When the 80/20 Rule Fails: The Downside of Being Effective

You get one, precious life. How do you decide the best way to spend your time? Productivity gurus will often suggest that you focus on being effective rather than being efficient.

Efficiency is about getting more things done. Effectiveness is about getting the right things done. Peter Drucker, the well-known management consultant, once encapsulated the idea by writing, “There is nothing so useless as doing efficiently that which should not be done at all.”

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 Pareto principle states that for many outcomes, roughly 80% of consequences come from 20% of causes. In other words, a small percentage of cases have an outsized effect. This concept is important to understand because it can help you identify which initiatives to prioritize so you can make the most impact. For example, 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.

Optimizing for Your Past or Future

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 at any given moment will be dependent on your previous skills and current opportunities.

The 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.

So what is the next step?

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.

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.