Teach Kids the Pareto Principle, the 80/20 Principle

The adult in the young leader’s life should read Richard Koch’s book

on this subject and discuss it with the youth. Here are the key questions I got from Koch. These questions can help a child learn to look for the imbalance in more situations.

Note	80/20 is a snap-shot, a static breakdown of causes at any one time, not a movie, or changes over time. See systems thinking for behavior over time.

What minority of (causes/inputs/efforts/insights) exert the majority of (effects/outputs/results/rewards)?
Which vital few things are most important above the trivial many?
Where is the predictable non-linearity or imbalance?
Where are cause and effect not linked equally?
Which 20% of causes produce 80% of the results?
Is 80% of a phenomenon associated with only 20% of a related phenomenon?
Rather than trying to address the whole range of issues, which are the most important? Crucial question for leaders?
Focusing on results first, which are disproportionately large? Can we trace these back to the inputs?
What are the relationships between outputs and inputs?
When deciding where to apply mass versus economy of force, where is the situational ‘center of gravity’? This is an application of the principles of war as applied to leadership
How can we reallocate resources disproportionately towards the 20% of inputs that produce 80% of the results? Which of the 80% inputs can resources be taken from to increase the 20%?
What can you do to improve the 80% of under-performing inputs that contribute only 20% of the results?
What hypothesis about the imbalance of inputs and outputs do you have? Can we estimate this factors intuitively or impressionistically?
How can we celebrate exceptional productivity?
How can we be selective rather than exhaustive?
Personally, are we doing the things we are best at and outsourcing the rest?
How do we generate the most money with the least expenditure of assets and effort?
How can we reduce the inequality of output and reward?
How can we reinforce the parts of the organization (people, resources, etc.) that generate the highest results (surpluses for the organization)? not really a kid question
Conversely, how can we facilitate dramatic improvements in the parts of the organization generating low or negative surpluses? If not forthcoming, stop expenditure on these resources.
How can we isolate where we are really making profits?
How can we simplify or reduce complexity in the organization (because complexity uses higher proportions of resources)?
How can we reduce the cost of complexity?

Richard Koch notes that complexity slows down simple systems and requires the intervention of managers to deal with the new requirements. Complexity is interesting and rewarding to managers. It is often tolerated or encouraged until it can no longer be afforded. This is an interesting observation about leadership and helps reinforce the distinction between managing and leading.

Updated on 19 Feb 2010