80/20 Rule and The Power of 16x

 

Now, what is the 80/20 rule? This is a rule that harnesses the power of inequality in almost every aspect of our lives. It was developed by an Italian economist named Vilfredo Pareto. At the time of his discovery, Vilfredo was studying the amount of wealth that existed in Italy. He found that approximately 80% of the wealth in the 80-20-Pie.pngcountry was owned by 20% of the population. He began studying other countries and found the same pattern in each. He even found this pattern in his green bean garden (80% of beans collected came from 20% of the plants). This is a key principle. If we find the 20% that gives us 80% of our output, we can get far more productivity out of doing less.

There are many books on the subject, however, Richard Koch’s The Breakthrough Principle of 16x explains it in a very simplistic manner that makes it easy for anyone to understand. The explanation of the ‘power of 16x’ is described in chapter two, titled “The Amazing Math of 80/20”. There he uses basic math to derive another rule from Vilfredo’s. To determine exactly how much more output you get for your 20% input, we first take 80(%) and divide it by 20(%). This will give you 4. Then take 20(%) and divided it by 80(%). Finally take these two numbers and determine the factor in between them. It’s 16x! Which means the 20% of your input on almost anything, will give you 16x better results than the other 80% of your input. “You can put less energy in, yet get far better results, if you just concentrate on the things that produce the fantastic results.” [pg. 13, para. 4] Of course, the “payback factor” of 16x is only a general rule, just as things that conform to the 80/20 rule will not always be exactly the same ratio percentage. If the figure was 90/10, the factor would be 81x better results, which might not be reasonable for the situation. So as you can see, the are variations of the 80/20 principle that allow us to improve our lives and begin “working to live”, instead of “living to work” (quote by Richard Koch).

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