The Pareto Principle, more commonly known as the “80/20 rule” is something that every leader should know about. Over 100 years ago, Italian Economist Vilfredo Federico Damaso Pareto spotted a pattern that would unlock the secret to productivity in the 21st century.
By studying the economic wealth of Italy, he discovered that 80 percent of the wealth was held by 20 percent of the population. He recognized this same pattern when he went from economics to the garden, where it was also true that 80 percent of the peas in his garden grew from 20 percent of the plants.
The examples could go on, but the statistics were stacking up overwhelmingly in favor of this split in other places.
- 80% of sales come from 20% of customers
- 80% of problems come from 20% of defects manufacturing production
- 80% of productivity comes from 20% of workforce
- 80% of crop yield comes from 20% of plants
This makes me stop and ask myself as a leader: which 20 percent of efforts are paying off the most for me and my team?
While the Pareto principle isn’t exactly a law physics, the principle was used to develop one of the most prominent quality control management theories in post-WWII business production. That means it actually works! Tried and true, the Pareto principle has the ability to change the way we think about business, especially when it comes to how we allocate time and resources.
The key question at hand is this one: how do we distribute our efforts to make them go as far as possible? If it rings true that20 percent of effort account for 80 percent of outcomes, then how do we discover which 20 percent of activities are the right ones?
This is easier said than done, considering many of us are confused about which percentage of our activities are on track to success.
What the Pareto principle shows is that when we focus on the right things, we will experience a disproportionate amount of success. But sometimes, we are the ones too close to the problem. We need someone from 50,000 feet to take a look at what we’re doing and how we’re losing efficiency, or how our efforts are being led astray by lack of vision or bad investments of time or resources. In summary, we need an advisor to keep us accountable to do our very best work, the kind of work that is results-bearing.
By helping to focus your efforts in three areas of development, an executive coach can help your team get where you want to go in the following areas:
- Team development
- Organizational development
- Individual development
In each of these spheres, there’s an opportunity to improve focus and sharpen your company’s productivity so that you are consistently focused on the right thing. So many of our new clients at Coachwell had come to us excited about the prospect of getting an executive coach, but feeling nervous about the investment. Many of them admit: “I know this executive coaching thing is important but I don’t even know where to begin. There are so many problems we need to untangle.”
If you’re in that boat, I can tell you right now that this feeling is totally normal! If you think it’s time to start investing in the overall direction your company is headed, then an executive coach can help you incrementally improve what you do for your industry, and your teams.
Coaching is leveraged upon the law of incremental improvements, meaning that we believe that health in the small areas of your business and personal life will grow into bigger outcomes later on down the road. This is the same idea that the Pareto principle teaches, and has been applied successfully to nearly every industry of the world.
We see good results with executive coaching happening all the time, like for our clients at Focus on the Family, whose daily broadcast is heard by an audience of over 5.5 million listeners a week. Helping Jim Daly and his team build a more focused and empowered culture is one of many privileges of coaching, and one Coachwell is bringing to many other types of companies.
We hope you’ll consider getting an executive coach to start putting the 80/20 rule to work for your business.
To your excellence in productivity,