THE IMBALANCING ACT
The Insights of Richard Koch By Dan Bergevin
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Despite what many of us are told, finding balance is not the answer to creating better results. In fact, the opposite is often true. The majority of what we do often amounts to little, if anything. Meanwhile, the minor activities and events in our lives have a profound impact on the outcomes we experience. It is only through recognizing, and capitalizing on, these imbalances that we are able to achieve truly profound results. I was fortunate to speak with Richard Koch, the world’s de facto expert on the universal application of Pareto’s Principle (commonly known as The 80/20 Principle, which is also the title of Richard’s most successful book). He was kind enough to answer my questions about how “the imbalancing act” of life really works, and how to maximize its benefits for everyone, even in the midst of tough economic times.
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Q: How can 80/20 arbitrage be used to take low value assets (jobs, social contacts, personal skills, etc) and convert them into high value assets?
A: I don’t think (it) is very easy. Something that’s low value will likely remain low value. A better idea is to glimpse the hidden gold in something that is mainly low value. For example, a student may be failing in most everything but there may be a small part of schoolwork that she loves and is good at – that could be the entire answer to her life. Maybe she’ll quite school but become really accomplished at that one thing. Nobody would then recall or care that she failed at ninety-nine percent of her course work; she would have succeeded at the one thing that matters. So examples of 80/20 arbitrage are the elements of creativity – often very well hidden – that we all have; or the one or two people in a restricted social circle or a mediocre workplace who can really help us. Look for the small things that could, just possibly, make a massive difference. They are always there, and usually stay there, neglected – help is a stone’s throw away, and stays there!
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Q: How can individuals move away from 80 percent activities and into 20 percent activities? What if they are entrenched in an 80 percent activity, like a job or relationship? How can the 80/20 Principle help them get out and into something better?
A: There are two ways out. One is to find the hidden twenty percent – or half a percent – in the “bad” activity or relationship, and build on that. It may totally transform things. The other – if the first doesn’t work – is to grit your teeth and just get out. Move on. If you are not happy, it’s unlikely you can make anyone else happy or be useful to them. Don’t stay where you shouldn’t be!
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Q: You mention how 80 percent thinking – easy answers, conventional wisdom, fads du jour, and the like – are not what they seem or are practically worthless. How can one train the mind’s eye to see through and beyond these things and discover the 20 percents that often hide in plain view?
A: I think you have to be ambitious and realistic at the same time. Ask, could I really be ten or twenty times more effective, if I did something unconventional? What would it take to do that? How and where? What assistance or new skills or contacts would I need? Then, if you think it might work, try it. If it doesn’t, try something else – but always something that, just possibly, could make a terrific difference.
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Q: Please explain the concept of using the 80/20 Principle to create “white space.”
A: Innovation requires doing something different; useful innovation requires doing it much better. How could something be twenty times better? Could you really be ten or twenty times more effective at something? How could you do that, by doing something never done before? People think that innovation requires you to think of the technology or solution that powers huge improvement. Yet that’s wrong. Many great innovators simply took a new and under-used approach and applied it to a new field. Henry Ford didn’t invent the assembly line, but he had the idea of applying it to making autos. Google didn’t invent the search engine, but just used an approach – already out there – that was better than Alta Vista’s. Wikipedia didn’t invent the encyclopedia or the Internet – it just combined them.
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Q: Do you feel it is harder for people to stop doing things that aren’t giving them great results or harder for them to start doing things that will give them great results? In other words, are bad habits harder to drop than good habits are to pick up, or vice versa?
A: I am reminded about the parable in the New Testament about the seven demons that were cast out of a man, who then was invaded by even worse demons – apparently those pesky things love to fill a vacuum. There is a lot of science that has proved that focusing on not doing things stands much less chance of success than focusing on doing things you want to do. Whatever you focus on, negative or positive, will come to the fore of your mind. If you look for faults in someone you’ll find them, and if you look for good things, you’ll find them too (pathological cases like Hitler excepted). I’m not sure this has much to do with the 80/20 principle, except that the principle adds another level of power to the idea of concentrating on the few good things. There is always something good, and always something fantastic – rare but there! Look for the few things that can unlock huge potential.
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Q: How can trying to hard at something have a negative impact on the results?
A: Easily! You don’t see the trees for the forest. You get tired and locked into the wrong approach. Look at a fly furiously flapping against a closed window, when the next one is open. Hard work drives out creativity. To be unconventional, you must be relaxed and have plenty of time. Be intelligent and lazy!
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Q: You mentioned in Living the 80/20 Way that not all actions must be preplanned but that desire must always be preplanned. Can you please elaborate on how someone can implement this idea?
A: I always wanted to have a consulting business, to be one of two or three partners starting one. I had no idea how it would happen. One day, I heard that two of my colleagues had flown across the Atlantic to see the boss of our firm, and that there was some bad news coming. It was a faint signal, but it made me think – are they planning to start a new firm? Long story short, I decided to join them, and did. If I hadn’t had the desire, I would never have noticed the faint signals.
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Q: In The 80/20 Principle you wrote “luck is our word for success which we cannot fathom. Behind luck there is always a highly effective mechanism, generating surpluses regardless of our failure to notice it.” What can be done to notice these highly effective mechanisms, recognize them for what they really are, and capitalize on them to maximize their potential?
A: The best way to notice these things is to have a very wide of contacts – friendly acquaintances –who come from different worlds and whom you see once in a blue moon. They will have information that may suddenly light up your world and show you what to do. Gosh, how lucky! But meet a hundred such people a year and strike gold with one of them, or through insight you get from them, is that really luck? It’s both random and planned.
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Q: Why is it important to have a “not to do” list as opposed to a “to do” list?
A: We all do too much. We are asked to do something, so we do it. So make a set of rules about things you aren’t going to do. That saves you deciding at the time.
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Q: When everything seems to be important, or even critical, in one’s life, what must be done to determine what time is being squandered versus what time is being used effectively?
A: Remember, very little matters much. If you knew you were doing to die soon, would you carry on doing everything you’re doing now? Would it seem to matter? Yet the truth is, we are all going to die and we don’t know when! It’s amazing how easily upset we all are – me too! – about trivial things that seem to ruin our day. The stock market goes down. We have a bad meal. Someone cuts us up on the road. It rains when we want to play golf. Too bad! What matters is your own search for truth and beauty, and none of the trivial things in life should be allowed to get in the way of it.
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Q: What do you feel are the major obstacles to happiness and prosperity in the world today? How can the “average citizen” overcome these obstacles to make life better for themselves and for others?
A: I think it’s very simple – unblocking your creativity, and applying it to those few things where you can do something nobody else can. What’s the one great thing you were put on earth to do?
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Q: Do you feel that the power to overcome the present “global recession� is within the hands of individuals? If so, what can we as individuals do to the economic storm? What lessons can we learn that will help us to prevent or mitigate similar issues in the future?
A: Pretty much the same answer as the last one! Remember the unemployed guy in the Great Depression who invented the game of Monopoly? Recessions can always be overcome because people are inherently creative. Do something that adds enormous value to other people. There is a way. You just need to discover it. But having said that, recession is not all bad. It came because it was necessary. We had gotten to consume more than we created. The only answer, for each person and for society, is to create more than we consume. You could consume less, but that creates problems for the rest of us. So create more! It really is as simple as that.
CREDITS AND RIGHTS Introduction and Interview Questions Copyright © Dan Bergevin 2010 Interview Responses Copyright © Richard Koch 2009 Permission granted to Daniel Bergevin to use for capitalizedliving.com 15 January 2009 Cover art by Kostya Kisleyko. Used by permission. Published by Capitalized Living Post Office Box 2172, Layton, Utah, 84041
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