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NOTABLE! The 80/20 Principle Library

MTF

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The 80/20 principle, also known as the Pareto principle or the 80/20 rule, states that 80% of the effects come from 20% of the causes. The rule applies to many aspects of life, including economics, business, sports, etc. For a quick overview, read Wikipedia's page on it: Pareto principle - Wikipedia

I started this thread to share useful resources about this principle to help you accomplish your goals more easily - or just enjoy your life more - thanks to simplifying it via the 80/20 rule.

This isn't just a little stupid rule stating the obvious fact - there are countless, sometimes weird, applications of it that can help achieve better results in less time and with less energy.

1. Books

By far the best author on the topic is British multimillionaire Richard Koch. He has written several books on the topic. The best ones are:

The 80/20 Principle - the original book, with the first part going deep into how to apply it in business and then other parts addressing personal life and other things. Ignore the negative reviews - there's a lot of thought-provoking, and for some probably controversial, stuff in there.

Living the 80/20 Way - offers additional insights on how to apply the principle to live better.

After Richard Koch, the best books are:

80/20 Sales and Marketing by Perry Marshall - some very powerful 80/20 concepts applied to sales and marketing. A must-read.

Essentialism by Greg McKeown - I consider Richard's books better because they're written in a less philosophical and more practical style. Greg's book is still pretty good, but IMO it's better to start with Koch.

The One Thing by Gary Keller - extremely solid concept of The One Thing, but with some unnecessary chapters which are related to the main topic, but not really talk about simplicity.

2. Articles

Richard Koch's blog is really good, though sometimes he gets too philosophical there: Blog

Some of his best articles:
HOW TO WORK LESS AND MAKE MORE
ARE YOU A HAMSTER?
HOW TO STOP BEING A HAMSTER
TIME REVOLUTION
http://richardkoch.net/2013/01/how-much-is-an-hour-of-your-time-worth/
http://richardkoch.net/2014/09/how-to-do-nothing-achieve-everything/
http://richardkoch.net/2018/11/liberate-yourself-from-the-protestant-work-ethic/

A good interview with Richard:
https://medium.com/learning-for-life/dont-waste-your-time-on-the-trivial-1a51c7dc3cc

3. Quotes

Here are some various thought-provoking quotes:

“We should act less. Action drives out thought. It is because we have so much time that we squander it.” – Richard Koch

“Slow down and remember this: Most things make no difference. Being busy is a form of laziness—lazy thinking and indiscriminate action.” – Tim Ferriss

“Most people who become rich through business do so by using other people’s ideas, not their own.” – Richard Koch

“Identify the times you are most happy, and expand them as much as possible. Identify the times you are least happy, and reduce them as much as possible.” – Richard Koch

“Generally, the most profitable customers have been customers for a long time. Gaining new customers is very expensive.” – Richard Koch

“Make the most of those few ‘lucky streaks’ in our life where we are at our creative peak and the stars line up to guarantee success.” – Richard Koch

“Time is like that: cussed when we try to speed up, a dear friend when we slow down.” – Richard Koch

4. Exercises

Some exercises I regularly do, particularly when I find myself losing focus and no longer religiously following the 80/20 principle in my life. It's important to emphasize that 80/20 is a mindset that needs to be cultivated, just like you need to go to the gym regularly if you want to stay in shape.
  • 80/20 analysis - analyze what produces best results and what the biggest waste of resources is. How can you double down on what works best and eliminate the unessential stuff?
  • The One Thing question - ask yourself the main question from Gary Keller's book: What's the ONE Thing you can do such that by doing it everything else will be easier or unnecessary?
  • Eliminate something from your life - it sounds stupid, but even throwing away an article of clothing you no longer wear is a good way to remind yourself to focus on what's most important.
  • Fast for a full day - it's good for your health, and it gives you some additional clarity and a lot of time to think how to simplify your life.
  • Stop taking action - if possible, take a few days off and occupy your mind with something else. Sometimes we're too close to the challenges we're facing and we fail to see an obvious, simple solution. Your subconscious will still work on the problem in the background while you do something else, ideally something enjoyable so you can recharge.
  • Let go of control and ego - the number one obstacle preventing you from achieving more while doing less is yourself. If you want to control everything, you'll never be able to delegate effectively. If you think that you're the only person who can do something well, you'll never delegate at all - so you'll be stuck doing everything yourself. Even if you're a solopreneur and nobody can do your job, at least simplify other aspects of your life (for example, hire a maid).
  • Think of long-term profitability - focus on projects and business models that are repeatable and produce consistent, long-term income over projects that produce a one-off result. The latter makes you a hamster, stuck on the wheel of work and unable to slow down because you always need to seek a new source of income. Always have in mind your hourly rate and resist the temptation to think short-term. For example, you can spend 100 hours on a project that generates $10,000 once (your hourly rate is $100), or you can spend 100 hours on a project that generates $1000 a month forever (your hourly rate is just $10 the first month, but after 10 months reaches $100 and then still continues growing without any additional work).
  • Destroy and rebuild everything from the ground up (in your mind) - if you lost everything you have now, how would you rebuild it? This is an useful exercise to review the most important fundamentals as well as open yourself to new ideas or maybe even discover that what you're doing now is just no longer working anymore and you're stuck in the past. It's often hard to see these obvious things due to the status quo bias (in which any change from the baseline is considered a loss).
 

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Great post @MTF

By far the best author on the topic is British multimillionaire Richard Koch. He has written several books on the topic. The best ones are:

The 80/20 Principle - the original book, with the first part going deep into how to apply it in business and then other parts addressing personal life and other things. Ignore the negative reviews - there's a lot of thought-provoking, and for some probably controversial, stuff in there.
I can vouch for this one. It's always near to hand even though I bought it back in 1997.

Another exercise to add in is walking (or running). The brain becomes so much more creative in a moving environment. You will be able to think clearer, make connections you wouldn't normally make and gain all sorts of insights that are not available to you in a static environment such as sitting at a desk or lying on a couch.

This is not hocus pocus but scientifically proven fact. (Stanford University research report here)

Personally I would say find a park or go out into the countryside for best results and also don't expect great insights within a few hundred yards. I hike about 4 miles a day 3-7 days a week and sometimes the most enlightening moments come a mile from home.

Also listening to podcasts or music while walking/running doesn't kill the creative effect but I find it does dull it significantly.
 
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Martin Boeddeker

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Great thread. One book that came to mind that I still wanted to read:

https://www.amazon.com/dp/1578645018/?tag=tff-amazonparser-20

Besides the only book, that kind of goes into that direction is Ray Dalio's Principles and Tim Ferriss 4-Hour-Work-Week.

It's kind of shocking that there are not that many more good books about this topic that I know.
 

Martin Boeddeker

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His writing style is horrible. It's anything but simple, but from what I managed to understand he does share some 80/20 ideas.
He has his own writing style for sure. I really like it.
 

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Great post @MTF
Another exercise to add in is walking (or running). The brain becomes so much more creative in a moving environment. You will be able to think clearer, make connections you wouldn't normally make and gain all sorts of insights that are not available to you in a static environment such as sitting at a desk or lying on a couch.
Be sure to 'set the table' ..... review information beforehand, or even better, the evening before and sleep on it. Let that subconscious work on it a while. Then stay in bed when you wake up and just think a little. Then keep it going while you exercise. You'll invent time travel in the shower that follows. Write it down, send yourself a note for when you get to your desk.

I have conquered many of my toughest problems using this method.
 

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Andy Black

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Be sure to 'set the table' ..... review information beforehand, or even better, the evening before and sleep on it. Let that subconscious work on it a while. Then stay in bed when you wake up and just think a little. Then keep it going while you exercise. You'll invent time travel in the shower that follows. Write it down, send yourself a note for when you get to your desk.

I have conquered many of my toughest problems using this method.
I did this once studying for a morning exam. Before bed I couldn’t make head nor tail of one particular problem. When I woke it was clear as day.
 

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We should act less.
I agree with this. One of my most productive years was when I went for a walk every evening. If I had a two hour window to work that evening, I’d spend 45 minutes of it going for a stroll, and then do the right thing when I got home.


I don’t know what it’s like in other countries, but when someone asks how things are going here in Ireland and the UK then most people say “Busy!” .... as if that’s the metric to measure against.


Two quotes I love from Blaise Brosnan are:

“The market doesn’t pay for activity.”

“You can’t invoice for input.”

No point being a busy fool, doing he wrong side of the 80/20, and doing the same thing all the time expecting a different result.


I love Perry Marshall’s book, and James Schramko’s book “Work Less. Earn More.”

In Jame’s book he encourages people to “spend an hour a day staring at the sea” (he’s a surfer, so choose your poison).


And the principle behind The ONE Thing is so helpful too: What ONE Thing can you do that will make everything else unnecessary or easier? If you don’t know it, then finding it IS your ONE Thing.


It also comes back to “Your desk is for executing, not thinking.” (Justin Jackson)

And that “Thinking is the hardest thing to do, which is why so few people do it”. (Henry Ford)
 

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Also listening to podcasts or music while walking/running doesn't kill the creative effect but I find it does dull it significantly.
100%. If you're always listening to “informative” podcasts then you can't hear yourself think. Often the answer is already within you.
 

Martin Boeddeker

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Great thread. Thanks.
I'd never heard of this guy before. Purely the contention around his style made me curious so I checked him out. While I'm sure he must have a brain to back such a writing style, it does sound a tad ;) pompous.
He is one actually my favorite authors. I've never seen someone thinging as clearly and seeing the world so accurate as Taleb does. He was able to articulate the things that I knew intuitively were right but was never able to express on my own.

Mainly:

- The world is far too complex and we will never the full picture that's why we should look at what survived.
- A lot of things that scientists discover in a lab DO NOT translate into the real world. Often times is far more useful to look ancient wisdom
 

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Also listening to podcasts or music while walking/running doesn't kill the creative effect but I find it does dull it significantly.
Was that a finding of the study, too, or was that in your experience only? (Yes, I'm too lazy to read the study right now.)
 
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I did this once studying for a morning exam. Before bed I couldn’t make head nor tail of one particular problem. When I woke it was clear as day.
That's also why studying a little every day is better than studying a lot one day prior to the exam. The brain memorizes information (and I assume that processes it better for problem solving, too) when we're asleep. I guess that's where the phrase "let me sleep on it" comes from.

I don’t know what it’s like in other countries, but when someone asks how things are going here in Ireland and the UK then most people say “Busy!” .... as if that’s the metric to measure against.
When people brag how busy they are, I can't help but think that they've lost their priorities in life (if they had them in the first place). There are soooooo many things we don't have to do at all. And that's what's controversial about the 80/20 principle: many people think that those who do little are lazy, even if during one hour they generate much more output than a person working 12 hours.

James Schramko’s book “Work Less. Earn More.”

In Jame’s book he encourages people to “spend an hour a day staring at the sea” (he’s a surfer, so choose your poison).
I considered mentioning his book, too, but in the spirit of the 80/20 decided against it because while it's good, it's not a must-read like the other books I mentioned.

And that “Thinking is the hardest thing to do, which is why so few people do it”. (Henry Ford)
It's uncomfortable, too, because it feels like you're wasting your time while you should be taking action. Which made me remember this post by Richard Koch: TOP 10 – 9 OF 10 : THE PLOTINUS PRINCIPLE

And particularly the most practical implications for everyone posted at the end of this article:
  1. Act less, think more.
  2. Allow plenty of time for quiet reflection every day. Make this a habit, in a particular place, at a particular time.
  3. Await insight.
  4. Hone your powers of intuition – by trying less, and opening yourself up to the universe more. Intuition comes in when you let it.
  5. Try to become the best possible version of yourself (the exact words I owe to Matthew Kelly – thanks, Matthew). This is not just a matter of opening your soul. It is also – more importantly – a matter of opening your mind, and seeking the most simple, unifying answer.
 
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Regarding the 80/20 analysis, one of the exercises I like the most that Richard Koch shares in one of his books is identifying your happiness and unhappiness islands and achievement and desert islands.

He explains it well here: WHAT ARE YOUR HAPPINESS & ACHIEVEMENT ISLANDS?

In short:

Happiness islands are the times when we are happiest, cut off by warm, gently lapping seas, from the worries and woes of the rest of our lives.
(...)
Find yourself a peaceful spot where you can be alone and relax. Now write down all the times you can recall when you were unusually happy. Don’t stop until you have at least half a dozen such times and preferably more.
(...)
Now, what was the common denominator between those times? Was it the person or people you were with? A particular place? An activity? A time you were feeling good for a specific reason? Anything else that applied to at least two or three of your islands?
(...)
But there are also happiness deserts, not jolly desert islands, but real deserts, parched and unforgiving. These are the times when you are emphatically not happy. Identify the common denominators and vow never to let them intrude on your life.
And as for achievement islands:

Identify the times in your life – and in the last week – when you feel you’ve been particularly productive, achieving more of value to yourself and other people in a few minutes than in many hours of lesser work.
(...)
Conversely, large amounts of time can be achievement and happiness deserts. Again, the best way to achieve more is to spend less time achieving little or nothing. Lie fallow. Enjoy yourself. Do what you were doing in the previous achievement islands. Wait for inspiration or opportunity to come. If you are too busy, you will miss the muffled knock of chance, the opening that may come – and go – in a flash.
It's a very useful exercise to begin simplifying your life for more happiness and productivity.
 

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Some rules of thumb from the 80/20 principle are that:
  • 20% will pay 4x as much (from Perry's book)
  • 10% will pay 10x as much (James Schramko mentions this a lot. Whether it's derived from 80/20 or not is irrelevant... 80/20 is a rule of thumb anyway.)
 

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Great post, thanks for taking the time to write this. Don't know how I missed it!
 
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Some tips how to practice lazy intelligence:

 

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I would also add "Deep work" to this list, such a wonderful book on productivity and a less cluttered life in general.
 
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eugenberzani

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The 80/20 principle, also known as the Pareto principle or the 80/20 rule, states that 80% of the effects come from 20% of the causes. The rule applies to many aspects of life, including economics, business, sports, etc. For a quick overview, read Wikipedia's page on it: Pareto principle - Wikipedia

I started this thread to share useful resources about this principle to help you accomplish your goals more easily - or just enjoy your life more - thanks to simplifying it via the 80/20 rule.

This isn't just a little stupid rule stating the obvious fact - there are countless, sometimes weird, applications of it that can help achieve better results in less time and with less energy.

1. Books

By far the best author on the topic is British multimillionaire Richard Koch. He has written several books on the topic. The best ones are:

The 80/20 Principle - the original book, with the first part going deep into how to apply it in business and then other parts addressing personal life and other things. Ignore the negative reviews - there's a lot of thought-provoking, and for some probably controversial, stuff in there.

Living the 80/20 Way - offers additional insights on how to apply the principle to live better.

After Richard Koch, the best books are:

80/20 Sales and Marketing by Perry Marshall - some very powerful 80/20 concepts applied to sales and marketing. A must-read.

Essentialism by Greg McKeown - I consider Richard's books better because they're written in a less philosophical and more practical style. Greg's book is still pretty good, but IMO it's better to start with Koch.

The One Thing by Gary Keller - extremely solid concept of The One Thing, but with some unnecessary chapters which are related to the main topic, but not really talk about simplicity.

2. Articles

Richard Koch's blog is really good, though sometimes he gets too philosophical there: Blog

Some of his best articles:
HOW TO WORK LESS AND MAKE MORE
ARE YOU A HAMSTER?
HOW TO STOP BEING A HAMSTER
TIME REVOLUTION
HOW MUCH IS AN HOUR OF YOUR TIME WORTH? | Richard Koch
HOW TO DO NOTHING & ACHIEVE EVERYTHING | Richard Koch
LIBERATE YOURSELF FROM THE PROTESTANT WORK ETHIC | Richard Koch

A good interview with Richard:
Don’t waste your time on the trivial

3. Quotes

Here are some various thought-provoking quotes:

“We should act less. Action drives out thought. It is because we have so much time that we squander it.” – Richard Koch

“Slow down and remember this: Most things make no difference. Being busy is a form of laziness—lazy thinking and indiscriminate action.” – Tim Ferriss

“Most people who become rich through business do so by using other people’s ideas, not their own.” – Richard Koch

“Identify the times you are most happy, and expand them as much as possible. Identify the times you are least happy, and reduce them as much as possible.” – Richard Koch

“Generally, the most profitable customers have been customers for a long time. Gaining new customers is very expensive.” – Richard Koch

“Make the most of those few ‘lucky streaks’ in our life where we are at our creative peak and the stars line up to guarantee success.” – Richard Koch

“Time is like that: cussed when we try to speed up, a dear friend when we slow down.” – Richard Koch

4. Exercises

Some exercises I regularly do, particularly when I find myself losing focus and no longer religiously following the 80/20 principle in my life. It's important to emphasize that 80/20 is a mindset that needs to be cultivated, just like you need to go to the gym regularly if you want to stay in shape.
  • 80/20 analysis - analyze what produces best results and what the biggest waste of resources is. How can you double down on what works best and eliminate the unessential stuff?
  • The One Thing question - ask yourself the main question from Gary Keller's book: What's the ONE Thing you can do such that by doing it everything else will be easier or unnecessary?
  • Eliminate something from your life - it sounds stupid, but even throwing away an article of clothing you no longer wear is a good way to remind yourself to focus on what's most important.
  • Fast for a full day - it's good for your health, and it gives you some additional clarity and a lot of time to think how to simplify your life.
  • Stop taking action - if possible, take a few days off and occupy your mind with something else. Sometimes we're too close to the challenges we're facing and we fail to see an obvious, simple solution. Your subconscious will still work on the problem in the background while you do something else, ideally something enjoyable so you can recharge.
  • Let go of control and ego - the number one obstacle preventing you from achieving more while doing less is yourself. If you want to control everything, you'll never be able to delegate effectively. If you think that you're the only person who can do something well, you'll never delegate at all - so you'll be stuck doing everything yourself. Even if you're a solopreneur and nobody can do your job, at least simplify other aspects of your life (for example, hire a maid).
  • Think of long-term profitability - focus on projects and business models that are repeatable and produce consistent, long-term income over projects that produce a one-off result. The latter makes you a hamster, stuck on the wheel of work and unable to slow down because you always need to seek a new source of income. Always have in mind your hourly rate and resist the temptation to think short-term. For example, you can spend 100 hours on a project that generates $10,000 once (your hourly rate is $100), or you can spend 100 hours on a project that generates $1000 a month forever (your hourly rate is just $10 the first month, but after 10 months reaches $100 and then still continues growing without any additional work).
  • Destroy and rebuild everything from the ground up (in your mind) - if you lost everything you have now, how would you rebuild it? This is an useful exercise to review the most important fundamentals as well as open yourself to new ideas or maybe even discover that what you're doing now is just no longer working anymore and you're stuck in the past. It's often hard to see these obvious things due to the status quo bias (in which any change from the baseline is considered a loss).
You have a wonderful writing style!

Can I ask you one question? What was the name of the real estate software you created to compare prices?I am interested on creating a similar one. It was the SaaS solution that you created and sold in the end.
 

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Also in the 80/20 realm...

What you shove in your mouth is 80% of your fitness...
What you do at the gym is 20%...

MARKED NOTABLE, almost missed it.
 
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Also in the 80/20 realm...

What you shove in your mouth is 80% of your fitness...
What you do at the gym is 20%...
Definitely. This goes even beyond exercise. Proper diet is by far one of the biggest contributors to performance and general sense of well-being, so one habit alone has a disproportionate impact on many areas of life (much bigger than many other habits combined).

MARKED NOTABLE, almost missed it.
Wow, thank you!

By the way, here's another similar concept that praises strategic laziness:


Niksen is similar to mindfulness, a word that’s been the subject of countless self-help books and articles over the past few years. But unlike mindfulness, niksen is not about staying in the moment and being conscious of your surroundings; it’s about letting yourself do nothing, about letting your mind go where it will without guilt or expectation. “I think that niksen on [a] regular basis is important to stay healthy,” Hamming says. “It’s a form of mental resting [and] recuperation, while you’re awake.”

The Dutch certainly didn’t invent doing nothing—philosophers and writers have touted the benefits for centuries, and other cultures have phrases for a similar experience (in Italy, dolce far niente means the sweetness of doing nothing). Mecking notes it’s during niksen that she gets her best story ideas, an outcome familiar to anyone who’s had an “aha moment” while in the shower or performing some other monotonous task.
 
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A thought-provoking post about strategy from Richard Koch:


Love the questions at the end:

  • What do you do differently from any other player?
  • What investments underpin your difference?
  • What is your competitive advantage, precisely?
  • What’s your value proposition to customers that they can’t get elsewhere?
  • What are the 20% of your customers who make you more than 80% of profits?
  • Who are your most profitable customers? At what rate, each year, do they leave you and buy elsewhere? Do you have a plan to raise the retention rate each year, and is it working?
  • Who is your main competitor and what are its plans? For an equivalent product or service, what are your costs and prices compared to those of your competitor?
  • What is your relative market share in each segment against your main rival? Are you the leader? What is the trend? Do you have star businesses – those where you are number one in market share and which are growing at least ten percent a year? What is the trend in relative market share (your sales divided by those of the largest rival) – are you gaining, holding, or losing? If you are not gaining, what will you do to ensure that you do?
  • Do you really know, objectively, what your customers think about your most profitable products/services and your main rival in those products?
  • What could you do to simplify your products, either to become much lower cost and price, or to provide products which are easier to use, more useful, and more fun to use than those of any rival?
  • Who are the two or three possible new or minor competitors who could be eating your lunch in five years? How do you protect yourself against them?
 
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I was re-reading Living the 80/20 Way by Richard Koch and this part resonated with me a lot (the part in bold was put in bold by me, not the author):

  • What’s the route to your 80/20 destination that you would normally pursue? This is not the answer — instead, it’s the standard against which you judge a possible 80/20 route. Unless you conjure up an approach that is hugely better than your habitual answer, you don’t yet have your 80/20 route.
  • Now ask, how can you make a vast improvement on your habitual answer, by unreasonably demanding more with less?
  • Divide the improvement into two parts. First, how could you get more? What would be a much better way for you? What would you enjoy more, and what would get you to your 80/20 destination more quickly? Brainstorm all possible routes. If you’re short of ideas, ask a friend or three to help — it’s always easier to solve someone else’s puzzle.
  • Second, ask how the route could be made easier for you. Dream up many ideas. Then, put them together, until you have a way that might work and definitely offers more with less. Even if you’re not sure it will work, try it. If it fails, move on to your second choice of route — but only if it too offers more with less.
The part in bold - Unless you conjure up an approach that is hugely better than your habitual answer, you don’t yet have your 80/20 route - is very interesting because it will uncover how often you turn toward the same old ideas. I just caught myself doing it and realized that what I thought could be my 80/20 thing is actually just a rehash of an old idea (my "habitual answer" that is very unlikely to bring different, "hugely better" results).
 

Andy Black

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I was re-reading Living the 80/20 Way by Richard Koch and this part resonated with me a lot (the part in bold was put in bold by me, not the author):



The part in bold - Unless you conjure up an approach that is hugely better than your habitual answer, you don’t yet have your 80/20 route - is very interesting because it will uncover how often you turn toward the same old ideas. I just caught myself doing it and realized that what I thought could be my 80/20 thing is actually just a rehash of an old idea (my "habitual answer" that is very unlikely to bring different, "hugely better" results).
Nice. I’m currently struggling with this too.
 

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