189. Productivity In 2020 — Part 3 — How To Use The 80/20 Rule To Grow Your Business

189. Productivity In 2020 — Part 3 — How To Use The 80/20 Rule To Grow Your Business

January 30th, 2020 By: Ash

Productivity In 2020 — Part 3 — How To Use The 80/20 Rule To Grow Your Business

 

Ash Roy Video Transcript (This transcript has been auto-generated. Artificial Intelligence is still in the process of perfecting itself. There may be some errors in transcription):

Ash Roy:

00:01                     Welcome to the third episode in the productivity 2020 series. By the end of this episode, you will learn how to use the 80 20 rule, also known as a Pareto efficiency theory to help you to grow your business profitably and fast. I’ll show you one simple way to use the 80 20 rule using just a pen and a paper and that’s coming up very shortly. But before we dive into this episode, let’s do a quick recap on the first two episodes in this series. In part one we talked about the Eisenhower decision matrix and why it’s important to focus on quadrant two activities, the important but not necessarily urgent tasks that appear in your workflow. Why is it important to focus on these quadrant two tasks? Because focusing on these tasks while they’re still in quadrant two means that you get to handle them before they get to a crisis situation.

Ash Roy:

00:56                     Also known as a quadrant one situation where they are important and urgent. You see quadrant one situations tend to be a huge drain on your resources, so it’s best to deal with them while they’re still in quadrant two before they are a crisis. Then in part two of the series, which you can check out here, we talked about systems and why they are a classic quadrant two activity. You know, episode 175 I spoke to James clear the author of the book atomic habits and in that conversation, James explained that he felt that habits are the compound interest of personal productivity. Well, I believe systems are the compound interest of business productivity and of helping you to grow your business fast and profitably. I explained that systems are a sequence of processes that may or may not include people and these processes when executed consistently in a particular sequence, produce a predictable outcome every time.

Ash Roy:

01:59                     Creating systems allows you to leverage your time and your resources most effectively and helps you to achieve your goal of building a business that’s profitable, scalable, and that can work independently of you. How does it do this? It helps you to outsource certain tasks within your business at a lower cost and helps you leverage your time and your resources better while still achieving the same profitable outcomes. Most importantly, by dealing with situations while they’re still in a quarter in two scenarios where they’re not yet urgent, you minimize the likelihood of a crisis, which is an urgent and important scenario and typically a quarter and one situation is a huge drain on your resources. We talked about how to create standard operating procedures using tools like ScreenFlow or Camtasia, which is a great way to start building systems in your business. Once again, you can check out that second video where I explained all this right here.

Ash Roy:

03:00                     Now that brings us to this third part of this productivity 2020 series, which is all about the 80 20 rule and why you should consider using it in your business. So what’s the 80 20 rule? Well, in the 19 hundreds Vilfredo Pareto, an Italian economist, discovered that 80% of the peas in his garden came from 20% of the pods. He then started to see this phenomenon in other areas and found that this seems to hold true in most areas of life and existence, including in your business. So that means 20% of your effort delivers 80% of your results. 80% of the problems can be attributed to 20% of the causes that lead to those problems. 80% of your company’s profits come from 20% of your customers. 80% of the complaints that you get come from 20% of your customers. 80% of your company’s profits come from 20% of the time you spend on generating those profits.

Ash Roy:

04:01                     80% of your company’s revenue comes from 20% of your products. 80% of your company’s sales are made by 20% of your sales staff. And most importantly, 80% of your results come from 20% of your activities. So how do you go about implementing the 80 20 rule and how do you make it a part of your daily workflow? Implementing the 80 20 rule into your workflow is a very simple process. The easiest way to start is to work with your daily tasks. You can later extend this to your projects and other areas of your business, but for now, I want you to start by just making a list of all the tasks you have to do for the day and then figuring out which of those tasks fall into the 20% of your activities that deliver 80% of your results. Typically, these are things like creating standard operating procedures, hiring great quality staff that can help you move your business forward, creating systems that allow you to operate your business independently of you.

Ash Roy:

05:02                     These tasks typically don’t seem to be really urgent, but you’ll find that if you do them consistently over time, you will start to free yourself up and you’ll be able to grow your business independently of you. These activities typically allow your business to operate independently of you. They allow you to automate repetitive procedures that happen in your business. Now I’ve used multiple online tools like OmniFocus and things and they all have their place and they do have an impact, but physically writing things down galvanizes me and activates a certain part of my brain that I am not able to activate using a computer and a screen. So I highly recommend you physically write these tasks down on a piece of paper and then prioritize them. The other thing I find about physically writing stuff down is that it slows my mind down and forces me to process each task at a different level as compared to when I type it on my computer.

Ash Roy:

06:02                     So what are the benefits to using the 80 20 rule? Well, there are five benefits. The first one is that it applies to most situations. And for the purposes of this discussion, it’s safe to say that the 80 20 rule is universal, particularly in the realm of productivity and helping you to grow your business profitably and fast. So you can be pretty assured that in most cases, 20% of your effort will produce 80% of your results. All you gotta do is find that 20% and you can do that by putting pen to paper, as I explained earlier. The second benefit is that it can have a massive impact on helping you make headway towards the goals that matter most to you and your business. If you can focus on your highest leverage tasks, you will have a greater impact on your business and on your life.

Ash Roy:

06:50                     Now, shortly I’ll explain how the 80 20 rule can be taken a couple of steps further because it’s fractal and I’ll show you how 1% of your effort approximately delivers 50% of your results. But let’s move onto the third benefit for now. The third benefit of the 80 20 principles is it helps you focus on your area of specialization. You see, the 20% of your effort that delivers 80% of your impact would typically fall into your area of specialization, your zone of genius. So if you focus on your zone of genius, you’re more likely to be focusing on the 20% of your efforts that deliver that 80% of your results. If there’s stuff that doesn’t fall within your zone of genius, I recommend outsourcing it to somebody else in your team within whose zone of genius that activity does fall, and that will be them using the 20% of their efforts to deliver 80% of their results.

Ash Roy:

07:47                     And as you can see, if all of you are focusing on your zone of genius, you’re far more likely to be a lot more effective and create a far more profitable and leverageable business. Now, the fourth benefit that specialization leads onto is the ability to free yourself from the daily grind. You see, if you focus on your area of specialization, your zone of genius, what you’re naturally really good at, you can outsource tasks to other people in your team or outside of your business and it will free you up to think more creatively. It will give you more time to work on your business rather than working in your business. It will free you up from working on those repetitive tasks that chew up a lot of your time without delivering a great return on investment. In terms of time. This is why building a good quality team is a classic quadrant two activity, one of those highly leveraged activities where each person is focusing on their zone of genius and delivering an epic outcome.

Ash Roy:

08:46                     And now for the fifth and most powerful benefit of the 80 20 rule, if you take the 80 20 rule one step further, you’ll find that 64% of results come from 4% of your effort. How does that happen? Because if you take 80% of your 80% you have 64% and if you take 20% of your 20% that gives you 4% so 4% of your effort delivers 64% of your results. Now take that one step further. If you take 4% of that 4% you get 1% approximately it’s 0.8 but let’s say 1% and if you take 64% of the 64% you end up with 51.2% let’s say 50% so about 1% of your effort delivers 51% of your results. So if you can answer this critical question, which is what is that 1% of my effort that delivers 51% of my results, that will lead you to the Holy grail of productivity that will help you figure out where you need to be spending your time and it will help you to be far more effective.

Ash Roy:

09:52                     Now I’m not saying you can work two hours a week and make build $1 million business. I don’t believe in that. But I am saying that every one of the six or eight hours a day that you work will be far more leveraged if you can figure out which 1% of your activities deliver 51% of your results and you can intelligently outsource or delegate the other activities that don’t fall into that approximate 1%. So one of the biggest challenges I’ve seen people face when it comes to just implementing this 80 20 principle is getting started. Just grabbing a piece of paper and a pen and writing down the tasks that you have and then prioritizing them. It sounds easy to do, but here’s the thing. It’s also easy not to do. So I encourage you. Take action right now. Grab a piece of paper, grab a pen and start writing down your tasks for the day and then start prioritizing them and figure out which one of those tasks falls into that 1% of your activities that delivers about 50% of your results, and be sure to leave a comment below telling us which of those tasks fall into that 1%. Deal?

Ash Roy:

11:06                     Cool. Be sure to subscribe to this channel so you don’t miss out on future episodes and particularly on other episodes that come out in this productivity 2020 series so you can get the best value out of your efforts in 2020. In the next episode in this series, we’re going to talk about the Pomodoro technique and how you can use it to annihilate procrastination and to help you get started even when your energy levels are low and you have low motivation levels. See you in the next video. Be sure to subscribe and don’t forget to leave a comment below. Talk to you soon. Bye for now.

 

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