The 80/20 Principle

Review done by Mayur Shah

“Strive for excellence in few things rather than good performance in many” -Richard Koch

About the Author

  • Richard Koch co-founded his own consulting company and retired at the early age of 40. He now invests and advises some companies such as Filofax and Plymouth Gin.

  • Koch has written 25 books that discuss productivity, efficiency, and happiness in both work and life.

  • Koch attended the University of Oxford and the Wharton School of the University of Pennsylvania.

Summary

In “The 80/20 Principle,” Richard Koch reveals how 80% of outputs, results, and consequences come from 20% of inputs, efforts, and causes. The 80/20 principle also known as the Pareto Principle can help people boost their effectiveness in both work and life simply by teaching and helping to understand how all of our inputs do not produce equal outputs. The 80/20 thinking is nonlinear, strategic, and reflective.


80/20 in Happiness, Relationships, and Investing

  1. Typically an 80% increase in wealth in a long-term portfolio comes from 20% of investments.

  2. 80% of our happiness comes from 20% of our time. This means that most of the things we do in our lives have low value.

  3. 80% of our success is also contributed by 20% of our social relationships, meaning all of our relationships do not hold the same importance.