paretOH THIS IS an IMPORTANT principle

Somehow…someway…I still underestimate the POWER of the Pareto Principle (and relatedly the “Power Law” dynamic).

You have probably heard of the Pareto Principle. The Pareto Principle states that 80% of consequences come from 20% of the causes, asserting an unequal relationship between inputs and outputs. I was taught the Pareto Principle probably 10+ years ago. It was probably? in school. I have had conversations about it with friends and coworkers. I have written about it. I have thought about it.

And even still…I find myself amused? with how much I underestimate the INFLUENCE of “the minority” on the rest of the pie chart. I have to remind myself, both in the moment and in reflection, just how real? the principle is and how big of an impact it can make.

Pick any context.

In relationships, I find that I can be _so so attracted_ to a particularly quality in a person that I ignore many of the other pieces of the pie chart. The attraction overshadows the rest. This actually does not happen very often for me, but when it does happen, it is an intense feeling of attachment.

More often, I sometimes find myself unfairly gravitating towards one _negative_ quality in a person that clouds my vision (perhaps) more than I would like in the capacity that it overshadows all of their other (potentially) positive qualities.

This is a version of the Pareto Principle in reality.

Another may be in the company building setting. I think the tech industry, or what is referred to as the technology industry today (tbd as to how it will be referred to in the future), is living proof that the Pareto Principle rules the world.

A friend was sharing this thought with me and I think he summarized it quite well: Very few startups succeed. Only a small percentage end up being worth anything material. Call those the unicorns or successes or whatever you want. Then debate how long those things will even be around—it’s likely that the output from the “startup ecosystem” 100 years from now will be a bunch of great technology but it is very likely that none of the institutions/firms/companies/organizations we are building will be really remembered 100, let alone 1000 years from now.

All that being said, the ones that “Succeed” (on a relative basis)—even they, the poster children of the industry, I think get most everything wrong about organization and company building.

Like they get hiring wrong. Culture wrong. Marketing wrong. Goal setting wrong. Etc. etc.

They get one thing right—and that one thing is they understand how influential it is to BE RIGHT ABOUT BUILDING SOMETHING PEOPLE WANT.

If you pick the right thing to work on, aka build the thing that people want, well then you will BE PULLED BY THE MARKET into building a thing that has value.

You just have to be REALLY RIGHT about the MOST INFLUENTIAL THING and the rest of STUFF, you can kinda be ~mediocre at (at best). If you do not believe this claim I would encourage you to spend some time shadowing the “quote best companies” in the world.

How good are they at goal setting?

How good are they at culture?

How good are they at ______?

If you were to judge their competence, my intuition is that you would rate it a 3/10. And that is for THE BEST OF THE BUNCH.

Try spending time with the average tech company. It is ridiculous and embarrassing honestly—especially as it comes to rigor and competence. It is like they are not really trying to be professionals.

Now this is easier said than done. I do not pretend to be strictly better than everyone—but I think the reason we have gotten this way is because most people just do not care enough about these details. And maybe they should not—depending on their goal.

But some people would and should and will care about the whole picture. But that is not what this essay is about.

The essay is just a reminder to myself that BEING RIGHT ABOUT THE RIGHT THING may actually overshadow all of the other details.

Now this thought pretty much directly opposes another challenging prompt: success often looks like a one-off event, but it is often the product of hundreds of things going right after many years of hard work.

Tricky to think about. Could both be true? Could success be the product of getting one thing right? AND the product of many little things going right?

I am chewing on this, more than usual, because I am not sure if there needs to be a right answer here. I could give you the ~boring cop out of sorts: “it depends.” But what does it depend on?

My intuition here is that if you do a bunch of little things right, but you are wrong about the most important thing, well, then nothing really matters.

And then if you get the one thing right, you are more likely to be able to do the little things right but the latter are not guaranteed.

I think, again, this is the pareto principle in action. I think you need to be really right about the big thing, and if you are not, you need to be aware enough to recognize this as soon as possible so you stop wasting time on things that do not really matter to the pie chart.

This often comes down to where to spend your time and energy. A resource allocation problem. And that…well that is to be or not to be. Or rather, HOW to be or HOW not to be.






Leave a Reply

Your email address will not be published. Required fields are marked *