Michael J. Kerrigan

Pareto Principle

 

There are many excellent reasons to purchase and enjoy Peter Thiel’s Zero to One, Notes on Startups.

For starters, going from zero to one or intensive (vertical) progress means doing new things. Vertical progress is harder to imagine because it requires doing something no one else has done. In short, doing new things is wiser than copying things that work. Thiel is best in questioning conventional thinking for he advises a start up must question received ideas and rethink business from scratch.

Two conventional beliefs Thiel asks us to question are monopolies and competition. “Creative monopoly means new products that benefit everybody and sustainable profits for the creator. Competition mean no profits for anybody, no meaningful differentiation, and a struggle for survival…. The more we compete, the less we gain.”

The book offers entrepreneurs many lessons learned but the best suggestion I offer is if you have little… Continue reading

For many years I have studied the Pareto Principle**, the commonly quoted management rule, which states that 80% of the work is done by 20% of the people. The hypothesis is that 80 per cent of results flow from 20 per cent of causes, and sometimes from a much smaller proportion of powerful forces.

The 80/20 Principle asserts that a minority of causes, inputs or effort usually led to a majority of the results, outputs or rewards. Taken literally, this means that, for example, 80 per cent of what you achieve comes from 20 per cent of the time spent. Thus for all practical purposes, four- fifths of the effort—a dominant part of it—is largely irrelevant.

The reason that the 80/20 Principle is so valuable is that it is counterintuitive. We tend to expect that all causes will have roughly the same significance and that all customers are equally valuable.… Continue reading

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