Simple is Beautiful: 80/20 Principle

Incurring a loss is never anyone’s desire in any venture regardless of the situation. Unfortunately, we all incur a loss in one way or the other in the course of our lives. Some of the instances in which we suffer loses are outright which means we institute risk mitigation plans (RMP) either through a corrective action in the current moment or preventive action looking into the future possibilities of such a loss. These are better loses to deal with for then we move on. On the other hand, there are loses we never know we are incurring. Often times these come in the form of investments in certain attributes we believe are set to reap or earn us the returns we so hope for that we never sit back to assess the level of investments we are making. In my first read for the year, Homo Deus by Yuval Noah Harari, in his argument around the data religion he presents case of leaders sending military forces to countries where their chances of success are almost non existent but to not accept the fact that their previous decision was wrong, they keep on funning the fire. It doesn’t stop with politicians though, parents enlist their children fight wars they know nothing about. If asked why they are supporting the war they have no answer but they still believe in it. These are biases as presented by Yuval Noah.

In current times, we are also faced with such biases in every level and how we respond to or deal with them determines the outcome. I’m sure at one point in time you’ve made a terrible decision at a later time just because you had promised but then you couldn’t rescind that decision. If you are the one who drinks and after committing to stop repeatedly you happen to be out with your friends who drink, then you have the temptation to drink just one time and promise yourself that it’s not that big a deal. You enrolled to a course you don’t like and are struggling through but because everyone around you feels you are doing a great course and is set for success you keep on. It’s unfulfilling but you keep on because then, what will others think of you? A failure. Nobody wants to be one but then deep within you know it’s not working for you. These are some contributors to our loses especially in circumstances where we become taken in so deep we don’t know why we do what we do but being it’s part of how things have been and need to be sustained or rather we’ve been there and it’s working just fine. If it’s not broken don’t fix it or so we are told.

I’ve been reading “The 80/20 Principle” by Richard Koch where he argues for the Pareto Principle that states that 80% of the output, profits, revenues, outcomes, impact is contributed by 20% of the input or investment. It then correlates to the fact that if we can optimize the 20% we are more likely to succeed that putting in the extra 80% of investment that doesn’t translate to value. It’s obvious we would all want to achieve this but then how do we get to know that there’s wasteful investment of our times, energy and resources? By doing an audit and assessing what we do. I believe it is even more challenging in the current world where we thrive on being busy instead of being productive. With the biases I alluded to earlier, letting go of a part of who we are, what we’ve always done or the norm would be like betraying ourselves whether at corporate level or individual level. However, it’s what’s needed. We’ve got to come down to the core of our operations to ask ourselves what value we derive from all that we do or rather what contribution that work makes in the grander agenda. If that doesn’t come around, it’s better to let go of the pieces and stay lean.

In the business world, I’ve been a believer in lean design principles where the focus is on simplifying the offering as much as possible to ensure ambiguities are eliminated and optimal value can be realized with efficiency. In my work then it means I should focus on finding the simplest & most efficient way to get the results in time other than get lost in the complexity of it.

As we settle into the second quarter of 2021, I believe it’s a great time to reflect on what we’ve been doing to simplify our processes, offerings and improve on efficiencies. There’s no value add from leakages & inefficiencies.

Leave a Comment

Your email address will not be published. Required fields are marked *