Book: 80/20 Principle: The Secret of achieving more with less
Subject Area: Productivity & Effectiveness
Post number: 6
English version:
The 80/20 Principle states that there is a inbuilt imbalance between causes and effects. A Majority has a small impact and a small minority has a major and dominant impact. Out of 100% of the population, 20% of it will cause the 80% of criminal trouble. 20% of the medicines make 80% of the profit in the Pharmaceutical industry.
As a side note, another major impact of these small major events is documented by noted Researcher Nassim Nicholas Taleb in his book “The Black Swan”. He makes some interesting derivatives out of this extrapolation of thee Pareto principle on the issue of economy. Many people like to get small profits over time than a huge one time profit. And on the reverse They prefer losing money in a bulk that in small decrements.
Based on the 80/20 principle, one must learn to celebrate exceptional performance, rather than raise average efforts! Be Selective, Not exhaustive and focus your effort on the few things that you think you should excel.
The First instance of 80/20 principle applied to corporate success is in revolutionizing Data Quality. Usually 20% of the problems cause 80% of quality issues. The Reason 80/20 principle works best in business is because in effect it is possible to generate 80 percent of the profit with 20 percent of the expenditure!
The Art of 80/20 is not to control the output. But rather to watch and observe which way the wind is blowing and utilise it to our maximum benefit. It requires 80/20 Analysis (Analysing the actual facts and data) and 80/20 Thinking (Assuming the existence of the principle in any realm and acting accordingly).
Identify the product, customer, market segment and the competitive segment that the company makes the most profit. That is part of the core 20% of the company that is driving 80% of the profits. Usually competitive segment is identified by knowing the major competitor to the product! If a product has a different competitor in the market, then it belongs in its own competitive segment.
Customer profitability is the next thing. Two customers who give the same amount of business might still drive different profitability. One of them might be too demanding and exhaustive on the resources driving your profit margin low. Prioritizing and allocating resources to the customer who makes the most profit margin is essential!
The next application of the pareto law reveals that simple is beautiful and beneficial. Complex is ugly and just causes overhead. Because usually the 20% of the core business in simple, while the remaining 80% of it is unnecessarily complex, has a lot of managerial positions and is a waste of resources! Simple doesn’t NOT mean small! But unfortunately, Big tends to get ccomplex and requires conscious effort to keep it simple! In a corporation, there is always a war. The war between the trivial many and the vital few. Be Selective. Not everything has the same importance.
Marketing efforts should be focussed on the top 20% of the products. Service should be focussed on the top 20% of the customers. (Both decided based on profitability! Not on sheer volume). Always keep the core customers happy.
Lets look at the top 10 corporate uses of the Pareto principle in the next post.
Showing posts with label MBA. Show all posts
Showing posts with label MBA. Show all posts
Book:
80/20 Principle: The Secret of achieving more with less
Subject Area: Productivity & Effectiveness
Post number: 5
English version:
Principle of Least effort - The 80/20 Principle – Pareto principle – Law of the vital few: Names are different, but the principle is the same! It basically states that for a majority of the events – both corporate and personal – 80% of the results come from 20% of the effort.
The greatest myth in the world is to believe in equality. If you still do, Good luck. The universe itself is imbalanced. 99.9999% of matter is found in .00001% space. (Clusted un stars and planets.. the remaining space virtually contain no matter). 82.7% of the worlds income goes to the richest 20% (Survey 1989). 80% of a company’s profit comes from 20% of the products/customers/segment etc;
This law also applies on a personal level. 80% of your disputes with your better half come from 20% of cuaases. Why do psychologist emphasize on the first 20 years of life more while a typical human life span is around 100? Why do the early 20 years have an unequal impact and importance on the rest?
This also applies to Machines. The IC engine (Internal Combustion) wastes 80% of the fuel for combustion and uses the remaining 20% to power the actual drive! Computers are made faster by tuning it to run the most frequently run 20% of the code (e.g.: RISC).
While the ratio 80:20 is note literal (though it is in most cases), the imbalance does exist in some form. 60:40, 99.9:0.1 etc;
The initial discovery of this principle was made in wealth distribution by an Italian economist Pareto. He found that 80% of the wealth was accumulated by 20% of the population. He was surprised to validate his theory across countries across time. He proposed the systematic and predictable lack of balance as the Pareto Principle.
So why is this law of so much importance? Because it is counter intuitive. Counter educational. We have all been taught that equal efforts should reap equal benefits. But that obviously is not the case. Not all customers are equal. Not all products are equal. Not each day we spend has the same significance. (Think of the day you spent on your public examination vs. your last Sunday when you were rolling in the bed.. Now which one had a greater impact in your life?)
The Point we miss is called feedback loop. In real life, everything is connected. Positive and negative feedback loops run amok. A day started with spilt milk leads to more and more stress. A slight initial advantage disproportionally affects the outcome.
What this means is that, Resources with major effects should be utilized more. Intermediate resources should be pressed to be more productive and weak resources are developed so that they mimic the action of stronger resources.
The Pareto theory, after all plugs-in with the Chaos theory – There is imbalance. But predictable imbalance. Same as the Chaos theory that says certain characteristic patterns re-occur – albeit with infinite and unpredictable variety!
p.s: Please note this is just a short condensed review / my thoughts of the book and is not intended to infringe on any rights or anything like that. For a complete understanding of the subject, I strongly recommend to buy the book yourself or rent it out from a library and read it.
Ok, Now that I have studied and reviewed and blogged the whole book, how about implementing it?
When someone told me MBA is a philosophy. I laughed. Now, I understand! This is the stuff that they should have taught us in school! Not some meaningless technicalities!
The first question that came to my mind was.. Am I manipulating people here somehow? Is all this a bit selfish? Well, Imagine a woman who is asking you $500. Would you give her? Now if that woman was your mother or sister? See the point. I dont think we get the definition of selfishness right. Selfishness is not doing things for yourself. Selfishness is doing things ONLY for yourself.
As the Author repeatedly emphasizes, showing real concern and real care matters a lot. You might get a bit with fake praise (flattery) and fake concern, but anything fake just like fake currency eventually gets caught and is jailed! Show real care. That doesnot mean you need to worry about the other person's financial problems all night. It means, when you talk with him, you spend time for him to think about the situation from his point of view and not be selfish. All it takes is an extra minute! (And following up on what you promise to him)
For me, personally the biggest problem has been "Caring for other people". I am so emotionaly distant usually, that it is tough for me. I still get a creepy feeling that I am manipulating them when i do some of this. I guess, I just have to keep practicing and not give up.
I never had a problem with criticism. I almost never criticize, and when i do, i honey coat it. My problem was else where. Praising people! appreciating them and showing concern for them! Well, I have started of with praising people immediately whenever they did something efficient/fast/better. Yes, I still have to fight with my own reservations to do it. I never praised people before, much less care for them! I used to openly proclaim that I dont give a damn! Now all that is gotta change. (I hope blogging my experiences will help me achieve this. Accountability to the unseen force and all that ;) )
And some of the other stuff the book mentions reminds me of spirituality. It comes down to knowing yourself. Once you know what you are, you are no more on a shaky ground. You have more confidence. After all only you can judge yourself on what you CAN do and not what you DID. Once we are sure of ourselves, we can easily project that to the world. Not get jumpy and not react to every thing impulsively.
And I must remind myself to read my posts atleast once a month, so I dont wander off course!
It is a long way from here! The hardest journeys are the best! arent they!
When someone told me MBA is a philosophy. I laughed. Now, I understand! This is the stuff that they should have taught us in school! Not some meaningless technicalities!
The first question that came to my mind was.. Am I manipulating people here somehow? Is all this a bit selfish? Well, Imagine a woman who is asking you $500. Would you give her? Now if that woman was your mother or sister? See the point. I dont think we get the definition of selfishness right. Selfishness is not doing things for yourself. Selfishness is doing things ONLY for yourself.
As the Author repeatedly emphasizes, showing real concern and real care matters a lot. You might get a bit with fake praise (flattery) and fake concern, but anything fake just like fake currency eventually gets caught and is jailed! Show real care. That doesnot mean you need to worry about the other person's financial problems all night. It means, when you talk with him, you spend time for him to think about the situation from his point of view and not be selfish. All it takes is an extra minute! (And following up on what you promise to him)
For me, personally the biggest problem has been "Caring for other people". I am so emotionaly distant usually, that it is tough for me. I still get a creepy feeling that I am manipulating them when i do some of this. I guess, I just have to keep practicing and not give up.
I never had a problem with criticism. I almost never criticize, and when i do, i honey coat it. My problem was else where. Praising people! appreciating them and showing concern for them! Well, I have started of with praising people immediately whenever they did something efficient/fast/better. Yes, I still have to fight with my own reservations to do it. I never praised people before, much less care for them! I used to openly proclaim that I dont give a damn! Now all that is gotta change. (I hope blogging my experiences will help me achieve this. Accountability to the unseen force and all that ;) )
And some of the other stuff the book mentions reminds me of spirituality. It comes down to knowing yourself. Once you know what you are, you are no more on a shaky ground. You have more confidence. After all only you can judge yourself on what you CAN do and not what you DID. Once we are sure of ourselves, we can easily project that to the world. Not get jumpy and not react to every thing impulsively.
And I must remind myself to read my posts atleast once a month, so I dont wander off course!
It is a long way from here! The hardest journeys are the best! arent they!
Book:
How to win friends and Influence people Author: Dale Carnegie
Subject Area: Communication
Post number: 5
English version:
How to change people without giving offence or arousing resentments
Lesson 1: When you must find fault, begin with a praise.. When you must blame, follow the dentist approach. Begin with the pain killer.
Begin with praise and honest appreciation.
Lesson 2: Don't use contradictory or negative statements between the praise and the criticism.. Instead of using words like But, try to change it by using neutral words like "and". Especially for sensitive people, it is much better to use indirect criticism rather than blunt ones. Inspire people to lead by example. (And you lead by example too..)
Call attention to people's mistake indirectly.
Lesson 3: Talk about your own experiences and road block before you criticize. That will make them take the message a lot easier.
Talk about you own mistakes before criticizing the other person
Lesson 4: Never give orders. Always give suggestions. Instead of pushing people, explain to them the necessity.
Ask questions instead of giving direct orders.
Lesson 5: Even when criticizing, always let the other person saving face. Even if we are right, criticizing the other person directly will only crush their ego and cause resentment.
Let the other person save face.
Lesson 6: Always emphasize improvements. People react better to improvements than criticizing failures. Praise is the warm sunshine on which human minds grow. The cold wind of criticism does not help much.
Bland flattery like "you are good" doesn't help! It falls flat and doesn't count as praise. Real appreciation is more specific telling why and what made them get the praise.
Praise even the slightest improvement! In fact lavish praise!
Lesson 7: If you want to improve a person in certain aspect, act as though that particular trait already exists in them. "Assume a virtue.. If you have it not" – William Shakespeare.
Give the other person a fine reputation to live up to.
Lesson 8: Make it seem easy to fix the failure. That will motivate people.
Use encouragement. Make the fault seem easy to correct
Lesson 9: Forget about your own benefits for a moment and consider the benefits to the other person. Know exactly what you want them to do. Be empathetic and ask yourself what the other person wants to do. Now match the benefits of what you want them to do to what they want to do. And when telling them, convey it in such a manner that it is personally beneficial to them.
Make the other person happy about doing the thing you suggest
Summarizing,
- Begin with praise and honest appreciation
- Call attention to people's mistake indirectly
- Talk about you own mistakes before criticizing the other person
- Ask questions instead of giving direct orders
- Let the other person save face
- Praise even the slightest improvement! In fact lavish praise
- Give the other person a fine reputation to live up to
- Use encouragement. Make the fault seem easy to correct
- Make the other person happy about doing the thing you suggest
Book 1 Review Complete. Now in the next few posts let's see how to implement it in life and what they exactly mean before we jump to the next book.
Book:
How to win friends and Influence people Author: Dale Carnegie
Subject Area: Communication
Post number: 4
English version:
How to win people to your way of thinking!
Lesson 7: Always make suggestions and guide the other people to your idea indirectly.. No one likes to be sold something or told to do something. "The reason why Rivers and the sea receive the homage of thousands of mountain streams is because they keep low below them. So the Sage, wishing to be above men, puts himself below them . Wishing to be before them, puts himself behind them. Thus, though his place be above men, they don't feel his weight. Though his place be before them, they don't count it as a injury" – Chinese proverb.
Let the others think the idea is theirs.
Lesson 8: Other people may be totally wrong... But they don't think so. Any fool can condemn them. But only a wise person can try to understand them. Try to honestly put yourself in his shoes. The success with dealing with other people is a sympathetic grasp of the other person's view point. Yes, you are interested in your own affairs more. But so is everyone else. Realise that and you have the key to success in relations.
Co operation is achieved when you show that the other person's opinion and ideas are as important as your own. Before asking anyone to do something, Ask yourself, "Why would I want to do it, If I were them?".
Try Honestly to see things from the other person's view point
Lesson 9: Show Sympathy. Realise that if you were in their shoes, with their temperament and attitudes, you would do exactly as them. It is just by luck/God's Grace, you are you and not him/her. The Human species universally craves for sympathy.
Be Sympathetic with the other person's idea's and desires.
Lesson 10: To move the person, always appeal to the nobler motives. For instance, when the famous guy doesn't want his kids picture in the newspaper, He doesn't tell the journalist that he doesn't like it. He tells them, we all care about kids safety. They don't want their kids picture public either. It is not safe for the kids.
Appeal to the nobler motives
Lesson 11: Dramatize a little. If ads can do it and Movies can do it,so can you and me!
Dramatize your ideas
Lesson 12: Generate competition. Not a money generating competition... but in the desire to excel. This desire and achievement in it makes people feel important.
Throw down a challenge
Summarizing, The Ways to win people to think your ways are
- The only way to get best of an argument is to avoid it
- Show respect for the other person's opinion. Never say "you're wrong".
- If you are wrong admit it quickly and emphatically
- Begin in a friendly way!
- Get the other person saying "yes", "yes" immediately!
- Let the other person do a great deal of talking
- Let the others think the idea is theirs.
- Try Honestly to see things from the other person's view point
- Be Sympathetic with the other person's idea's and desires.
- Appeal to the nobler motives
- Dramatize your ideas
- Throw down a challenge
p.s: Please note this is just a short condensed review / my thoughts of the book and is not intended to infringe on any rights or anything like that. For a complete understanding of the subject, I strongly recommend to buy the book yourself or rent it out from a library and read it.
Book:
How to win friends and Influence people Author: Dale Carnegie
Subject Area: Communication
Post number: 3
English version:
How to win people to your way of thinking!
Lesson 1:
A man convinced against his will is still of the same opinion. Argumentation is a lose – lose situation. You win the argument, lose a friend and his good will or lose the argument and lose the friend and his good will. So do you want a academic theatrical victory which is pretty useless or the good will of the other person?
Hatred is never ended by hatred but by love– Buddha. A Misunderstanding is never ended by argument, but by a genuine interest in understanding the other person's view point and reconciliation. Give the opponent time to talk. Donot interrupt. Look for areas where you can admit your mistakes and say so. Anyone who spends time disagreeing with you is actually trying to help you. But you only need to let them.
The only way to get the best out of an argument is to avoid it!
Lesson 2:
If you want to prove anything, don't let the other person even notice it. It has to be subtle. "Men must be taught as if you taught them not.. And things unknown proposed as things forgot". If you really think you are smarter than the other person, make sure you never tell them that! Any disagreement should be answered as, "I may be wrong. I often am. Let us examine the facts together..." or something to that effect.
People associate the concept of everything to "My". My god.. My language My country My beliefs. My version of the truth. So when you are challenging any of it, in essence you are challenging their ego. Shadows cast on these only cause resentments. Most of people's reasoning consists on sticking to facts that seem to support their version of things! Deny yourself the pleasure of contradicting people! Even when what they say is wrong. Instead engage in a constructive dialogue and sincerely try to appreciate their view of the world.
Judge people by their own principles. Not yours!
Show respect for the other person's opinion. Never say "you are wrong"!
Lesson 3:
It takes courage to agree to one's mistakes. It also gives a certain degree of satisfaction by clearing the guilt and doubt, but also mostly provides a chance to rectify it. Any fool can defend his mistakes. But it takes character to admit one's mistakes.
When we are right, Let's try to win people gently and tactfully into understanding us. When we are wrong, Lets admit to our mistakes quickly!
If you are wrong admit it quickly and emphatically
Lesson 4:
There is only one way approach anyone. It is friendly! Gentleness and friendliness are always stronger than force and fury. A drop of honey after all catches more flies than a gallon of water!
Begin in a friendly way!
Lesson 5:
When talking with people, don't begin with things you differ. Instead start with things you agree upon. Get the other person to say 'yes', and 'yes'. Don't set him initially to say 'No' for everything! He who treads softly goes far!
Get the other person saying "yes", "yes" immediately!
Lesson 6:
Always Let the other person talk! Even our friend would much like to talk about their achievements than hear us boasting about ours.
Let the other person do a great deal of talking
(This section to be summarized in the next post)
p.s: Please note this is just a short condensed review / my thoughts of the book and is not intended to infringe on any rights or anything like that. For a complete understanding of the subject, I strongly recommend to buy the book yourself or rent it out from a library and read it.
Book:
How to win friends and Influence people Author: Dale Carnegie
Subject Area: Communication
Post number: 2
English version:
6 ways to make people like you!
The best way to make friends is to be genuinely interested in the other person. People are not interested in you and me. They are interested in themselves.
A individual who is not interested in his fellow men is the greatest source of failures and difficulties. If you want to make real friends, be ready to invest something for them.
Time, energy, usefulness and thoughts.
Basic human psychology: We are interested in others, when they are interested in us.
Lesson 1: Be genuinely interested in other people.
Have you ever wondered why puppies and kids usually win everyone's affection? Because they show happiness genuinely.
Try practicing a smile every hour at someone. Be at home or work or on the road. Just a small smile and a Good morning perhaps.
The best way to be happy is to act happy. Your thoughts and feelings will follow your action.
Lesson 2: Smile!
An average person is more interested in his/her name than all the rest of the names in earth put together.
Men invest so much so their name would be remembered. The Most easiest way to gain good will is to remember the names of the people you meet.
A lot of people resist saying they cant remember names. But all you are not doing is not spending enough effort to remember it.
Lesson 3: A Person's name is the most important and sweetest word in any language to him!
Listening with genuine interest is the highest compliment we can pay anyone. The secret of a good conversationalist is to be a good listener.
You make the person feel important by paying rapt attention to them. Good talkers are rare. Good listeners are a rarer lot!
Lesson 4: Be a good listener. Get people to talk about themselves.
Listen. And when you have to talk, talk about the things that interest the other person.
The best way to gain a person's attention and open them up is to talk their interests.
Lesson 5: Talk in terms of the other person's interests.
All these exercises are not meant to get something out of the other person. If you cant
Be nice to other person and give some honest appreciation without getting something out of them in return,
you deserve failure! Having said that, the only true return you should expect is that you have done something to make their day happier.
Show courtesy.
Do unto others as what you would have others do unto you.
Lesson 6: Make the other person feel important... And do it sincerely!
So, 6 Ways to make friends
- Be genuinely interested in other people.
- Smile.. It cost you nothing and makes your world beautiful!
- A Person's name is the most important and sweetest word in any language to him!
- Be a good listener. Get people to talk about themselves
- Talk in terms of the other person's interests.
- Make the other person feel important... And do it sincerely!
p.s: Please note this is just a short condensed review / my thoughts of the book and is not intended to infringe on any rights or anything like that. For a complete understanding of the subject,
I strongly recommend to buy the book yourself or rent it out from a library and read it.
Book:
How to win friends and Influence people Author: Dale Carnegie
Subject Area: Communication
Post number : 1
English version:
The Key challenge is to get along with people. Studies have shown that success translates to 15% technical knowledge and 85% personality and communication regardless of their field of work.
Key: Remind yourself every morning that your success and happiness depends on your ability to deal with people skilfully.
Reading Key: Take short notes for reviewing time to time and refresh your goal and memory. And apply it. Knowledge without application is a waste.
The key to everything is to think and act. Do not act reactively. Yes, it will be the easiest way, but usually it is not the best.
Chapter 1:
Resentment can Criticism only worsens the situation.
When dealing with people, Remember we are not dealing with logic. We are dealing with emotions, prejudice, pride and vanity.
If God himself, doesn't intend to judge a man until he is dead, why should we?
Lesson: Don't criticize, condemn or complain
Chapter 2:
There is only one way to get a person to do something. It is to make them want to do it.
All men crave the desire to be great. They have to feel they are important. Some people even go insane to feel this. (Apparently it is that important to human nature!)
Donot take people for granted. Appreciation is real currency. Flattery is fake. Eventually it will be caught and disgraced.
"Every man I meet is superior to me in some way. In that, I learn of him".
Lesson 2: Give Honest, sincere appreciation.
Chapter 3:
The only way to influence people is to talk about what they want, and show them how to get there. Before you make a person do something, think on how you can make them want to do it.
When you have a brilliant idea, let others cook on it and get some ownership of that too.
Lesson: Arouse in the other person, the eagerness to do it.
So, fundamental techniques in handling people.
- Dont Criticize, condemn or complain
- Give Honest, Sinccere appreciation
- Arouse in the other person an eager want.
p.s: Please note this is just a short condensed review / my thoughts of the book and is not intended to infringe on any rights or anything like that. For a complete understanding of the subject,
I strongly recommend to buy the book yourself or rent it out from a library and read it.
Well, Lets see how far I get to!