Focus on the 20% that moves the needle of your startup

Vilfredo Pareto was a philosopher, economist and academic, fascinated by social and political statistics and trends. Legend has it that one day he noticed that 20% of the pea plants in his garden generated 80% of the healthy peapods.

He took this observation into a study about wealth and income, and discovered that 80% of the land in Italy was owned by 20% of the population. He investigated different industries and found that 80% of production typically came from just 20% of the companies, publishing his findings in a paper, Cours d’économie politique.

Sadly, Pareto didn’t live to see the general appreciation and wide adoption of his principle, and it was left to Joseph Juran to suggest The Pareto Principle or the 80/20 rule, the law of the vital few, that states that for many events, roughly 80% of the effects come from 20% of the causes – a small minority will have a disproportionate impact, generating a larger share of results.

Whilst there is nothing special about the number 80% mathematically, many natural phenomena have been shown empirically to exhibit such a distribution. Check it out yourself: I have 20 rooms in my house, but I spend about 80% of my time in four – the front room, kitchen, my study and bedroom (exactly 20%). On my iPhone, I have 30 different mobile apps pinned to the tiles, but 80% of the time I’m only using the six (20%).

When I socialise, 80% of my time is spent with the same 20% of my friends; 80% of the time I listen to 20% of the music on my iPod. In perfect accordance with the Pareto Law, 80% of the people reading this blog will gloss over it and be on their way, but 20% will stop, read, reflect and take action.

Pareto’s Principle also applies to the odds of success: your odds of winning go up to 80% when you achieve the 20% of the drivers that give you the most results. That is great odds. Intuitively, we know this to be true, but very few people understand how far this principle extends into business, and it’s especially useful when grafting in a startup.

So how can you apply Pareto’s Principle to focus on those things that matter in your startup life, and which will move the needle the most?

You’re faced with the constant challenge of limited resources. It’s not just your time you need to maximise, but your team’s capacity. Instead of trying to do the impossible, a Pareto approach is to truly understand which projects, actions and activities are the most important, the ‘Vital Few’ you need to focus upon.

The temptation is always to try the new and exciting. There’s nothing inherently wrong with that, but an 80/20 mindset helps you to stay focused on your North Star and execution, and spend less time chasing stuff which isn’t on the radar, which can be distracting and is often the cause of entrepreneurs losing their way.

The simple takeaway is this: stop beating your head against the wall on working harder and putting in longer hours. Most of what you’re spending time doing doesn’t matter, and that’s before we get onto the law of diminishing returns in terms of impact/effectiveness and hours worked.

Most startup founders I’ve discussed this with find it hard to accept this thinking, and the 80/20 can appear paradoxical. We are predicting the future not measuring the past, so our thinking is to do everything because we can’t really decide what is important. Often I see exhausted entrepreneurs walking around wearing burnout as a badge of startup life.

This needn’t be the reality. The opportunity cost of doing the 80% is not doing the 20% of what really matters. Once you focus on predicting the 20% instead of trying to get everything done, and always feeling you’re living on a hamster wheel and constantly behind, you’ll move forward faster. Doing more and working hours does not necessarily increase the likelihood that your startup will succeed. In fact, it may decrease it if it makes your thinking narrow and clouds your judgment. You may be too focused on breadth of work and not depth of work.

For example, if you persist in working equally across your entire product range then you miss the reality that perhaps 80% of customer traction derives from just 20% of the products. By discovering these statistics, your decision-making will clearly signpost where to direct your efforts. It’s a return-to-basics call that gives clarity.

Think of it this way: most of us work five days a week, but in four of those days we’re only creating 20% of what we do in the week; there’s a single day buried in there when we create 80% of our output for that week. What if we could track that day down and make the rest of the week more like that day? According to the Pareto Principle you can do just that, as:

·      80% of outputs come from 20% of the inputs.

·      80% of all consequences come from 20% of causes.

·      80% of your results come from 20% of your effort and time.

·      80% of your startup revenue comes from 20% of your products and customers.

Ask yourself ‘Which 20% of my current efforts are resulting in 80% of my desired outcomes and happiness? Which 20% of my current challenges are causing 80% of my problems and unhappiness?’ Workaholics don’t actually accomplish more than non-workaholics. They may claim to be perfectionists, but that just means they’re wasting time fixating on inconsequential details instead of moving on to the next important task.

So, here are some thoughts on how to apply the 80/20 thinking to your startup. There are three things to thing about from a business perspective, and three from a personal perspective.

Business 80/20

Focus on 20% of your target market It is possible to have a successful business that either focuses on a niche market or just a segment of an overall market. Your target isn’t the ‘market’, but identify a demographic and define your addressable market with precision to ensure you have discipline, clarity and focus on your customer development.

Work with your top 20% of customers Not all customers are created equal. Apply the 80/20 principle to time consumption: what 20% of people take up 80% of your time? Put high-maintenance, low-profit customers on autopilot, process orders but don’t pursue them or nurture them, and cultivate low-maintenance, high-profit customers. Respect your time – if you don’t, they won’t.

Get intimate with your top 20% of products Likelihood is that 80% of your new customers result from 20% of your products. Therefore identify which offerings generate most new customers, and then use the identified offerings more often (and use the less-effective offerings less often, or not at all).  Get intimate with your product data, and focus on the 20% that your customers want.

Personal 80/20

Hyperactivity vs. Productivity Being busy is not the same as being productive. Forget about the start-up overwork ethic that people wear as a badge of honour, you don’t scale! Get analytical and stay analytical, use 80/20 principles to stop putting out fires, duplicate your few strong areas instead of fixing all of your weaknesses. Calm, not chaos.

Step out of the drama Drama is a diversion that keeps us busy and not moving forward, it absorbs all our attention such that we leave important tasks ignored or at best incomplete, resulting in our failure to push our startup to its fullest.

Habitually, we create drama by dwelling in interminable thought loops, or continuing to participate in dead-end activities. We entangle our mind in a web of ultimately inconsequential details, clouding our long-range vision and side tracking our self-direction.

We additionally feed our self-perpetuating drama by projecting ourselves into a future of worst-case scenarios constructed from our assumptions. Being preoccupied by our drama makes it impossible to get centered, keep the focus on our real self, and use the Pareto 80/20 to give yourself discipline.

Use your third eye According to ancient wisdom, we all have a third eye, placed in the middle of our forehead. This third eye gives us perception beyond ordinary sight, the extension of what the mind knowingly is aware of. Use your spiritual third eye to look at yourself with a new perspective. Use it to focus on yourself and bring yourself in focus and responsible for your choices.

Everyone wears several hats in a startup, with overloaded schedules and too much to do, but getting stuff done does not have a linear relationship to doing the stuff that makes a difference. You already have all the time you’re going to get, and the law of diminishing returns applies – time is a bandit, and we often use extraordinary effort to keep things moving forward, but this is simply not sustainable. Management by crisis and fire fighting can become the norm, but are hugely unproductive and energy sapping. Urgency itself is not the problem.

The Pareto Principle enables a startup founder to work ‘on’ the business, not just ‘in’ the business, providing visibility for thinking time and space to focus on priorities, working to do the stuff that makes a difference. The reality is most of what we do doesn’t matter, so we need to change this and focus on the 20% that moves the needle.

Are there occasionally stressful moments? Sure, such is life. Is every day peachy? Of course not . But do your best so that on balance be calm, by choice, by practice. Be intentional about it. Make different decisions than the rest, don’t follow-the-lemming-off-the-cliff worst practices. Step aside and let them jump!

Chaos should not be the natural state at work. Anxiety isn’t a prerequisite for progress. Keep things simple and leave the poetry in what you make. Chose fulfilment ahead of growth. Small is not just a stepping-stone. Small is a great destination itself. Build something of purpose, of intent.

Growth can be a slow and steady climb. Curate rather than blitz. I am turned off by the testosterone fuelled super rapid growth companies, don’t let them set your bar, it’s how high you want to jump that matters. It’s not stable. Just look at oak trees. They grow slowly, but they have the kind of solid foundation to withstand storms. You need a solid core, which is why I’m an advocate of consistent and steady growth.

So do the 20% of your work that leads to 80% of your results. Prioritise the 20% of your network who provide 80% of your support and enjoyment. Fill your life with the 20% of experiences that provide 80% of your happiness. Use the 80/20 rule to pick out the imbalance of effects, maximise the small and powerful 20% and reduce the wasteful 80%. Go on, give it a go yourself.

Thinking about time – past, present & future

In the dining room of my maternal grandfather’s house stood a massive grandfather clock. It was old, dark wood and dark brass, a sombre and serious piece of furniture with dents here and there. Meals in that Burnley dining room were a time for three generations of our family to become one. The clock stood like a talisman and guardian over the laughter and stories that were a part of our lives.

The longcase clock, or grandfather clock, fascinated me with the constant pendulum movement and sounds from inside the tower of the case. The English clockmaker William Clement is credited with the development of this form in 1670. Until the early C20th century pendulum clocks were the world’s most accurate timekeeping technology.

The term ‘grandfather clock’ stems from a song written in 1875 by Henry Work, and the renaming from ‘longcase clocks’ caught on. The song was based on a particular clock found at The George Hotel, Piercebridge, Durham – where it still stands today. It was known to be an exceptional clock, it kept accurate time and belonged to the hotel owners, a pair of bachelors, the Jenkins brothers.

One of the brothers died and the clock curiously began losing time. Attempts to repair the clock failed, and the story culminates when at the remaining brother’s death, the clock ceased running altogether. Henry Work was a guest at the hotel at time. He was an abolitionist who helped thousands of slaves flee to freedom in the north, and imprisoned in 1841 and released in 1845, penniless. He began writing songs to earn a living on his release, including ‘My Grandfather’s Clock.’

But back to Burnley. As a child it fascinated me. I watched and listened to it during meals. I marvelled at how at different times of the day, that clock would chime with a wonderful resonant sound that echoed throughout the still house. The Westminster Quarter chimes, and the option of the Whittington chimes, always fascinated me. The clock chimed, the time line of my childhood.

Even more wonderful was my grandfather’s ritual as he meticulously wound the clock each day at 9am after breakfast, checking the time with BBC radio. He took the key from the mantelpiece and opened the hidden door in the side of the clock, inserted the key and wound – not too much, never over wind, he’d tell me solemnly – nor too little. He never let that clock wind down and stop.

When I was eight, he let me open the door and take a turn of the winding key. I remember the first time. To be part of this family ritual. Knowing how clumsy and ham-fisted I am today, I am surprised I didn’t do irreparable damage immediately!

After my grandfather died, it was several days after the funeral before I remembered the clock. The clock! We’d let it wind down, it stood forlornly quiet. The clock even seemed smaller, not quite as magnificent without my grandfather’s special touch. I couldn’t bear to look at it. The silence wasn’t a good sound.

A month or so later, my grandmother gave me the key. The old house was quiet. No ticking or chiming of the clock, all was still. The hands on the clock were frozen, a reminder of time slipping away, stopped at 10.20am. I took the key and opened the clock door. All of a sudden, I was a child again, watching my grandfather.

He was there, with me, and the key that held so much power. I stood, lost in the moment. Slowly, I inserted the key. But I didn’t wind the clock. I couldn’t do it. I imagined the clock working again, the slow deep sound, the tick-tock, tick-tock. Life and chimes breathed into the dining room, into the house, in the movement of the hands. But I didn’t wind the clock, we agreed to let it rest.

We never did rewind the clock, we left it silent. Life resumed, with a life remembered, but it remained silent and still. When my grandmother died a year later, the house had to be emptied, and we moved the bulky clock to my house. We had it restored and refreshed, it now stands looking large over me in the hallway. But I’ve never wound it up. It’s been stopped since it ran down the last time my Grandfather wound it.

The silent Grandfather clock stands as a sign that the passing of time is not simply an illusion, it’s actually happening, so we really have to make the best use of it we can and get out there and make things happen. Time is the currency of your life, you only get once chance, and only you can determine how it will be spent – be careful lest you let other people spend it for you.

Each of us has exactly the same number of hours and minutes every day, and no matter how much time you’ve wasted in the past, you still have an entire tomorrow. Time is of the essence is a saying known to us all, telling us that it is never too late to be what you might have been. As French poet Paul Valery said Until you value yourself, you won’t value your time. Until you value your time, you will not do anything with it.

Most productivity strategies focus on short-term efficiency, essentially how to manage your to-do list effectively, how to get more done each morning, how to shorten your weekly meetings, and so on. These are all reasonable ideas, yet we often fail to realise that there are certain strategic choices that impact our time on a larger scale. These choices can be categorised as Time Assets or Time Debts, a concept I read recently in a blog post from James Clear. http://jamesclear.com/time-assets

Time Assets are actions or choices you make today that will save you time in the future. Software is a classic example of a time asset. You can write a program one time today and it will run processes for you over and over again every day afterward. You pay an upfront investment of time and get a payoff each day afterward.

Time Debts are actions or choices you make today that will cost you additional time in the future. Email is a time debt that we all participate in each day. If you send an email now, you are committing to reading the reply or responding with an additional message later. Every email you send creates a small debt that you have to pay back at a later time.

This is not to say that all time debts are bad, or that all time assets are good, however, when you make these commitments you are also creating a time debt that you will have to pay at some point. Sometimes the debts we commit to are worth sacrificing for, many times they are not, and likewise what was a time asset at a particular moment turns out to have little realisable future value.

Each time asset that you create is a system that goes to work for you day in and day out. If your schedule is filled with time debts, then it doesn’t matter how hard you work, your choices will constantly put in a productivity hole. However, if you strategically build time assets day after day, then you multiply your time exponentially. Simply, time debts need to be paid, be careful how you choose them. Time assets pay you over and over again, spend more time creating them.

A similar theme runs through the Tim Ferris book The 4-hour week, a copy of which sits on my desk, reminding me of several things about my time assets and time debts. Like most people who have chosen to work for themselves, I try to build balance of ‘doing and building’ a pipeline of opportunities for today and the future. However, to be blunt, most days are chaotic with more good stuff than bad, and it’s my ambition and curiosity that frequently override common sense – I’m the time bandit who inflicts pressure into my day.

I’m good at planning, estimating, scheduling and meeting, if not exceeding my clients’ expectations and deadlines. The trick is to ensure I give myself enough thinking time, and I can then execute brilliantly in less time than most other people, with a level of insight, innovation and quality. If I don’t put the thinking time I disappoint myself – I can still meet client expectations, but I don’t ‘wow’ them with something standout – and that is my ambition, going the extra mile as standard.

But like the Grandfather clock, my time is running out! I know that is cruel to say, but it’s true and we need to realise that our time is limited, so we need to make the very best of it. I’m always looking for new productivity hacks – small steps I can take to work smarter, faster and better. So, what’s worked for me? I work on the basis that each day will bring a fresh set of ‘time-suck problems’ of unexpected distractions, so here’s how I work with four techniques that I use all the time.

Distinguish between urgent and important Steven Covey’s Time Management matrix is a really useful tool for this, here’s the link: http://www.forbes.com/sites/kenkrogue/2013/01/01/level-5-time-management-beyond-stephen-r-covey-and-ben-franklin/3/ This enables me to plan between stuff that is important/not important, and urgent/not urgent. Everything I need to do is in the plan, it just has a rank according to priorities. It’s also worth checking in on the definition of important and urgent, there is an important difference.

Honour the two-minute rule This one comes from David Allen’s ‘Getting Things Done’ methodology, http://gettingthingsdone.com/ In short, if you’ve got something to do that takes less than two minutes, do it right now, with his ‘GTD’ approach:

– Capture: collect what has your attention

– Clarify: process what it means

– Organise: put it where it belongs

– Reflect: review frequently

– Engage: simply do

When in doubt, resort to the Pomodoro TechniquePomodoro is a method for breaking large tasks into small chunks developed by Francesco Cirillo. Set a timer for twenty-five minutes and work nonstop without doing anything else. Then take five minutes to do whatever you want. Then do another 25-5 cycle. Shower, rinse, repeat. Frequent breaks improve mental agility.

Mark your progress Professor Teresa Amabile’s Harvard research has shown that the single largest day-to-day motivator is making progress in meaningful work (http://progressprinciple.com/). Sometimes it’s tough to see the progress we’re making, so checking in and reflecting on your headway at least twice a day is a good self-motivation technique.

Besides these techniques, I also apply some of my own thinking to sorting myself out, and don’t get me wrong, sometimes it’s very much a ‘note to self’ check-in to ensure good habits are preserved

  • Don’t waste your most productive hours A growing stack of research shows that each day we reach our peak productivity a few hours after waking – my natural rhythm of wakefulness and concentration kicks in at 7am. I don’t lose this window of time to checking email or playing around on social media, I use it to do my most important work.
  • Plan for interruptions I only fill my day 80%, that way I can get ahead if the day goes well and do +20% more, or adapt and absorb unexpected stuff as it happens, and still maintain a rhythm and output for the day. In reality, my ‘Plan B’ is also my ‘Plan A’ with built-in contingencies. This gives me the feeling and reality of keeping focus and momentum.
  • Create available and unavailable time Only I can protect my own time, so having set priorities I stick to this with a ‘do not disturb’ attitude. There is no reason you should be at the mercy of everyone else. Some things are not moveable, so set boundaries, have a process and respect yourself, whilst knowing the things you have influence over.
  • Visualise my day Before making a decision or choosing a course of action, start with the ending in mind. Our days often take unexpected turns. Since there is no definition of working hours,” it can easily feel as if we compress a year’s worth of experiences into just one day.
  • Add learning opportunities into your normal routine I always try to find time for research and learning each day. Rather than scheduling this activity separately, I work it into my normal routine, fitting in and around client commitments and deadlines. This keeps me fresh and thinking about new ideas to incorporate into potential future client projects, but also keeps me refreshed each day.

How did it get late so soon, it’s night before it’s afternoon, December is here before it’s June, my goodness how the time has flewn – how did it get lat so soon?  Ok, it’s a quote from the fictional Dr, Seuss, but it reflects the reality that time management is an oxymoron. Time is beyond our control, the clock keeps ticking, the hours are going by. The past increases, the future recedes. Possibilities decreasing, regrets mounting if we don’t do the things we want to do, regardless of how we lead our lives.

As Einstein said, the only reason for time is so that everything doesn’t happen at once, so make sure you wind up your personal clock everyday, and make the best use of your time, whatever you’re doing.