Wednesday, February 12, 2014

Applying the 80/20 rule

Sometimes you just gotta listen to a math guy.  James M. Jackson shares his valid thoughts about applying the 80/20 rule to writing.
~ Donnell 

In 1906 an Italian economist named Vilfredo Pareto analyzed the distribution of wealth in Italy and discovered 20% of the people owned 80% of the wealth[i]. [In the US, Wikipedia suggests the top 20% own over 85% of the assets[ii], but that’s a different blog.]


Dr. Joseph Juran, an early quality management guru, discovered the broad principal of “the vital few and trivial many.”

Pareto’s work was a single statistic. Juran’s a broad principal. In the magic of naming conventions, combined they became “Praeto’s Principle,” the ubiquitous 80/20 rule, which in one general form states that 80% of the results are due to 20% of the actions.

Here’s an example of the 80/20 rule in action:

Many corporations discover that 80% of their profits are derived from 20% of their customers.

They also may discover that 80% of the time spent producing work also applies to 20% of the customers.

The problem for most corporations is there is not a 1-1 correspondence between the two sets of customers. Some of the customers sucking up great gobs of time produce very little (or even negative) profits.


One result of this kind of analysis is frequent buyer programs. Airlines, for example, want to capture business flyers who regularly travel and often pay more for a ticket because they don’t qualify for advanced purchase pricing or multiple day stays. These fliers provide a disproportionate share of airline profits for the same or less cost than the typical family traveler.

How can you apply this principle in your life?

If you want to be more productive, you can begin by learning how the 80/20 rule applies to your work. Since many of the Five Scribes Blog’s readers are authors, I will use them for my examples. Self-published authors have an easier job here because they have access to all of their statistics. They can tell exactly how many books sold on Amazon, Barnes & Noble, Booksamillion, Kobo, and individual bookstores.


I’d bet that for most authors, 20% of their outlets account for 80% of sales and likely of profits. Looking at how they generate profits has led some authors to choose to publish exclusively on Amazon. Doing so, they get a higher royalty rate from Amazon. The potential profits lost from foregone sales at other outlets are more than made up by the extra royalties. As an extra bonus, these authors can apply the time they would have used to create the extra formats needed by other outlets, to publicize for these venues, etc. and apply that time to writing—the thing that generates future sales.

This kind of understanding is why Joe Konrath no longer goes on book tours. He can make much more money writing new works than by meeting a few fans at signings. Of course, he spent years developing a platform, which illustrates that we need to continue to evaluate our current decisions. What was right for last year may not be right for this one.

Authors who decide they must do all of their own marketing, or design their own websites, or create their own book covers may be ignoring the effects of their personal 80/20 rule. If they paid someone for those services they would have more time to write. Increased writing develops more products to sell. Your fans will buy more from you, but only if you write more.

I read a comment last year that struck me. The author noted that historically, large publishers did not expect new authors to make them money until their fifth book. As the large publishers have become corporate behemoths, they’ve lost that patience. However, when we are our own publisher, perhaps we should be taking that long view for ourselves.

I know that if you absolutely do not have the money to invest in a career, you will have to do it all yourself. However, if you can invest, you must decide the best places to do that, and the 80/20 rule should help you to find which 20% of stuff you can farm out that will save 80% of that kind of effort.


One last word. I’m a math guy and know it is possible to run everything “by the numbers.” Fun and enjoyment have intangible benefits. If you really love doing a task and would miss it if you didn’t, then by all means keep doing it—but don’t fool yourself into thinking it’s a good business decision; it’s a life decision, and that’s okay.

~ Jim 

Applying the 80/20 rule originally appeared on Writers Who Kill BlogSpot.  http://writerswhokill.blogspot.com/

JAMES M JACKSON authors the Seamus McCree mysteries, BAD POLICY (March 2013) and CABIN FEVER (coming April 2014), published by Barking Rain Press. BAD POLICY won the Evan Marshall Fiction Makeover Contest whose criteria were the freshness and commerciality of the story and quality of the writing.

Website: http://jamesmjackson.com

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