Part 3 — The 80/20 Series
80/20: For Life
Work less, earn more, enjoy more. The 80/20 Principle turned away from the company and onto your own life.
The 80/20 Series · from Richard Koch’s The 80/20 Principle
Part 2
Part 3
80/20: For Life (you are here)
Part 4
The same imbalance runs through your life
In the first two parts of this series the asymmetry lived in companies: a fifth of the products carrying most of the profit, a fifth of the customers carrying most of the value. The same shape runs through a single life, and the numbers are just as extreme.
Twenty percent of your time produces about 80 percent of what you achieve. Twenty percent of the way you arrange your life produces about 80 percent of your happiness. Twenty percent of your investments will give you 80 percent of your returns. A few relationships carry most of the warmth. A few decisions set the whole direction.
Most of what fills a week barely registers. A small, identifiable fraction produces almost everything that matters. The work of a good life is to find that fraction and feed it.
KEY INSIGHT
The point of 80/20 is the same here as it was in business: identify the few inputs that produce the great results, and pour yourself into those alone. Avoid hard work for its own sake. Don’t push water uphill. Be ruthlessly selective in what you do.
Freedom: most of our failures are in races others entered us for
Start with the races we are running. So many of our failures arrive in races other people entered us for, on terms we never set, chasing a finish line we never chose. We lose because the calendar is crowded with the wrong ones. The successes that matter tend to come from the handful we picked ourselves.
80/20 thinking is unconventional by design. It teases out where conventional wisdom is wrong, which it usually is. Progress comes from spotting the waste and the bad fit built into ordinary life, starting with your own daily routine, and then doing something about it.
The trap most people sit in: they spend a lot of time with people they don’t much like, doing work they aren’t enthusiastic about, filling their “free time” with activities they don’t greatly enjoy. None of it is forced on them. It accumulates by default, one reasonable-sounding obligation at a time.
Most of our failures are in races for which others enter us. Most of our ultra-successes come from races we want to enter.
Richard Koch
George Bernard Shaw saw the same thing from the other side. The reasonable man adapts himself to the world; the unreasonable one keeps trying to adapt the world to himself. So all progress depends on the unreasonable man. 80/20 thinking is a licence to be that kind of unreasonable about your own life.
Notes from Barnaby
Koch frames freedom as a private act of rebellion against convention. In practice I find the hardest conventions to break are the invisible ones — the meetings you attend because you always have, the relationships you keep out of guilt, the version of success you inherited rather than chose.
The eccentricity he prescribes is uncomfortable precisely because nobody is stopping you. You are the only one entering yourself in those races.
The Time Revolution
The phrase “time management” assumes the problem is efficiency — fitting more in, shaving minutes, tidying the calendar. The 80/20 answer is the opposite of busier. Spend your time on the few things that matter and treat the rest with open neglect.
Begin by separating two things our culture welds together: effort and reward. They are, at best, loosely linked. Warren Buffett is the standing example. Where most fund managers buy many stocks and churn them constantly, he buys few and holds them for decades, which means there is very little to do. The returns come from judgement applied rarely, then left alone.
A primer for time revolutionaries
Dissociate effort from reward
The hardest mental leap, and the one everything else depends on. Hard work and valuable work are different things, and a great deal of valuable work feels suspiciously easy. Stop using effort as the measure of a day.
Give up guilt
Guilt is what keeps clever people working far too hard long after the returns have dried up. For years it kept Koch himself from acting on his own best insight. Doing less of the low-value work is the whole point, and nothing to apologise for.
Free yourself from obligations imposed by others
When 80 percent of your time yields 20 percent of your results, it is a fair bet the 80 percent was undertaken at someone else’s request. Audit your calendar for whose purposes it actually serves.
Be unconventional and eccentric with your time
You will almost never spend your most valuable 20 percent being a good soldier — attending the meetings everyone assumes you’ll attend, doing what your peers do, observing the conventions of your role. Find the people who are both effective and eccentric, and study how they spend their days.
Identify your happiness islands and achievement islands
Your happiness islands are the small slices of time that have given you a wildly disproportionate share of your happiness. Your achievement islands are the short periods when you produced far more value per hour than the rest of your life put together. Name them precisely.
Multiply the islands
Once you know where the 80 percent comes from, the task is simple to state and hard to do: arrange your life to have much more of it. Pour resources into the islands and let the surrounding sea drain away.
The top uses of your time
When you are deciding what deserves a slice of the precious 20 percent, this is the side of the coin worth keeping in view:
- Things that advance your overall purpose in life
- Things you have always wanted to do
- Things already in the 20/80 relationship of time to results
- Innovative ways of slashing the time a task takes or multiplying the quality of the result
- Things other people tell you can’t be done
- Things that use your own creativity
- Things you can get other people to do with little effort from you
- Work alongside high-quality collaborators who already use time eccentrically and well
- Anything where it is genuinely now or never
KEY INSIGHT
The aim of the Time Revolution is a far emptier schedule pointed at a handful of very valuable things. Calm down, do less, and aim at the few goals where 80/20 will do the heavy lifting for you.
Happiness: spend it today
Here the analogy with money breaks in a useful way. Money you don’t spend can be saved, invested and, through compound interest, multiplied over decades. Happiness behaves differently. Happiness you fail to take today does nothing for tomorrow, and the capacity for it, like a muscle, wastes when it goes unused.
Money not spent can be saved and invested and, through the magic of compound interest, multiplied. But happiness not spent today does not lead to happiness tomorrow.
Richard Koch
So the 80/20 thinker treats happiness as something to be generated and spent on the day, consciously and cheerfully, using today’s happiness to build more of it tomorrow.
The Seven Secrets of High Happiness
- Choose the right romantic partner.
- Be committed to being committed to them.
- Love your work.
- Use wealth to gain freedom.
- Cultivate a few great friends.
- Be true to yourself and your conscience.
- Radiate happiness.
Notice how few of these involve acquiring anything. Most are about choosing well, then protecting the choice.
Strengthen your emotional intelligence by knowing your own weather. In what circumstances are you at your most positive, and your most negative? Where are you, who are you with, what are you doing, what is the weather like? The patterns are more regular than you’d think, and once you can see them you can engineer your days towards the good ones and away from the bad.
Koch is candid about his own pressure points — pointless bureaucracy, lawyers, traffic jams, grey days with no sun, being crammed in with too many other people, listening to excuses. Write down yours, now. Then engineer your life to avoid them, and check each month how far you are succeeding.
Seven daily happiness habits. The secrets set the frame; the habits fill the day. Koch’s daily regime runs to seven, and the load-bearing ones are simple: physical exercise, mental stimulation, a spiritual or artistic lift, doing something for another person, and sharing a pleasurable break with a friend. None of them is expensive. All of them are easy to skip, which is exactly why naming them as habits matters.
Friends and alliances: fewer and deeper
In personal and professional relationships, fewer and deeper wins every time. Your friendships will shape your happiness and your achievement more than almost anything else, so the 80/20 question is sharp: which handful of relationships carries most of the value, and are you investing in them accordingly?
The uncomfortable truth about achievement is that you cannot make yourself successful. Only other people can do that for you. What you can do is choose the right relationships and alliances, and then treat them as an extension of yourself. You need a few key allies — the right ones, at the right time, in the right place, with a common interest in your success and total mutual trust.
You don’t need many allies. You need the right ones.
The five attributes of the best relationships
- Mutual enjoyment of each other’s company
- Respect
- Shared experience
- Reciprocity — every true relationship is bilateral
- Trust — if you don’t trust someone completely, don’t try to build an alliance; it shouldn’t work and it won’t
On the relationships that have gone wrong: where you spend a lot of time together and come away unsatisfied, end it as soon as you can. Bad relationships drive out good ones, and they do it quietly, by taking up the room the good ones needed.
Notes from Barnaby
The five attributes are a good test to run on your own network. When I have applied it honestly, the result is always the same: a small number of relationships that score on all five and deserve far more of my time, and a longer list that survives on habit and proximity.
Reciprocity is the one most people get wrong. They keep score on the wrong ledger — favours owed, rather than enjoyment, respect and trust freely given.
Lazy achievement: combine intelligence with laziness
The real stars combine intelligence with laziness. If you can be lazy and still do a job well, you are using 80/20 — a little effort buying a great result. The skill is in choosing the few areas where a small amount of your brainpower, judgement or cunning travels a very long way, and then refusing to apply effort anywhere else.
The road to happiness and prosperity lies in an organised diminution of work.
Bertrand Russell
There is always a better way to do anything, with less effort, fewer people and less money. With enough ingenuity, simplifying and automating are nearly always possible. The lazy person, forced to be selective, has a better chance of finding the easy path than the diligent one who treats hard work as a virtue in itself.
The golden rules for career success
Koch’s list runs to ten. The vital few that carry most of the weight:
01
Specialise in a very small niche
Specialisation is one of the universal laws of life — it is how evolution itself works, each species finding its own ecological corner. A person who never specialises is doomed to life as a wage slave. Pick a narrow patch and develop a genuine core skill.
02
Know more than anyone else about it
In your niche you have to know more than anybody alive — real depth, beyond knowing a lot about a little. Keep improving your expertise until you are sure of it, then defend the lead with constant practice and relentless curiosity.
03
Choose a niche you enjoy and can excel in
Almost everyone who reaches the top did so with real enthusiasm for the thing itself. Enthusiasm drives your own achievement and infects the people around you, which compounds it.
04
Become self-employed early, then build leverage
Arrange your work so you focus on the things where you add several times more value than elsewhere, and capture as much of that value for yourself as you can. The exception worth respecting: stay employed while a firm is still teaching you a great deal, because in the first few years the value of the learning can exceed the gap between what you add and what you are paid.
Money: where wealth actually comes from
The larger part of most fortunes is built by investment. Salary funds the investing; it rarely becomes the fortune itself. The increase in wealth from most long-term portfolios comes from fewer than 20 percent of the holdings, so the entire game is to pick that 20 percent well and concentrate as much as you can into it.
20%
of a long-term portfolio’s holdings
80%
of the gain it produces
Conventional wisdom is not to put all your eggs in one basket. 80/20 wisdom is to choose a basket carefully, load all your eggs into it, and then watch it like a hawk.
Richard Koch
Koch sets out Ten Commandments of Investment. The ones that do most of the work for a private investor:
- Be proactive and unbalanced. Concentrate; don’t spread yourself thin across the index out of nervousness.
- Invest for the long term. Unless a stock is a clear loser, hold it for years — take a ten-, twenty- or thirty-year view. Money put into stocks for the short term is gambling rather than investing.
- Invest most when the market is low. Buy when everyone else is pessimistic. During a boom, every mediocre argument for prices continuing upward sounds persuasive — treat that as the signal to hold back.
- If you can’t beat the market, track it. A low-cost index is a perfectly honourable basket.
- Cull your loss-makers and run your gains. Cut losses, but never cut gains short.
–15%
Sell any individual stock that falls 15% below what you paid
Run
Hold the winners — the best sign of a great long-term investment is a short-term gain, repeated
KEY INSIGHT
The −15% rule governs individual stocks rather than the market as a whole. Few fortunes have ever been lost by holding a broad portfolio through the decades; a great many have been lost through misplaced loyalty to one or two declining stocks. For a single name, the best guide to where it goes next is where it is going now. Nobody ever went broke taking a profit — and very few ever got rich doing it early.
Lifestyle: having it all is simpler than you think
Every thread in this essay pulls towards the same place. Work out what you actually want from life and aim to have it. That sounds glib until you try to answer the questions honestly:
- Are you living with the right person?
- Do you have the right friends, and see them as much as you want?
- Do you live in the right place?
- Do you enjoy your work?
- Are you able to express your natural creativity?
Then do the 80/20 thing with the answers. Focus on what you find easy, what makes you feel productive and happy. Pursue the few things where you are amazingly better than other people and which you enjoy most. Starve the rest.
What we are all really looking for is work we love doing, which other people genuinely value and will pay for — in money, in admiration, or in love. Finding the thing that gives joy to others while generating joy in us, without burning through what we hold dear, can be the work of a lifetime. It is worth making it the work.
The universe is not on your side, but it is not against you either. It is merely unbalanced.
Richard Koch
That imbalance was the threat in business and the opportunity in a portfolio. In a life it is the same lever. A few people, a few hours, a few choices carry almost all the value. Find them, feed them, and let the rest go.
You are having it all. It is simpler than you think.
The 80/20 Series · from Richard Koch’s The 80/20 Principle
Part 2
Part 3
80/20: For Life (you are here)
Part 4