The 80/20 Principle

I soon became convinced that, for both consultants and their clients, effort and reward were at best only loosely linked. It was better to be in the right place than to be smart and work hard. It was best to be cunning and focus on results rather than inputs. Acting on a few key insights produced the goods. Being intelligent and hard working did no

The pipelines—value chain supplier, for example, Nokia and its rival traditional phone makers—lose out to the new platform providers. When the market leader changes from a pipeline-only business to one that adds a platform, 80/20 gravitates remorselessly to 90/10 and then on toward 99/1. Besides platforms being so much more profitable than pipeline

The third rule of 80/20 decision making is for important decisions: gather 80 percent of the data and perform 80 percent of the relevant analyses in the first 20 percent of the time available, then make a decision 100 percent of the time and act decisively as if you were 100 percent confident that the decision is right. If it helps you to remember,

Daniel Goleman and other writers have contrasted academic intelligence or IQ with emotional intelligence: “abilities such as being able to motivate oneself and delay gratification; to regulate one’s moods and to keep distress from swamping the ability to think; to empathize and to hope.”5 Emotional intelligence is more crucial for happiness than in

Understanding the cost of complexity allows us to take a major leap forward in the debate about corporate size. It is not that small is beautiful. All other things being equal, big is beautiful. But all other things are not equal. Big is only ugly and expensive because it is complex. Big can be beautiful. But it is simple that is always beautiful.

Koch’s 10 commandments of investment 1 Make your investment philosophy reflect your personality 2 Be proactive and unbalanced 3 Invest mainly in the stock market 4 Invest for the long term 5 Invest most when the market is low 6 If you can’t beat the market, track it 7 Build your investments on your expertise 8 Consider the merits of emerging market

80/20 Principle in my hit parade. 1 Strategy 2 Quality 3 Cost reduction and service improvement 4 Marketing 5 Selling 6 Information technology 7 Decision making and analysis 8 Inventory management 9 Project management 10 Negotiation

Fourth, if what you have decided isn’t working, change your mind early rather than late.

Both chaos theory and the 80/20 Principle assert (with a great deal of empirical backing) that the universe is unbalanced. They both say that the world is not linear; cause and effect are rarely linked in an equal way. Both also place great store by self-organization: some forces are always more forceful than others and will try to grab more than t