15 Minutes

Financial, Relationship and Spiritual Growth. Personal Development. Leadership.


Leave a comment

Increase Your Value by 52.5% In Less Than 1 Second

pareto2I don’t remember exactly where I first heard of the Pareto Principle, a.k.a. the 80-20 rule. In fact I don’t even remember who Pareto was, possibly an economist (if only there were a convenient way to instantly look up information without having to leave my computer keyboard… oh, well).

The premise of the rule is this: you will get 80% of the effect from 20% of the cause. Or 80% of results come from 20% of the effort put in. This principle applies not just to your personal activity, priorities and time management, but also to large organizations and businesses.

pareto1Some examples of the principle in action:

  • 80% of your work will be completed in 20% of the total time spent (for those of you who procrastinate, it will be in the final 20% before deadline).
  • 80% of your satisfaction at work will come from 20% of your job duties.
  • If you own a business, 80% of your profits will come from 20% of your product line. And 80% of your sales will come from 20% of your salesmen.
  • In your church, 80% of the donations will come from 20% of the people.
  • In any book you read, 80% of the content will be found in 20% of the pages (the obvious exception being MY books which have incredibly valuable tips and information condensed into every single page including in the copyright information right next to the title page).

According to leadership expert John Maxwell this rule even applies to picnics.

  • 80% of the food will be consumed by 20% of the people. Also, 20% of the people will provide 80% of the food, but those two groups are never the same 20% people.

Usually when I talk about principles of success, I focus on the idea of slow, gradual growth, of changing our daily habits, of internalizing change and becoming rather than just behaving successful.

I’ve said many times that the idea of a quantum leap to success is largely a myth. Well, today I’m going to admit that I was wrong. Instant success is possible, and using Pareto’s Principle I will share a method that will instantly increase your profit, or relationship, or happiness, or whatever you choose to apply it to.

Stop spending time on the 80%.

End of seminar.

Well I suppose I could expound on that idea just to prove the point of Pareto’s Princple.

Legendary life insurance salesman, Frank Bettger, wrote a book called How I Raised Myself From Failure To Success in Selling (and by the way, no one ever asked him “What’s your book about?”). In Chapter 2, he carefully analyzed his records of 12 months of his daily activity (interviews, sales calls, and commissions). He came to the realization that when he took his total annual sales commissions divided by the total number of sales calls he made, his average phone call had a value of $2.80.

This realization had a major impact on his thinking, because it made him realize the value of his time, and the value of every phone call, regardless of whether the person bought or not.

Here’s what his records further revealed. 70% of his sales were made on the first interview. 23% were made on the second interview. However, he was spending roughly 50% of his time with prospects on the third interview or later. In other words, he was spending most of his time chasing 7% of his total sales.

So here’s what he did: if his prospect did not buy a policy from him after his second sales interview, he stopped calling them.

Whoa, that’s pretty drastic. What if that customer seemed like he was right on the verge of buying? Sure, there was a chance that the customer might buy. And that chance was 7%; he had the records to show it. Whereas a brand new customer that he was calling on for the first time had a 70% chance of buying.

That single decision increased the value of each call from $2.80 to $4.27. That’s an increase of 52.5%… in case you were wondering about the blog title.

pareto3Your time is valuable.

Your time is less valuable when you invest 80% of your activity into 20% of your results.

Spend your time on the valuable things first.

If you spend all of your creative energy in the 20% of activity that yields the 80% results, you would increase your productivity by four times (at least I think that’s what the chalkboard shows). Math only accounts for 20% of my GPA so I skipped it. In fact, it took me quite a while to figure out that increasing something from $2.80 to $4.27 is a 52.5% increase.

So I have two questions for you:

  1. How can you apply Pareto’s Principle to your life, and
  2. Which 80% of this blog was unnecessary?
Advertisements


Leave a comment

An Urgent Matter

3d rendering of a rubber stamp with URGENT in red inkWhen something comes into your life that is marked “urgent,” we usually have a sense of trepidation about it. This is because we rarely ever categorize something as urgent in our own lives. Urgency is usually thrust upon us by outside forces.

When your boss needs something done within a certain time frame it becomes urgent the closer you get to deadline. The more we procrastinate, the more urgent things seem to get thrown into our path.

Sometimes our lives can feel like a perpetual cycle of fulfilling one urgent task after another. If you want to accomplish anything worthwhile, you should get your own “urgent” stamp.

Add a sense of urgency to your own life events, your own tasks, your own agenda (your own blog). Put an urgency on those little tasks that won’t make or break your life today, but will contribute to your long-term growth.

And really treat them like they are urgent.

It’s easy to skip a day jogging, because not jogging for one day will not make you fat. But missing one day will rob you of your momentum. Missing one day can keep you from establishing a firm habit. Most importantly, missing one day today makes it easier to skip another day the next time. The same goes for missing a day writing. Missing a day of telling your wife you love her. Missing a day of whatever your new years resolution was.

Can you honestly say that you treat your own life with at least as much urgency as you do your boss’s business?


3 Comments

Urgent Vs Important

Urgent (adj) compelling or requiring immediate action or attention.
Important (adj) of great significance or consequence.

The most important concept that should be taught to young leaders, corporate execs, and anybody that wants to accomplish anything of significance in their lives is to finish tasks in the order of their importance. The problem is that many people confuse the urgent with the important.

Dwight D. Eisenhower said, “What is important is seldom urgent and what is urgent is seldom important.”

Urgent things demand our attention immediately, but they may not be important in the overall scheme of our lives. That’s why the really important things, the things that will add value to our lives over the long term can get put off indefinitely; because they are not screaming for our attention.

When making your to-do list, prioritize your tasks according to this standard:

1. Urgent and important
2. Non-urgent but important
3. Urgent and non-important
4. Non-urgent and non-important

Completing your urgent and important tasks first is a no-brainer.

The hardest thing, will be deciding whether to handle the number 2 or the number 3 items first. When something urgent comes hurtling towards you, arms flailing, it will command you to take care of it right now Now NOW! It takes discipline, but before addressing this incredibly urgent and demanding task, ask yourself “is this important?” A question I ask myself is “will this matter five years from now?

If this urgent task that requires your immediate attention is something that can be delegated, rescheduled, or even ignored without causing you long-term harm, then ditch it. Take care of what’s important first.

Then the things that are neither urgent nor important, you work on those when you have absolutely nothing else to do. Watching television goes in that category.

What are some urgent tasks that seem to always pop up in your life?