The 80/20 Principle

I just finished reading The 80/20 Principle: The Secret to Achieving More with Less by Richard Koch.

The main premise of the book is that 80% of outcomes are produced by 20% of causes. The most common example is that 80% of sales come from 20% of your clients. A more novel example is that 20% of a carpet gets walked on 80% of the time (which one company capitalized on by renting out tiles and reusing the good 80%).

The book can be highly recommended. Not every chapter might be as relevant for yourself, but even this Koch anticipates. He states that you should skip around the book to the parts that are for you.

What I find the most useful is the change in mindset that you have to go through. Not 50% of your activities lead to 50% of your outcomes. You should see your efforts as a logarithmic line, most of the outcomes are from a small part of the time/efforts. What you need to do is identify which are your most productive activities, which ones are least/counter-productive and try to maximize the first and eliminate the second.

Lazy Intelligent

In one of the later chapters, Koch comes up with a novel classification of (working)people. He divides them in lazy vs. hardworking, and dumb vs. intelligent. He states that the most productive people are the lazy intelligent. These are the people who are working in an area in which they know much (have expertise) and will do their best to eliminate all the tasks that they are not perfectly suited for. What I like about his definition is that intelligence is not used as a static term, he states that everyone is intelligent, you just need to work in the area in which you are smart.

The best example of this comes from one of the reviews that is featured in the last chapter of the book. It’s from a person who is now the leader of a school programme that helps children with learning disabilities. The teacher himself sometimes takes hours to find his car in the parking lot or forgets where he leaves things around the house. He himself has trouble with his memory. But he understood this in an early stage. Therefore he delegated all tasks that are remotely related to memorizing things and focus on building the programme from a leadership position (his intelligence).

Question of the day: What is your 20% time and how can spend more time there?

The One Thing

“What’s the ONE Thing I can do such that by doing it everything else will be easier or unnecessary?”

Let me stick to the philosophy of the book and just quote this one sentence. Here is some more from Wikipedia:

This second section of the book deals with productivity principles like habit-building and benchmarking. For instance, the book suggests that readers should engage in four hours of work on their “ONE thing” each day. The authors cite economist Vilfredo Pareto as one of the inspirations behind this philosophy. Pareto’s principle suggested that 20% of the effort produces 80% of the results (see The 80/20 Principle). According to the book, this means that engaging in the one most important task will be more likely to produce the desired results without any extraneous effort. The book also differentiates between the Big-Picture Question (“What’s my ONE Thing?”) and the Small-Focus Question (“What’s my ONE Thing right now?”). The core idea is that focusing on an excessive amount of tasks will more likely lead to discord and under-performance.

One to read again some day!

Think Simple

“Simplicity is arguably the most potent weapon in business—attracting customers, motivating employees, helping outthink competitors, and creating new efficiencies. Yet rarely is it as simple as it looks.”

It has been a while that I listened to this book but I remember it not being the best ever. With the memory of now and by reading some other reviews, I think the book was too long and I think you’re better helped by books like The One Thing and The 80/20 Principle.

Getting Things Done

What if you could get more done? What if your plans could become a reality without having to wait for years? What if you could free up your mind for important things and store your worries/to-do’s etc, somewhere else? This is what Getting Things Done (GTD) is all about.

GTD is a book for the people that like to make lists, and who would want to get their lives more organised. The process aims to clear your mind, see what’s on your plate and make it easy to decide what to do next. The end goal is to make you work on the most important things (only).

GTD is an organisational system. It’s built on five pillars (or principles).

1. Capture everything – Write down (digitally) everything that comes up. From to-do’s to brain farts, get it on paper and out of your head.
2. Clarify the things you have to do – break everything down into SMART goals. Don’t say “I want to get bread”, better say “Tomorrow at noon I will get one whole grain bread at John’s Bakery”.
3. Organize your actionables by category and priority – put a date on things, reminders, calendar notes, etc.
4. Reflect on your to-do list – see what’s next, and periodically reflect if your priorities are still in the right order.
5. Engage and get to work – choose your next action, and do it.

These pillars are the basis of GTD. You are probably already doing (some of) these steps without having even heard of the GTD method. What GTD brings to the table is a reminder of working with a system and useful tips & tricks on how to best make use of such a system.

Getting Things Done is a useful way to get your life organized. The full system is not for everyone, but I do believe it has something to offer for everyone.

The One Minute Manager

“The best minute I spend is the one I invest in people.” – Ken Blanchard

Lessons learnt: Set goals and check if your behaviour matches it. Catch someone doing something right. Be specific in your reprimands.

Managing people can be overwhelming. Sometimes you are faced with questions about motivation. At other times you are asked to give a critique. And in the end, it may all be an overwhelming experience. The One Minute Manager is the perfect book for the starting manager. It features simple lessons, sticks with one story and does not bother with difficult explanations or hefty theoretical basis. At the same time this is its weakness and for further lessons in leadership please consult some other classics like The Effective Executive.

The story in The One Minute Manager follows a man who wants to work for (and eventually become) a great manager. In the second chapter, we meet this man. He is quick with his words, does not repeat himself and seems to have it all figured it out. At the end of the meeting between the two characters, he corrects the visitor one last time. When thanked for giving him answers he replies “I did not, you solved it yourself. I just asked questions”. In fact, here lies the first lesson of the book, enable other people to think, to take command and become less reliant on you.

In the book three things are discussed: 1) goals, 2) praisings, and 3) reprimands. Here is a summary of the lessons on praising:

1. Tell people up front that you are going to let them know how they are doing
2. Praise people immediately
3. Tell people what they did right – be specific

There are 4 more points, but I leave it to you to go and read those. As with more management books, the lessons may seem generic and too simplistic. At the same time, I believe that more people do not exhibit behaviour that reflects these lessons and that mastering them will be hard – for any executive.

“Take a minute: look at your goals, look at your performance, see if your behavior matches your goals.” – Ken Blanchard

 

After the one or two hours, it takes you to read the book, you are left 50% satisfied. As with the ‘questions’ mentioned above, the book does not tell you how to go about and implement the lessons mentioned. Of course, we can think for ourselves and it is up to you to go and become an effective executive.

The Miracle of Self-Discipline

This one of the (small) books that Brian Tracy has written. I guess that it’s good to learn these things when you start with goal-setting. But please read Triggers instead. I believe that it’s about building the right systems and that self-discipline as a skill or as a mental habit that you can will into existence is overrated.

Seeing the points below I do think that most are valid and with only about 1,5 hours of audiobook, he doesn’t beat around the bush.

Here are some points from another review:

Nine disciplines:
1. Clear-thinking
*** Fast decisions are usually wrong decisions
*** Chunk off large amounts of time for thinking
*** Think on paper; write it all out
*** Wisdom = Experience + Reflection (Confucius)
*** Keep your thinking open

2. Daily Goal-Setting
*** Focus and concentration are indispensable to success
*** If you cannot focus and concentrate, then you will have to work for someone else… who will make you focus and concentrate, who will supervise you.
*** Never work on less than 10 goals per year.
*** Write these goals in a spiral notebook every morning and reprogram your mind every day.

3. Daily Planning
*** Every minute spent in planning saves 10 minutes in execution
*** Just keep working your plan
*** Discipline yourself not to do things of low-value
*** Daily eliminate/delegate any task which does not have serious consequences that only you can do
*** Start your A-1 task first every morning and stay with it until that task is done

4. Courage
*** Force yourself to do what you know you should do
*** Practice courage whenever courage is required

5. Excellent Health
*** Start off with a clear picture of your perfect body
*** Exercise every day

6. Saving & Investing
*** “Compound interest is the most powerful force in the universe.” – Albert Einstein
*** 2/3 of success in investing and business is avoiding making mistakes

7. Hard work
*** Work all the time you work. Don’t waste a single minute.

8. Continuous Learning
*** Read in your field daily
*** The more you learn, the more you earn

9. Persistence
*** Drive yourself forward to complete your tasks 100%
*** Persistence is self-discipline in action
*** “Persistence is to the character of a man like carbon is to steel.” – Napolean Hill
*** Your persistence is your measure of your belief in yourself.

Delivering Happiness

Is money more important than building something great? Tony Hzei thinks not, he believes that building culture is more important than making the highest profits. In Delivering Happiness you can read Tony’s story. The book is half autobiography, half company bio. Although not the most common combination, I believe it works. The book is inspirational, fun and a bit quirky.

What I like is that his focus is not on the money, and maybe not even so much on the customer, as on the employees and enabling them to make great choices (to help the customer and the money part of it).

Seeing his later ventures I don’t know if Tony is the best businessman. But he sure has the heart in the right place and his story is one to take note of.

The Black Swan

“Past performance is not a guarantee of future returns.”  – proverb

Lessons learnt: Highly improbable events have huge impacts on our lives. We are very – or exponentially – bad at predicting the future. Awareness is the first step in becoming ‘future-proof’. 

If we look back on the housing bubble that was created before 2008, most of us would recognise the risk and overpricing that was going on. But back then almost no-one saw it coming, prices were rising for years and everyone had money to pay their bills. When everything eventually collapsed it put most of the world into a financial crisis of which we are only recently recovering. This kind of event is something that with hindsight we might think we may be able to predict, Nassim Taleb argues that beforehand we are totally in-the-blind. In The Black Swan, he explains why we cannot predict the future, what the impact is of highly improbable events and how we may protect ourselves from them. The book introduces groundbreaking concepts but sometimes is too long-winded.

People seek validation, in most cases, we are looking for facts that support our current models. This happens in everything from interrogation room to historical searches. Psychologists have been fascinated by this concept and have called it the ‘confirmation bias’. Before the housing boom we expected prices to keep rising, they did not. People also like to make models, we want to fit all the information that is available in the world into simple-to-understand frameworks where we can make sense of what is going on. But putting things in models also means sacrificing information for the sake of simplicity.

Nassim Taleb’s biggest problem with models is the Bell curve. A Bell curve (or Gaussian function) assumes a normal distribution, where events on the far left or right are deemed very unlikely to happen. With the Bell curve itself Taleb does not disagree, he disagrees with the interpretation. Most of the time people discount the extremes, in psychology you are even actively encouraged to not consider the outer 5%. Even in the ‘very rational’ field of Finance, investors rarely put their money up for the thing that is very unlikely to happen. Then came 9/11.

In one of the many stories mentioned in the book, Taleb describes an investor who bets on the ‘long tails’ (the outer 5%). The investor is steadily losing money, but at the same time, he knows that one of these days something very unexpected will happen, this is where he will make his money. This does not mean that the investor had the ability to look into the future, nor that he had any negative feelings towards Americans. It only meant that he saw that ‘rational’ investors were ignoring the long-tail and that he could make money there.

“Things always become obvious after the fact” – Nassim Taleb

So what is the impact of these Black Swans? They are rare, unexpected, but very big. Black Swans are events like the assassination of Franz Ferdinand, the rise of Hitler, 9/11, but also the rise of the internet, and (of course) the discovery of black swans in Australia. A Black Swan can upheaval a system that has been in place for decades (e.g. the fall of the Soviet Union) and will influence people for many years after it has taken place (all Black Swans).

Talking about unpredictable events is very interesting and difficult at the same time. After five paragraphs I have barely made it through the first part of The Black Swan. The book itself also struggles to keep the centre concepts from drifting into specifics about finance or how storytelling can take facts out of context. For the very busy people, I would advise you to read only the first part, for everyone else please do make it through the whole book. You will learn to protect yourself from negative Black Swans and in the process also learn about fake ‘experts’, Umberto Eco’s Antilibrary and randomness. Be sure to read it when convenient. ps “Remember that you are a Black Swan” – Nassim Taleb

More on The Black Swan

http://www.goodreads.com/book/show/242472.The_Black_Swan – Other Reviews on Goodreads

http://en.wikipedia.org/wiki/Black_swan_theory – Wiki on Black Swan Theory

http://www.riosmauricio.com/wp-content/uploads/2013/11/Taleb_The-Black-Swan.pdf – .pdf of The Black Swan

pps I think that Nassim Taleb has gone off the deep end a bit lately (2018), but I do very much agree with the validity of this book!

The Better Angels of Our Nature

The Better Angels of Our Nature by Steven Pinker is a long, long, book. So, I said it. I read over 50% of it and then listened to the rest as an audiobook. The book is full of great knowledge but also doubles as a reference work where Steven explains every detail until it hurts.

One thing I took away from the book is that the world is better than ever before. There is no need for nostalgia, in every regard possible (and most definitely in aggregate) we have it better than ever before. Fewer people dying from diseases, murder, rape, starvation. More options, more wealth, more rationality.

And no, not everything is going perfect, but we’ve come quite a way.

One point where Steven Pinker disagrees/highlights a different point is his optimism for the world, versus the view of Nassim Taleb (Black Swan). Steven argues that the underlying constructs of society have become better, that those factors contribute to our wealth and health. Whilst Nassim argues that very bad events can still happen and that we may just be riding a positive wave. I tend to agree with Steven and like to also believe (based on the statistics) that we are heading in the right way.

Does that mean that we are without danger? No, of course not. Nuclear weapons, bioterror, AI, there is a lot to be afraid of. Yet at the same time, we have the most resources available to get ourselves going again and the least incentive to do harm.

I haven’t started Enlightenment Now, but I might recommend that over this one if the message is similar and has less focus on the underlying arguments/history.

High Output Management

High Output Management by Andrew Grove is one of the management classics, and rightly so. The main insight I took away from the book is that the output of a manager is the output of his team/whom he influences. This sheds new light on the usability of meetings, what the impact is of decisions, and how you should plan.

In the introduction, Andrew speaks about time as being the competitive advantage. I like this both for the business perspective (i.e. how to leverage your time), and for personal life (how to get the most out of your time).

As a manager, you want to be working on the thing that has the most leverage. For instance, if you make one decision that influences the work for the coming months, that is a high leverage activity. Or if you give a training to 200 employees who will then work more effectively, that is also high leverage. Andrew argues that information gathering is also part of this equation.

Another insight from the book is that we need to plan ahead. What are the things we can do now so that we don’t have to do X (Y and Z) later? For instance, if you review a draft of some work, you may give it another direction without having your employees waste time making the finished report and then changing it.

One thing I found in the book, and in my goals, was the idea of having slack in the system. So that when a thing comes up you can deal with it and not let everything go sideways.

Andrew argues for a system of Management by Objectives (MBO) or more precisely Objectives and Key Results (OKRs). (also see this TED talk by John Doerr) And Measure What Matters.

1. Where do I want to go? (objective)
2. How will I pace myself to see if I am getting there? (key results)

He states that the system should be for relatively short periods of time (quarterly or monthly). Luckily that is something we do at Queal.

There is even more good stuff in the book, but then you will have to read it yourself!