The Pareto Principle & Parkinson's Law

In order to operate efficiently, we have to know what to work on and when to work on it. The Pareto Principle ("The 80/20 Rule") guides us on what to work on. Parkinson's Law guides us on when to work on it.

• Pareto Principle: What is important and is worth my time to work on?
• Parkinson's Law: How much time should I spending working on these important tasks?

The Pareto Principle (The 80/20 Rule)

The Pareto Principle is a simple concept that 80% of the positive effects in life/business are the result of 20% of highly effective actions and that 80% of the problems you deal with are due to 20% of your bad habits or painful people/clients you're working with. (The concept is a little larger than that, but that's an okay 1-sentence synopsis.) In short, the Pareto Principle means "Do more of what works and less of what doesn't work." A longer explanation is in the following video:

https://www.youtube.com/watch?v=MzcX_0D49Ts&t=65s

Identifying the Positive 20%

If you can identify the positive actions you take that account for 80% of your positive results, it allows you to focus on a few high-impact activities. For agents, this can mean that following up with your clients more or going on more appointments means that you sell more and earn more. At the company level, it can mean that the more energy we spend on marketing & lead generation, the more houses everyone sells. In property management, you might notice that quick follow-up on maintenance requests means happier tenants. It's important to identify your goals and then identify which actions are actually helping you meet those goals the most. If you do more of these high-impact actions, you'll meet more of your goals faster.

Identifying & Eliminating the Negative 20%

Likewise, if you can identify the 20% of clients or bad habits that cause 80% of your problems, you'll have a much happier and more efficient business life. The Pareto Principle is huge in property management because we have such long relationships with clients. We know that we always have a small few clients or properties that cause the vast majority of our problems. By ending these relationships, it frees up our time to take on new good accounts, and we grow as a result. In real estate sales, a good example is to focus on your core competency and to avoid taking clients or properties that will be low paying and/or labor-intensive. It's probably not worth taking the $100k lot listing in Lago Vista if you live in Southwest Austin, for example.

Our 80/15/5 Rule

In real estate sales, we work with clients using a modified Pareto Principle. We know that 80% of the people that we work with will be good to work with, and many of them are a joy to work with. 20% are a pain. Of that remaining "pain", 15% are difficult but manageable, while 5% are insane/impossible. Because we sell a high ticket item in a relatively short amount of time, we continue to work with the 15% "difficult but manageable" and we part ways with the 5% "impossible/insane."

Parkinson's Law

While writing this, I've given myself just a 15 minute time frame to finish this portion of this article. Why?

Because of Parkinson's Law: "Work expands to fill the time available for its completion."

Yesterday, I put writing this on my to-do list to complete by Friday, thinking I might need to wait until I had about 30-45 minutes to focus on it. Today, I looked at it and realized I might be making a mountain out of a mole-hill, so I decided to just spend the next 15 minutes on it and see what I end up with.

By setting an ambitious & somewhat arbitrary (but still reasonable) deadline, I'm ensuring that I focus on what's critical to what I'm doing; communicate an idea.

It comes down to the distinction between being busy and being productive.

"Being busy" would be the version of this where I set aside 30-45 minutes on this. "Being productive" is the version where I hammer it out in half the time. Being busy is the negative byproduct of allotting too much time or not setting a deadline for a given task. When you don't set a deadline for yourself, the task will drag on.

Parkinson's Law works incredibly well with the Pareto Principle:

• Limit tasks to the important to shorten work time. (80/20)
• Shorten work time to limit tasks to the important. (Parkinson's Law)

And what is excellent about Parkinson's Law is that it not only goes hand in hand with The Pareto Principle, it works excellently with our principle of incremental improvements. In short, get a product out to meet whatever ambitious deadline you set for yourself, and then work on improving it later.

Take some opportunities to experiment with this. Start setting ambitious deadlines, stick to them, and you'll be surprised with your results.

My time is about up now. I might come back tomorrow and spend another few minutes improving this, but now it's done and I've still spent less time than I thought I'd need.

Here are 2 more great articles on Parkinson's Law. I pulled a quote above from one of them. Spend at least 35% less time than you think you'd need to read both of them:

• http://simpleeconomist.com/tim-ferriss-parkinsons-law/
• https://lifehacker.com/parkinsons-law-and-the-4-hour-workweek-262343