, you have to understand what the word ‘niche’ means because we will also discuss it later.

A niche means a broader or narrow stream of work. Art is a broader niche to choose from, but we have drawing, painting, coloring, sketching, craft, and origami in art.

If we select to paint, there are many ways to do it, like painting glass or canvas. This helps us narrow down our choices.

Now that you have understood about niche, so let’s understand the ten golden rules for career success:

• This rule says that we should select a small niche but excel in it to develop our core skills.
• We should decide the niche we enjoy the most and in which we have a chance to stand.
• We should realize that our knowledge is our power.
• We should best serve our core customers after determining our niche and identifying our market.
• We must learn to identify our 20% effort, which gives us 80% of returns.
• Learn from the best.
• Become self-employed early in our career.
• If you have your own business, then try to employ as many lazy- hard-working people as possible in your company.
• Use outside contractors for everything, but keep your firm as simple as possible and focus only on areas where you are several times better than your competitors.
• Exploit capital leverage.

80/20 Principle For Students During Examine

Now, the author tells us about our hidden friend, which is our subconscious brain. You can watch our video on the power of the subconscious mind if you want to know more about it.

But for now, understand that our brain is divided into two parts:

• One is our conscious brain, which controls all our actions,
• One is our subconscious brain, which works on its own accord. Thus, we don’t need to put any effort into it.

Let me give you an example, which is also a tip for students during examinations. When you are given your question paper, please read it thoroughly, see what questions you can do, and write their answers first. 

When you are writing their answers, your conscious brain is working, but side by side, your subconscious brain is also working to process the answers to the questions you left.

So, when you write them down later, you will feel that you can now write their answers more deeply than before.

You can use your subconscious mind in any field to improve it.

I hope you like it.

Please tell us your thoughts and comments.

The 80/20 Principle Summary