Why Only 20% Separates The Winners From The Losers?

December 20, 2007

Have you ever wondered, why some things just die will others go from strength to strength? That’s to say what really accounts for the success factor? What’s that one enduring factor that makes all the difference in the world? What really accounts for their timelessness and ability to beat the odds time and again? While others can hardly even maintain a foothold as they’re swept away into the garbage heap of “has-been’s” I guess you could ask the same for businesses, music, film stars, relationships, leaders, philosophies, ideologies or for that matter anything under the sun.

Hey, this is a serious question, if you consider that nearly 78.5% of the corporations that once made up the fortune 500 fifty years has packed up and disappeared into the sunset, it has far reaching ramifications, not only on your investments, but also whether you will thrive or go the way of the dodo bird. I am serious, understanding why things just fritter away while others latch on only to grow from strength to strength is what business schools all over the world have been trying to figure out for the last 100 years and guess what? They can’t do it! No one really knows!>Perusing the landscape of winners and losers suggest, most don’t make it simply because nothing is supposed to last forever. The dinosaurs didn’t make it – so why should the Roman Empire – the same goes for Communism – remember Enron? What about Arthur Anderson, Worldcom, Panam and so on, the list goes on and on.

One clue to understanding why some things wax and wane, while others remain ageless and timeless is to be found in the science of life expectancies. To cut to the chase the math is pretty screwy here, so I’ve spare you all a comatose inducing lecture, but if I had to hammer it down to one phrase it would be this simply this:

“Stuff (and this includes everything from hamburgers, firms to governments) that endure are designed to beat the law of averages.”

Of course, I am simplifying big time here gutting out whole chunks of math, stats, axioms and even disquisitions so I know some of you out there will probably be hollering at the top of your voice, “You idiot, what about wear and tear, weather and a number of other factors can influence life expectancy like a lousy attitude?”  OK, I hear you, but if we square off the irritating details with our broader than broad rule or ladle and discount anomalies like housewife’s who regularly electrocute themselves because they don’t know how to use a power tool or drive their cars into bollards etc – the whole of idea of beating the law of averages is actually quite a robust theory that does a very good job of explaining why some products, firms and stuff manage to thrive long before the end of their expected life spans.

A big chunk of the reason is because we don’t usually use all the functions that’s regularly offered in a product or service. Don’t believe me, when was the last time you took a picture, saved it and printed it into a photo using your phone? Or how many programs do you regularly use in the latest Microsoft Vista? Even the number of songs you listen to in an iPod, if you really take the trouble to list it down, it would probably be less that the regular 100 odd despite the capacity to hold 1,000 tunes. By the same logic, I know the latest PDA offers probably 1,000 new functions complete with all the bells and whistles of regression curves cum extrapolation that basically even allows a novice engineer to build an atomic bomb, but if I really squared off the day to day usages of functions I regularly use – I would probably end up with a staple of only 4 or 5 main functions (20% of the functions) 80% of the time.

So the key to understanding why some things have this enduring capacity to remain ageless and timeless is to look deeper at the 20% instead of trying to figure out the larger than large picture of the 80%. Now this is hardly a new concept, its being around for the last hundred years or so and it’s called the Pareto principle (aka 80-20 rule, the law of the vital few and the principle of factor sparsity) states that, for many events, 80% of the effects comes from 20% of the causes. That means if you’re in business, “80% of your sales comes from 20% of your clients. Or what you do really well in the 20% makes the 80% which completes the 100%.” Now I tempted to tell how I use this to increase my chances of landing a bird on the sofa every weekend, but I have been getting death threats recently, so let’s get back to the topic.

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Now to understand the 20/80 rule, I am not saying that you should just grow a perfect moustache that roughly takes up 20% of your face and not bother with developing a winning personality or sprucing up your appearance. If you don’t pay attention to the rest of the 80% and dress like Gandhi or go around like the elephant man, the only thing you’re going to attract is flies and the only attention you’re going to get is from those boys in white from the IMH, so let’s get real. There needs to be a sense of scale here.

What I am saying is this: if you want to really maximize your return on your investment / energy / opportunity and it doesn’t really matter whether you’re well past your sell date, even as a “Bo lang aih,” it pays dividends to focus on developing the 20% strengths to carve out a comparable advantage – this could be anything really, but you really need to be so good at it, that you’re probably much better than the next guy next to you.

The trouble with most products and service offered by firms and even people they try to be “everything” – a Swiss knife – that’s to say they’re trying their level best to offer everything under the sun and that’s where they run smack head on into the brick wall of the law of averages! It just doesn’t work, because time is always will always be a constraint and so will opportunity, so however, you cut it the math just churns on varying degrees of lose/lose.

But if you focused on just improving the 20% your chances of success could be so dramatic, it may even be the tipping point that allows you complete the 100% by turning around the dysfunctional 80%.

We all know Swiss knifing is good when you’re stranded in a island and need out to dig out eyes in coconut to make imaginary friends, but if you’re really serious about setting up a book shelve, nothing beats a dedicated rubber grip screwdriver (hey don’t read more into it, I am just talking about home renovations otherwise we will be dead meat again – remember the sisterhood has a contract out on me already).

Focusing all their resources on the ‘all’ instead of the 20% means result the focus gets diffused and all they offer is stuff that fail to rise above the law of life expectancy. That’s the reason why if you really look at what firms and individuals offer, the really good one’s who manage to thrive in an age of change are the ones who just focus on one or two things which they do really so well that no one can even come near them.

They’re playing the 20/80 game. Gaining a deeper understanding on how to beat the law of averages could well apply to even building and sustaining strong bonds in relationships. Whenever I reflect on my best friends, the definer is always the 20% that distinguishes them from the faceless “hi and bye’s” crowd. I can’t really go as far as to state specifics or even define them in absolute terms, but I know those 20% stuff standout from the regular 80% of the crowd– they are the people who I know will matter to me today and tomorrow.

(This has been brought to you by your friend Brotherhood Controller, Aurora / Written by Darkness / Technology / Economics/ Sociology – ES 9908210E – The Brotherhood Press 2007) 

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