Introduction

Have you ever wondered why some companies make more money than others? This a million dollar question that everyone asks, but not everyone is ready to hear the answer.Are you ready to know these successful companies secrets? Is it due to talent? Or just luck?Don’t assume that you are less than these successful companies, if you learn the secrets of success shared in this book, then you will also achieve great results.In this book, you will learn the one rule of top successful businesses and how they made their success a reality. It is not luck, nor talent, and you can achieve it, too.The secret is that the most successful companies know how to focus their energy and resources on what matters the most. This is what the 80/20 principle is all about. Once you know how it works, you’ll never be the same again.So are you ready for the change? This book will change your business, your life, and your overall happiness.

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Welcome to the 80/20 Principle

Bernard Shaw once said that the reasonable man tries his best to live by the rules of society, while, the unreasonable person tries to make the world adapt to his own rules. According to Bernard Shaw, the unreasonable man is the one capable of changing the world. In other words, if you think differently, you can change anything.From childhood, we are conditioned to think that we have to give 100% to anything we do in order to achieve what we want. We are also raised to believe that our actions have equal results; we believe that each day, every customer, and every opportunity is exactly the same.That type of thinking is wrong. If you still believe that to achieve 100% out of, for example,  your job, you need to give 100% , then your thinking needs some upgrading.

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The way we think can change the world. We have to be smart and start thinking about how to create more results with less effort. If you do that, imagine how your job, happiness, and life in general will change.The 80/20 principle suggests that 80% of results can be achieved from just 20% of the effort. This principle can be applied to all aspects of your life.If you start thinking 80/20, then you will realize that 80%of your profits can be gained by only 20% of the cost. So what about the other 80%? Is it not valuable? The answer is that once you start questioning your priorities, you will discover what works best and what doesn’t.  You can then focus more on the things that matter most.Think of the benefits that you can profit from if you only spend 20% of your time and effort on a task that used to take 100% of your time, energy and attention. Your life would  change forever.

This idea was first introduced by Vilfredo Pareto 100 years ago. He was trying to study the wealth of rich people in nineteenth century England. He noticed that only a few people were rich. That didn’t surprise him; it was expected.He then tried to study the relationship between the distribution of wealth and the number of people living in England. Once he did that, he discovered that only 20% of English citizens had 80% of the money.This discovery made him think that there was no balance in this world. So, he continued to study rich people of past times and places. He was surprised to find out that the same rule applied all throughout history.That made him think: can this principle be applied to other areas of life, such as the economy? That was the birth of the 80/20 principle.

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How to Think 80/20

In the previous chapter, we learned that small things can lead to big results, and likewise, big things can lead to small results. That is the 80/20 principle in the simplest sense.How can this principle be applied to real life? First, you need to focus on your own life, study it, then see what changes you can make to improve your life.You don’t have to work too hard to achieve good results. Instead, you need to be smart and know what kind of work requires less effort and what gives you the most profit.Take time to think carefully before making any changes.There are two ways you can do this: you can start thinking 80/20 or do an actual analysis  of the area of your life that you want to change.

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Then, once you spot your 20%, study the causes, concentrate on nurturing them and try to make the rest produce 80% of profits, just like them.As an example, the author had a tutor who gave him life-changing advice. He told him to never read a book from start to end unless he really wanted to enjoy it.If he wanted to learn from that book, he had to be smart. He told him to read the conclusion carefully, then the introduction, then go back to the conclusion. That should be enough, since most books explain everything in both the introduction and the conclusion.If he needed more information out of that book, he should go directly to the chapter he needed. This way, he didn’t  have to read the whole book.What the author concluded was that his teacher was telling him to get more value from the book by reading less. That was an easier approach and took less time. He thought, What if this works on exams as well? He studied samples of 100 exams and found that 80% of exam questions cover only 20% of the content that the students were studying.First, that made him think that the educational system at Oxford was ineffective. With time, he started thinking that maybe their professors were just preparing them for how the real world works.

The Underground Cult

How does this principle contribute to the world? You may be wondering where this idea has been implemented across the globe. It has been used on countless occasions throughout history.The first wave that changed the world was the quality control wave. Here the 80/20 principle was applied to study products that did not make any profit. The results proved that if you focus on the 20 percent good qualities that may sell the product, rather than focus on all of them, you will receive 80 percent profit quickly, and with less effort.If things were this easy, what’s causing the lack of quality in products? The answer to this question is that not everyone is working by this principle.Today, the 80/20 principle is considered a secret weapon used by only a few. Those few are the most successful businesses in the world.

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In order to apply this principle to your business, you have to try to generate the most profit out of the least effort. This must involve every aspect of your business: focus on the most profitable products, markets, and customers.A good example of this principle is one that Joseph Juran created back in 1950. He started a revolution on quality control. Juran claimed that companies should study their flawed products and identify the reasons why they failed to sell in the market. Once the problems were identified, they should focus only on the most important qualities (the 20%) and try to improve them.He believed that by fixing the 20% qualities, the products would start selling better. It all depended on the customers and what they wanted. Trying to improve 100% of the quality of a product is impossible.He called these problems the “vital few”. This method proved to be useful. When Japanese companies started implementing this approach they took over the market with their products.This view changed the business world. Companies in the West also started to adapt 80/20. They stopped trying to achieve overall or perfect quality, but rather focused only on the 20% that would sell and make 80% of the profit.

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Why is Your Strategy Wrong?

You may be thinking that your company is doing its best, and you and your employees are doing their best, too. But you are totally wrong.Is your strategy wrong? Yes. Why? Surely, you have no idea where your profits are coming from and where you are losing money. You are making much effort and achieving only a small profit.You don’t need to conduct an overview of your strategy. What your company needs is an “underview”:a deep study of how your business is working for you. You must know how your money is being generated.You need to identify the aspects of your business that are making you the most profit. This includes your products, your customers, and anything else that is bringing in money.To know more about your products, you need to study the sales you made last month. To know more about your customers, you must focus on the customers or customer groups that buy your products the most.

Other aspects are things you may have already noticed, such as comparing small projects and big projects. Whichever makes you the most profit should take more of your energy and resources.Another beneficial way is to study your competition.A company called Interface Cooperation of Georgia used to sell carpets. They studied their business and noticed that of all the carpets that people bought, only 20 percent of them were used.After learning this, they shifted the company’s focus from selling carpets to fixing carpets people already owned and used daily. Anyone who had a carpet that suffered an accident was taken to that shop. The employees would repair the carpet and reinstall it into the home of the customer.This company realized that in order for their business to make more money they had to target the customers that were bringing in the most profit, in this case, the carpet owners.Now this company is an $800 million carpet supplier. It is a great proof of the inner workings of the 80/20 principle.

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