Does the 80:20 Rule actually work?
Hands up who's read Tim Ferriss' The 4-Hour Work Week? When the book first came out I was at Audible in London, working closely with the book team at Amazon (Audible's parent company). The 4-Hour Work Week was "the" entrepreneur / startup book to read (or listen to... #heyaudiblefans) so I did it, I listened. But it wasn't until a few years later, once I was back home in Melbourne and another friend mentioned it, that I took the time to re-read the whole thing. One of the biggest takeaways for me? The 80/20 rule.
Now, Ferriss wasn't the first to come up with this (an Italian economist Vilfredo Pareto did, and Richard Koch wrote a book about it 12 years before Ferriss), but he brought it to my attention and it's now something I use in my business. The basic idea is that 20% of your output results in 80% of your profit / results. On the flip side, we often spend 80% of our time on things that only generate 20% of results (not just in business, but in all areas of our life). By reviewing where we spend our time and what results from that (positive and negative) we become more productive and find more efficient solutions to business problems.
So, what does this look like?
For people in retail, this may look like swapping piece-meal advertising for one awesome trade show. For service-based businesses, it may be creating a workshop or online video series that takes effort up front, but can be replicated again and again with minimal input. For a digital or PR agency, it may be refining your services to focus on a few areas and industries, as opposed to serving a variety and having to spend time learning about each one, each time.
How do I start implementing the 80/20 rule?
The first thing to do is understand where your time is going. If you missed my goal setting email a few weeks ago, download this Weekly Planner to start tracking your time. If you're someone who uses a calendar/diary religiously, you may want to go back over the last month and review which meetings, events and activities you took part in and what the result was. You may wish to track your time via an "80/20 audit" on a monthly, quarterly or annual basis.
Next, link your activity to outcomes. For example, if you spent four hours on Tuesday creating social media posts for the month, do you know what benefit that brings your business? If you spent three hours creating a pitch document for 40 new stockists, what is the direct result? Are there sections of time you're wasting on ad-hoc, unplanned and non-results-driving activity?
Finally, decide if you want to start, stop or keep activities. For example, you may spend a lot of time on email marketing but you're not targeting the right audience and, consequently, not getting any sales/cut-through. You may want to start outsourcing this (with clear KPIs for your contractor). You may realise that when you collaborate on a product, you sell way more stock overall, so you may wish to keep this and increase the frequency of collections. You may be spending hours on face-to-face initial (unpaid) consultations that don't equate to sign-ups, so you might stop that and start conducting initial chats via Skype or Zoom. This Start, Stop, Keep template will help with this step.
Once you have completed the steps above, you'll start to see where the top 80% of your business is coming from and how you can replicate more of that and reduce time on activities that bring little or no result. To quote Ferriss, the point of the 80/20 audit is to, "focus on being productive, instead of busy".
I'm not going to lie. This whole exercise may be tedious and uncomfortable to begin with; it can often uncover activities or people that are sucking your time, and it can be difficult to confront that reality and say goodbye to clients / staff. But, it can also bring so much clarity on how you spend your days and what you want most from your business — that, for me, is well worth any initial uneasiness.