Bestselling author Richard Koch shows managers how to apply the 80/20 Principle to achieve exceptional results at workwithout stress or long hours.
In his bestselling book The 80/20 Principle, Richard Koch showed readers how to put the 80/20 Principlethe idea that 80 percent of results come from just 20 percent of effortinto practice in their personal lives. Now in THE 80/20 MANAGER, he demonstrates how to apply the principle to management. An 80/20 manager learns to focus only on the issues that really matter, achieving exceptional results, and feeling successful everyday while working less hard in fewer hours.
A large number of managersespecially in these difficult timesfeel completely overwhelmed. Their inboxes are overflowing and they constantly struggle to finish their to-do lists, leaving little time for the things that really matter. THE 80/20 MANAGER shows a new way to look at managementand at lifeto enjoy work and build a successful and fulfilling career.
|Publisher:||Little, Brown and Company|
|Product dimensions:||6.34(w) x 9.50(h) x 1.04(d)|
About the Author
Richard Koch is the bestselling author of The 80/20 Principle, which has sold over a million copies and been published in thirty-one languages. He is also a highly successful entrepreneur and investor, whose ventures have included Filofax, Plymouth Gin, Belgo, and Betfair. He was formerly a partner of Bain & Company and co-founder of LEK Consulting. He is British and lives in Portugal.
Read an Excerpt
The 80/20 Manager
The Secret to Working Less and Achieving More
By Richard Koch
Little, Brown and CompanyCopyright © 2013 Richard Koch
All rights reserved.
Way Two: The Superconnecting Manager
It is remarkable that people receive crucial information from individuals whose very existence they have forgotten.
Professor Mark Granovetter
Creativity comes from spontaneous meetings, from random discussions. You run into someone, you ask what they're doing, you say "Wow," and soon you're cooking up all sorts of ideas.
Weak links, powerful effects
Who do you think can provide the most help in your work and life? Your close colleagues? Friends and family? Or people you hardly know and rarely see?
The answer is surprising. Great leaps forward in our lives—such as getting a fantastic new job or finding the key to transforming a business—are more likely to come out of the blue, from casual acquaintances, than from our close friends and colleagues. The art of being a superconnecting manager is cultivating a wide range of diverse casual acquaintances, and fully utilizing the "weak links" we all have in profusion. I shall use an important turning- point in my own life as an illustration.
When I was thirty-three and working for Bain & Company, two colleagues and I decided to start our own consulting firm, LEK. It was hard. Bain & Company sued us and stopped us taking our clients with us, something we had banked on being able to do. Our small pot of capital was dwindling fast and we desperately needed to find a big client. We called all our friends and close business contacts, but that didn't get us anywhere. Finally, the three of us sat down to work out what to do next. Iain and I were glum; Jim was more upbeat and can-do. Iain and I put it down to him being American.
"Here's what we should do," Jim said. "Take a sheet of paper and write down the name of every manager you know who works in a large company. Include everyone, even if you don't know them that well—former colleagues, acquaintances from college or business school, friends of friends. Don't worry if you haven't seen them for years. Take them out to lunch or for a drink after work to catch up. Tell them what you are doing and see if they have any ideas."
That was how I ended up in Julie's Wine Bar near the Portobello Road in London with Nicholas Walt, a distinguished-looking former colleague from BCG. He was tall and slender; his signature trait was walking with a ramrod-straight back, like an old soldier. We had vaguely known each other five years earlier, had never worked or socialized together, but had got on well in the office and shared a subversive sense of humor. I'd met him twice since leaving BCG, when he had tried to hire me for a large firm.
The wine acted as an effective anesthetic as he rattled off a long series of stories about the delights of becoming a father in his early fifties. I tried to steer the conversation to his role within the Imperial Group, one of Britain's largest conglomerates, with interests in tobacco, food manufacturing, leisure, restaurants and hotels, but all Nick wanted to talk about was how his son had given him a new lease of life. If his boy was gurgling with pleasure, so was his dad.
Eventually, though, I managed to stem the flow and explained that we were finding it very tough to get our new venture up and running. The phone simply didn't ring as it had when I was in a big firm.
Nick empathized: "The strain must be enormous," he said. But all I got out of him that evening was another glass of wine and some sympathy.
So it was something of a surprise when I answered the phone two weeks later and heard Nick on the other end of the line. He started asking questions about the size of our firm. I admitted there were only seven of us.
"Hmm," he said.
There was an extremely long pause.
I said nothing.
"Well," he eventually resumed, "I wanted to tell you that our food division is organizing a beauty parade of strategy consultants. We've made a short list of McKinsey and BCG. I'll see if I can get you invited to make a presentation, too. Individually you have a lot of high-level experience, even if your new firm is tiny. Don't expect them to pick you for such a big assignment, but pitching will be good experience for you."
To cut a long story short, McKinsey was selected while we were congratulated on coming second. We were quite pleased with that—it was good to be mentioned in such illustrious company. (McKinsey and BCG were the world's biggest and most acclaimed strategy consultancies at the time.) But then, at the very last minute, after a restless night, Gerry Sharman, the boss of the food division, had a change of heart. Gerry was a tough old bird who had come up the hard way, and he didn't like McKinsey's "snootiness." He also thought we had made the best presentation. So, in the end, he offered us the contract. The other two firms were taken aback, which pleased Gerry immensely.
Later we worked with other Imperial divisions, and ultimately at the corporate level. But that first contract came at a critical time for our firm. It gave us the confidence to hire aggressively and helped us win other major clients. Without it, who knows what might have become of our fledgling firm?
At the time, I viewed it as a stroke of pure luck, given that it had arisen from a contact so weak that I had almost not even bothered to call Nick and suggest a quick drink after work. I met up with him a couple of times over the next few years and of course thanked him profusely, but as I write this I'm ashamed to say that we haven't spoken for twenty-one years. Not even a call or an email. Nevertheless, that chat in Julie's Wine Bar was a critical moment in my life. When I left LEK six years later, I had enough money to do whatever I wanted thereafter. Largely thanks to Nick Walt.
Weak links—information provided by acquaintances—are often more powerful than the supposedly strong links of close friends and family. Long after my encounter with Nick, I discovered that a sociologist called Mark Granovetter had written a seminal paper about "The Strength of Weak Ties." His Ph.D. project at Harvard had focused on how managers got new jobs. To his surprise, his research revealed that most managers found their jobs—especially prestigious and well-paid jobs—through personal contacts rather than through advertisements, formal applications or recruitment consultancies. Even more astonishingly, only one in six managers heard about their job through close friends and family. The great majority of leads came from colleagues and casual acquaintances, with a quarter coming from a person whom the successful applicant hardly knew at all:
In many cases, the contact was only marginally included in the current network of contacts, such as an old college friend or a former workmate or employer ... Usually such ties had not even been very strong when first forged ... Chance meetings or mutual friends operated to reactivate such ties. It is remarkable that people receive crucial information from individuals whose very existence they have forgotten.
Granovetter speculated why friends and family—who are strongly motivated to help—are usually less valuable than casual acquaintances in our career turning points. He came to the conclusion that our friends, family and close colleagues form a "closely knit clump of social structure" where most contacts are in touch with the others. These close contacts have access to the same information that we have, but not much more. So we have to move outside our immediate circle and contact the distant extremities of our social network to gain fresh insights and learn new information. This means renewing contacts with people from the past or cultivating new links with friends of friends.
This works especially well if you and your new contacts come from different backgrounds, do not share many mutual friends, work in contrasting occupations, and/or live far from each other simply because their contacts and knowledge will be very different from your own.
Red and green lottery tickets
Imagine that you can acquire an unlimited number of lottery tickets. Of course, the chance of winning the jackpot with any individual ticket is low, but the more tickets you collect, the greater is your chance of success. Now, imagine that the tickets are available in two colors, red and green. The red tickets are extremely expensive. You can "buy" them only through putting in several years' hard work. So, for instance, you will get a single red ticket once you acquire a degree and another after amassing a considerable amount of work experience. These red tickets are the conventional, traditional route to success and no one is able to accumulate many of them during their lifetime. Moreover, despite their very high price, even winning red tickets tend to result in only modest prizes.
By contrast, the green tickets are cheap, sometimes almost free. Hundreds of them can be acquired without any hard work and they arrive quickly, often as a pleasant surprise, an unexpected windfall. They comprise information from casual acquaintances that we can turn to our advantage. Most of the time, these green tickets—just like the red ones—don't result in a jackpot ... but a few of them do. For me, Nick Walt was one of my jackpot-winning green tickets. The minimal effort of walking to a wine bar turbo-charged my career.
In the game of Monopoly, a set of two or three properties of the same color is much more valuable than four or five unrelated properties. But in life, a set of two differently colored tickets, one red and one green, is the way to win. A good qualification or work experience—red ticket—may be invaluable, but so is the information—green ticket—that levers up your expertise. Given that the two colors have roughly the same value and chance of securing the jackpot, and that the green tickets are much cheaper than the red, it makes sense to acquire as many of the former as you can. This is the Principle in action.
I have hit the jackpot with several winning tickets during my lifetime:
I gained a good undergraduate degree, which gave me confidence and marketability (red ticket), but I acquired it through very selective study (green ticket).
I learned that two colleagues were contemplating starting a new consulting firm (green ticket), and joined them when they took the plunge.
I met Nick Walt at Julie's Wine Bar and reaped the benefits over the next six years (green ticket).
I made investments in five new or young firms based on information provided by acquaintances (green tickets), which again led to large returns.
I met my current circle of close friends, as well as my partner, through acquaintances (green tickets).
As you can see, all but one of these winning tickets was green. If you compile your own list of life-changing events, you will probably get a similar result. You are much more likely to win with a green ticket (acquired through little or no effort) than with a red ticket (acquired through enormous effort), although it helps to have both if you are planning to scoop the jackpot.
You might like to think that the green tickets arrive through pure luck. That is almost true, except for the fact that you have to invest a little effort to get your hands on them, such as going out and meeting someone you hardly know. But remember, the more tickets you acquire, the more luck you will have, and green tickets are much easier to acquire than red. Typically, at least 99 percent of our effort goes on acquiring those rare red tickets, even though they have no more chance of securing the jackpot. Meanwhile, we devote the remaining 1 percent to acquiring hundreds of green tickets, every one of which might lead to most of what makes life rich and fun.
By now, you should have worked out exactly what to do: concentrate on extending your network of weak links both inside and, crucially, outside work so you acquire as many green tickets as possible. This will allow you to gain insights and information that your colleagues do not possess. Maintain a raft of distant but friendly acquaintances who have the potential to give a high payoff for very little effort on your part.
You have no way of knowing where any single contact might lead or how high its value might be. But eventually you are likely to win that life-changing jackpot because of one of them.
It gets even better, though. By far the greatest benefits of weak links accrue to the few people who have the most personal contacts. This finding—an important one for successful managers to take on board—came from research conducted by one of America's greatest social psychologists, Stanley Milgram. In 1967 Milgram experimented to see how "big" or "small" the world really was. He was curious to learn whether people far away from each other, socially and geographically, could be reached through a series of weak links; and, if so, how many links were typically needed to connect them.
Milgram enlisted volunteers in Wichita, Kansas, and Omaha, Nebraska, to see if they could get a folder to a target person they didn't know who lived far away—in Cambridge, Massachusetts, and Boston, respectively. The volunteers had to post the folder to someone with whom they were on first-name terms and who might be "closer" to the target person. (Milgram's studies were conducted long before the internet, email and online social networks.) This friend would then be invited to post the folder on to one of their friends or acquaintances, who would do the same, until either the chain broke or the folder reached the target person.
Milgram reasoned that if the folders made it all the way to the target person in a relatively short chain of contacts then we lived in a "small world," where acquaintances can act as stepping-stones to anyone we want to reach. He and a colleague wrote, "The phrase 'small world' suggests that social networks are in some sense tightly woven, full of unexpected strands linking individuals far removed from one another in physical or social space." If the folders didn't get through, that would indicate a "large world," where there are unbridgeable gaps between discrete groups of people because nobody has a foot in both camps. Similarly, if the folders reached the target person eventually but through a very large number of links, the world could still be viewed as "large," because the links would be so inefficient as to be unusable.
The results vindicated the "small world" thesis. In the Nebraska study, 160 chains were started and 44 completed. The number of links in the chains varied between two and ten, with the average five—much lower than the researchers expected. Eerily, this is precisely the number guessed by a character in a short story called "Chain Links," published in 1929. The Hungarian author, Frigyes Karinthy, wrote, "To demonstrate that people on Earth are much closer than ever, a member of the group suggested a test. He bet that we could name any person amongst Earth's one and a half billion inhabitants, and through at most five acquaintances, one of whom he knew personally, he could link to the target person." The idea was later adopted by John Guare for his play Six Degrees of Separation, which was subsequently turned into a Hollywood movie. Later research using emails and instant-message communications showed results that averaged between five and seven links. This is a truly remarkable case of scientific research vindicating popular American folklore derived ultimately from a forgotten Hungarian writer—in itself a demonstration in miniature of the "small world" in action.
For managers, Milgram's most telling finding concerns the identities of the most popular links. In another of his "send the folder" experiments, the target individual was a stockbroker who worked in Boston but lived in the suburb of Sharon, Massachusetts. Of the forty-four folders he received, no fewer than sixteen of them came via one final "funnel," a shopkeeper called "Mr Jacobs" (a pseudonym) who sold clothes in Sharon. The stockbroker, Milgram reported, was "shocked" at how many of the folders came through Jacobs. Milgram called Jacobs a "sociometric star." The small world exists only because a relatively small number of people—like Jacobs—form most of the links between the rest of us.
Excerpted from The 80/20 Manager by Richard Koch. Copyright © 2013 Richard Koch. Excerpted by permission of Little, Brown and Company.
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