Introduction
I developed the Pareto Planning Method™ after being frustrated trying every productivity method/system and ‘To Do’ list app you can think of. The problem with them is I ended up working on a lot of trivial/low value but urgent tasks. I felt frustrated the list just kept growing and my business was not moving forward as fast as I would like.
Each time I tried a new system or app, I built up a massive list of to-dos over time and eventually got so frustrated, I dumped the system/app along with the massive tasks list that had grown on it.
My breakthrough came when I started to begin my day with high value tasks that generate lots of value for my clients and in turn lots of income for my business and ignored the low value tasks or outsourced them.
Generally I am awful at planning. My brain gets stuck in detail and I end up planning too long and then the plan goes out the window five minutes after I start anyway. This article details the method I have found works best for focusing in high value work and generating massive value for my customers which they are happy to pay well for.
Pareto Principle
The Pareto Principle (also known as the 80–20 rule) is named it after Italian economist Vilfredo Pareto, who, in 1896, while at the university, published his first paper that showed that approximately 80% of the land in Italy was owned by 20% of the population. Prior to that he also observed that 20% of the peapods in his garden contained 80% of the peas. Since then, many natural, economic and business phenomena have been shown empirically to exhibit such a distribution (1). For example a common rule of thumb in business is “80% of your sales come from 20% of your clients.”
This principle also extends to your work: 80% of your results come from 20% of your time and effort.
A lot of us don’t want to think this way because it indicates we are wasting most of our time on trivial things but it is really a principle of nature.
All your tasks may be important, but not all your tasks are valuable.
80/20 Curve
The Pareto Principle actually has a curved relationship behind it. Here is the traditional 80/20 curve. In this case is shows 80% of your results come from 20% of your effort.
Note, depending where you pick on the curve, the numbers don’t need to add to 100 either. For example on the curve above there is also 90/35 and 95/50. But it is nice to pick a point on the curve where the two values add to 100 to get a good feel of the inequality.
There are other curves that exist in business and nature too with other ratios that add to 100. eg 60/40, 75/25, 90/10 and even 99/1 but 80/20 is the most popular and a good rule of thumb.
The 75/25 Work Day
For the Pareto Planning Method I use a 75/25 version of the Pareto Curve just because the maths is simpler for an 8hr day.
This is what it looks like:
It shows the one hour of your work day generates 50% of your workday results, then another hour generates another 25% of the value. This give 75% of the value for 25% of the time (2 of 8 hours). Each successive hour is half the value of the previous hour. You can see by the 8th hour it is close to 0%, actually 0.4%. See the maths are really simple.
Now your thinking, if the last hour is only creating 0.4% of the value, why bother doing that last hour at all or for that matter the 7th hour and 6th hour. I like the way your thinking…. and that’s how I want you to start thinking. It will take some time to wrap your head around this concept but stick with me, it is worth it.
Now, I can extend this concept further by creating a target value ($/hr) for each hour of the workday based on my annual revenue goal. For example my annual revenue goal is $1,000,000/yr. This is my combined business income, not my take home pay. I have staff to help me achieve this BUT I need to put the products, services, marketing, sales, etc in place to achieve this income. That is my job as CEO and that’s what I do each day.
So this annual revenue goal of $1,000,000/yr over 250 work days per year (50 weeks x 5), means my daily value goal is $4000. Don’t get bogged down in the details (eg if you work 48 weeks per year or you could get sick). This is all ball park thinking to get you to focus on and do your most valuable work.
So if I break down this $4,000 into my 8 hour day with the breakdown from the graph above, I need to generate $2000 (50%) in one hour, $1000 (25%) in another hour, then $500, $250, $125, $63, $31 and $16 for other hours.
This is shown in the table below along with other revenue goals that you could be aiming for.
Now you’re probably thinking, “How can I generate 50% of a workdays value in 1 hour?” or in my case “How can he generate $2000 in value in one hour?”. Why wouldn’t I just do that all the time? Again, I like the way your thinking. My goal is to move you in that direction (i.e. doing higher value work) but remember, you are fighting with the laws of nature so you can’t bend the rules too much but there are ways.
Work Value
Likely Work Value = Potential Work Value x Likelihood of it happening (%)
Eg If I can spend 1hr and improve my offer for a product and this could increase my sales by $4000 over the next 12 months and I feel it has a 50% chance of doing that, then the Likely Work Value is
$4,000 x 50% = $2,000
I don’t write this calculation down for each hour of my day but I do it in my head when I’m planning.
What task can you do in the next hour that will likely generate $10,000 for your business within the next 12 months?
Work Value
- Developing or enhancing a product that can be resold
- Developing a sales funnel that can automatically resell
- Improving your USP
- Creating new and better offers
- Repositioning your message and position
- Executing “bolt from the blue” brilliant ideas
- Negotiating major deals
- Selling to high – value customers and groups
- Hiring New Team Members Who Can Magnify Your Productivity
- Public speaking
- Establishing values and culture
Your Core Genius
Defining your highest-value skills: What are you better at than almost anyone?
These are the types of skills you can use to gain a reputation for you and your business, in turn bringing more of the kind of clients you want, along with more revenue.
- Zone Of Genius: You typically need to work in your ‘Zone of Genius’ to generate this much value.
- Zone Of Excellence: You should be working in your ‘Zone of Excellence’ in your second hour
- Focus Audio: Listen to this productivity soundtrack to help improve focus.
Example
Here is an actual example from 8 Aug 2016 when I worked on this article you are reading.
My Annual Revenue Goal: $1,000,000/yr
My Daily Value Goal: $4000/workday
Today I will do these action items that will likely generate $4000 in income over the next 12 months:
1st Hour $2000 __Improve Succcessly Planning Method Article
2nd Hour $1000 __Redo OptiSurface dealer pricing page/offer
3rd Hour $500 __Hiring for Successly VA
4th Hour $250 __Jeff OptiSurface Design meeting
5th Hour $125 __Send OptiSurface Profile feature video
6th Hour $62 __Email Inbox Zero, AR email reply, Message Kate K
7th Hour $31 __Spare
8th Hour $16 __Spare
Notice how email is towards the bottom of this list. Years ago, I had it at the start of the day. It set me off each day on the typical busy but not very productive path. I was like a hamster on the email wheel. I decided to shift it towards the back of the day. To assist with this, I hired a support engineer to take on most of the emails of the business including the ‘urgent’ support emails. I have a process for handling your emails with a Virtual Assistant that I will detail in another article.
Also note how I leave the last two hours ‘Spare’ to accommodate interruptions during the day. If an interruption occurs during the day I will try to schedule it to these spare hours. If I can’t schedule it for then (e.g. urgent call from my largest client), then I do it immediately and the day plan get pushed back.
Tips
Write the action item as if it is already done. Eg I have written the first draft of my sales letter.
References
1. https://en.wikipedia.org/wiki/Pareto_principle
