…of consequence. Yes, and I can say that with confidence, it will be lost in the sands of time without a trace. This is almost universally true – the things you do / learn / invest in / try / ….everything!

Strange, right? It has been going on for ages, and yet a vast majority of the populace (including well known national leaders) are oblivious to it – in business, and, personal life.

It started with a discovery by Vilfredo Pareto (1848 – 1923), an engineer, sociologist, and economist. He found that 80% of the land in Italy was held by 20% of the population. Since it has been found to apply almost universally it was named as the Pareto Principle, in his honor.

A lack of understanding and use of this rule results in much wasted time, money, and effort. Pitiably, even today it is not taught in most schools.  In this post, I will provide a few examples from my observations, and share ideas on how to harness the power of the 80/20 principle (aka “the vital few vs. the trivial many“).

Five Examples / Observations from Business Life

1. 80% of the money managers failed to beat the S&P Small Cap index according to this Huffington post article.
2. Study your company’s product portfolio – how many products bring in the bulk of the revenue? For several businesses, less than 15% of the products delivered over 90% of the total revenues. You can look at this by region, or customer as well.
3. Look at your complaints – how many come from a given region or customer? For one computer manufacturer, about 70% of the complaints came from one region. Why? Because the power supply could not handle brown outs that were common to
   that part of the world. You can also study this on a product or part number basis.
4. Examine your company’s financial statements – which items had the largest dollar amount? Several balance sheets and income statements I have studied showed over 80% of the listed items amounted to less than 10% of the dollar amount. Such analysis can enable focus on the highly leveraged items to improve financial performance.
5. 68% of IT Projects fail – as is borne out by a study; you can read more about it here; and a second level of analysis can reveal major underlying causes for such failures.

Five Examples / Observations from Personal Life

1. If you have not prepared a statement of net worth for yourself – it is time you did. Examine it to determine which are the vital few vs. the trivial many. See below for one individual’s statement.

Notice carefully – again – few items add up to much of the total for both – assets, and liabilities.

More importantly, constructing such a statement enables one to see the soundness of their finances. When you examine the top three assets apart from their home, you see that they add up to $150K+, and each of them are losing assets (i.e. the value will only erode over time). And, the net worth is already negative – indicating poor creditworthiness. The situation is likely to get worse with time due to the heavy investment in depreciating assets.

2. Keep a diary for a few weeks, jotting down by 15 minute increments – honestly – what you did. Examine it after a week and add up the total time you spent on things that really matter (wellness, moving forward to your dream, raising responsible and smart kids – if you are a parent, etc.). Divide by the total available time during that period. What do you find? I would love to hear – you can write to me at rai_chowdhary@yahoo.com. All responses will be kept anonymous.

3. What percentage of the things in your purse (or wallet) are used on a daily basis?

4. Look back on your education (if you have already graduated, or if you are still in school – speak with those who have been in the workforce for 5+ years). What percentage of the total learning are you really putting to use? Is it any surprise that a vast majority of the traditional degree programs fall short of preparing you well for the workplace? Neither do they teach you how to manage your finances, and your relationships – both of which are important determinants of wellness and success in life.

5. Study your friends and social circle. What fraction can you really call as true friends? I know many people who would say that number is less than 10%; so 90% of the relationships are just for convenience sake? Now that is sobering isn’t it?

Having said all this, the question is what is one to do? Here are five ideas that will get you started:

• Focus on what takes up your time; re-align how much time you spend on “in-consequential vs. what really matters”
• Create a punch list – and use it on a daily basis (see below)
• Divide your day in 15 minute or 30 minute increments and get the items on the punch list done
• Create your own systems to reward yourself; you don’t have to wait for others to do this
• If nothing else works – every time you begin doing something ask yourself “What is the strategic purpose? Why should I spend time on this? Which objective is this linked to?”

So there you have it; a practical approach to making every day count, rather than counting your days!

Thanks for reading, let me know your thoughts, and how did this work for you!