Efficient vs. Effective

In other words, making progress is not just about being productive. It's about being productive on the right things.

But how do you decide what the “right things” are? One of the most trusted approaches is to use the Pareto Principle, which is more commonly known as the 80/20 Rule.

The 80/20 Rule states that, in any particular domain, a small number of things account for the majority of the results. For example, 80 percent of the land in Italy is owned by 20 percent of the people. Or, 75 percent of NBA championships are won by 20 percent of the teams. The numbers don't have to add up to 100. The point is that the majority of the results are driven by a minority of causes.

The Upside of the 80/20 Rule

When applied to your life and work, the 80/20 Rule can help you separate “the vital few from the trivial many.”

For example, business owners may discover the majority of revenue comes from a handful of important clients. The 80/20 Rule would recommend that the most effective course of action would be to focus exclusively on serving these clients and either stop serving others or let the majority of customers gradually fade away because they account for a small portion of the bottom line.

This same strategy can be useful if  you practice  inversion and look at the sources of your problems. You may find that the majority of your complaints come from a handful of problem clients.  The 80/20 Rule would suggest that you can clear out your backlog of customer service requests by firing these clients.

The 80/20 Rule is like a form of judo for life and work. By finding precisely the right area to apply pressure, you can get more results with less effort. It's a great strategy, and I have used it many times.

But there is a downside to this approach, as well, and it is often overlooked. To understand this pitfall, we return to Audrey Hepburn.

The Downside of the 80/20 Rule

Imagine it is 1967. Audrey Hepburn is in the prime of her career and trying to decide how to spend her time.

If she uses the 80/20 Rule as part of her decision-making process, she will discover a clear answer: do more romantic comedies.

Many of Hepburn's best films were romantic comedies like Roman Holiday, Sabrina, Breakfast at Tiffany's, and Charade. She starred in these four films between 1953 and 1963; by 1967, she was due for another one. They attracted large audiences, earned her awards, and were an obvious path to greater fame and fortune. Romantic comedies were effective for Audrey Hepburn.

In fact, even if we take into account her desire to help children through UNICEF, an 80/20 analysis might have revealed that starring in more romantic comedies was still the best option because she could have maximized her earning power and donated the additional earnings to UNICEF.

Of course, that's all well and good if she wanted to continue acting. But she didn't want to be an actress. She wanted to serve. And no reasonable analysis of the highest and best use of her time in 1967 would have suggested that volunteering for UNICEF was the most effective use of her time.

This is the downside of the 80/20 Rule: A new path will never look like the most effective option in the beginning.

Optimizing for Your Past or Your Future

Here's another example:

Jeff Bezos, the founder of Amazon, worked on Wall Street and climbed the corporate ladder to become senior vice-president of a hedge fund before leaving it all in 1994 to start the company.

If Bezos had applied the 80/20 Rule in 1993 in an attempt to discover the most effective areas to focus on in his career, it is virtually impossible to imagine that founding an internet company would have been on the list. At that point in time, there is no doubt that the most effective path—whether measured by financial gain, social status, or otherwise—would have been the one where he continued his career in finance.

The 80/20 Rule is calculated and determined by your recent effectiveness. Whatever seems like the “highest value” use of your time in any given moment will be dependent on your previous skills and current opportunities.

he 80/20 Rule will help you find the useful things in your past and get more of them in the future. But if you don’t want your future to be more of your past, then you need a different approach.

The downside of being effective is that you often optimize for your past rather than for your future.

Where to Go From Here

Here's the good news: given enough practice and enough time, the thing that previously seemed ineffective can become very effective. You get good at what you practice.

When Audrey Hepburn dialed down her acting career in 1967, volunteering didn't seem nearly as effective. But three decades later, she received the Presidential Medal of Freedom—a remarkable feat she is unlikely to have accomplished by acting in more romantic comedies.

The process of learning a new skill or starting a new company or taking on a new adventure of any sort will often appear to be an ineffective use of time at first. Compared to the other things you already know how to do, the new thing will seem like a waste of time. It will never win the 80/20 analysis.

But that doesn't mean it's the wrong decision.

Thanks for reading.......