The 80 / 20 manager

The secret to working less and achieving more.

By Richard Koch

It’s easy to feel overwhelmed at times, as a business owner. Our inboxes are overflowing, we never see the end of our to-do list and we stay at work way beyond the notional 9 to 5 period. This leaves little time for anything else. However if this is the case, then, according to Richard Koch, something is very wrong- were not being the best that we can be and there really is room for improvement.

In the 80/20 Manager, Koch applies the 80/20 principle to business and show how, by focusing on the key issues, asking the right questions and finding the right connections, we can be much more efficient and effective by, to put it quite simply doing less.

It’s not just about working more, it’s about working more effectively..

Book Summary

The first part of The 80/20 Manager is short in comparison with the rest of the book, but it’s not a section to be skimmed over, as it helps you to establish where you’re at and what kind of manager you are – There’s actually a short quiz that scores you in order to tell you how applying the 80 /20 principle to your life will benefit you.

The first chapter of the book also explains the 80/20 principle, for those that don’t know it and the thinking and statistics behind the 80/20 principle. In the second part of The 80/20 Manager Koch identifies ten management styles, each of which offers a path to working less whilst working better and enjoying better results. He does acknowledge that some of these management styles are more difficult to master than others, with the first four methods perhaps being the easiest to implement into daily life, whereas the other six take a little more time and effort to master – however, they’re certainly worth doing!

By focusing on just one method to start with, you will be focusing on a small group of actions that will produce noticeable results very quickly, which is exactly the core concept of the 80/20 principle.

What is the 80 / 20 Principle?

The 80/20 principle, simply put, is the observation that a small number of events give rise to the majority of effects, that most consequences come from few causes – that the great majority of outputs come from a small minority of inputs. No matter what it is relating to, ultimately there is very little that matters – but what does matter is extremely important in determining results, success, and, when it comes to your business…Profit.

Life, especially in the workplace, conspires to make is choose numerous irrelevant objectives that sap our energy without ever giving us what we really want. The value of The 80/20 Principle is that it helps to identify those few activities that we should pursue because they will lead to great results.

We are tuned in the 50/50 wavelength, according to Koch, not the 80/20 wavelength. We expect the world to be balanced – we expect all events and all causes to have roughly the same significance, but this just isn’t the case. Koch applies this traditional way of thinking to the world of business and says that one of the most harmful, ridiculous, idiotic yet enduring assumptions of the business world is that all sales are good, all revenue is valuable and all sources of revenue are of roughly equal importance.

Koch says that:- “The 80/20 Principle is not a magic formula. Sometimes the relationship between results and causes is closer to 70/30 than to 80/20 or 80/1. But it is very rarely true that 50 per cent of causes lead to 50 per cent of results. The universe is predictably unbalanced. Few things really matter.”

This misguided assumption leads to enormous amounts of energy and money being wasted in chasing totally unsuitable customers or wasteful expansion into new products. To illustrate this Koch uses Steve Jobs reinstatement as the boss of Apple, as Jobs continually focused on a handful of core products at the expense of everything else. Once we understand the few vital things that make us happy and most useful, the principle enables us to reproduce, multiply and hasten the arrival of those things we want to happen.

The Ten Types of Managers.

The Investigating Manager.

As the investigating manager, you should be constantly questioning. In fact, Koch urges you to take on the persona of a detective, who gets their kicks by questioning and increasing their knowledge as a result. In business, the most potent type of investigation looks beyond average, because averages can be misleading. You’ll have heard it said that the status quo has no place in business and it’s a sentiment that Koch echoes in the 80/20 Manager. Business is not driven by averages, it is driven by exceptions and extremes.

The Super Connecting Manager.

Koch uses the analogy of red and green lottery tickets in order to show how important ‘super connecting’ can be to us as business owners. Red lottery tickets represent the traditional routes to success (education etc) they’re expensive, you can buy very few and they tend to result in modest prizes. Green tickets represent information that we’ve acquired casually from acquaintances and friends – they’re very cheap, sometimes free, are very available and can result in great windfalls. Essentially, the theory of ‘super-connecting’ tells us that it is only by meeting a whole range of different people that we can discover the person or people, or idea that can or could change our lives.

The Mentoring Manager.

Everyone needs a mentor, especially in business, and if we’re lucky then we’ll meet more than one mentor throughout the course of our lives. Koch looks back to his first job as a junior manager in a Shell Oil refinery, to his first mentor, Dan Rawlinson who taught Koch the importance of thinking in terms of results, rather than activities (this is massive given the who premise of this book).

Few than 20% of managers are effective mentors, yet this small group of leaders probably account for more than 80% of the performance attributable to the human factor. Koch says that when looking for a mentor, you should always look for quality over quantity, never be afraid to ask, try not to demand too much of their time and to act immediately on their advice, as even the best advice becomes useless if not acted on.

The Leveraged Manager.

There are according to Koch, seven levers that you should use in order to obtain great results:-

Caring and the power of subconscious. When we don’t care, we miss vital clues that might lead to breakthroughs.
Confidence. Confidence helps you to achieve what others don’t even attempt.
Ideas. Internalise the idea that every idea can be improved upon and that there is always a much better way of doing something.
Decisions. As a leveraged manager you can exert leverage by making firm decisions, especially those that are counterintuitive, unprecedented or courageous.
Trust. As long as you trust everyone in your team and give them reason to trust you, your leverage will increase exponentially.
People. Find the ‘A’ people in your team. Remember that, usually, 1% of employees deliver 99% of valuable output.
Money. Using Other people’s Money (OPM) gives greater leverage.

Using the seven levers is a little different from the other nine ways to be an 80/20 manager, in that these levers naturally help and reinforce all of the other approaches.

The Liberating Manager.

Honesty is really the key here. Nobody works their best unless you create an environment that creates trust; you get far more out of people if they can be honest. A liberating manager must be utterly honest with their people; supportive and friendly, yet very demanding.

Liberation requires total honesty and openness from both the manager and the people who are being inspired and liberated. Consequently, it’s not for everyone. Koch is keen to stress that there’s nothing ‘touchy feely’ about being a liberating manager, as you need to demand high standards, rather than settle for average.

TheManager Seeking Meaning.

If you’re looking for meaning (and meaning is essential for happiness and high achievement at work) you must take a different approach. There are five aspects to this, you must be excited by the line of work you’re in, your job must give you rare knowledge, your business must inspire by love rather than rule by fear, you must like your colleagues and they must like you, and finally your business needs to have a direction and be going places. To derive meaning from your work, you need to polish and hone your core attributes so that they become ever more powerful and appreciated.

The Time Rich Manager.

This requires a change to your mindset. It is important to realise that value is not related to time, but to ideas, collaboration and the power of our intent as human beings to do what we do. If you think about it, a few key decisions take almost no time at all, but have far more impact than anything else that we do. In order to operate on 80/20 time, your first priority should be to identify the most valuable aspects of your work. Then you need the freedom and self-confidence to focus on those areas and ignore everything else.

Most of all, you need the temperament and discipline to think before you act, to resist distractions and to work only on those vital matters that are truly worthwhile. The truth is, there is plenty of time, we all just squander it one dealing with exciting ‘crises’ or attending pointless meetings.

The Simplifying Manager.

It’s easy to get bogged down in the philosophy, but the essence of simplification is grasping what is and what is not important in a complex picture, and then reducing this to something that is recognisable and easily understandable. Simplification is the most neglected managerial art, partly because it’s so hard to achieve, and you will have to battle business culture as well as your own complicating habits, but simplifying satisfies- it takes a messy reality and draws the few vital pieces of inspiration and information out of it.

Once you become an effective simplifier, you become a great leader.

The Lazy Manager.

Here, Koch reflects on his experience in management consulting, stating that he knew two executives that were the greatest men he ever met, yet, in their different ways, they were both self-indulgent and lazy. Their brilliance gave them the confidence to be lazy and their laziness gave them the freedom to find shortcuts to better results.

You see, laziness and selectivity go hand in hand. The lazy manager has to be selective and the selective manager can afford to be lazy, so clearly, selectivity and success are closely related. Laziness is not easy to achieve, but it’s worth it, because lazy managers achieve exceptional results.

The Strategic Manager.

Perhaps the most demanding way to become an 80/20 manager, but definitely the most worthwhile, is by becoming a strategic manager. Strategic managers create fantastic value by re-imagining their industry and devising fresh ways of doing business. They value thought above action and harbour extreme ambition to create a better business model. However, the paradox of the strategic manager is that it is easy to be one but it is exceptionally difficult to become one.

Final word.

The 80/20 manager proves that less really can be more. Just because you’re working the most hours does not necessarily mean you will be the most successful or profitable manager. In fact, according to Koch, if you’re working the most hours then you are probably doing something wrong and should take a step back to evaluate the process. The more efficiently your business runs, the more result driven it is, and the more freedom and flexibility you have, then the more profitable and more successful you will be.

Happy reading

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