By our very nature, entrepreneurs are explorative, often traversing a multitude of paths to success at any one time. While this approach is invigorating, the truth is that the lack of focus cannibalises new businesses before they have a chance to take off.
I have found that honing in on what really matters is imperative for success, an approach that aligns well with the 80/20 rule, or Pareto Principle. While initially an economics ratio that 80% of all wealth is owned by 20% of the population, the notion that focusing effort on the important aspects leads to more significant results, rings true in my business and personal life.
Letting Go of the Other 80%
The catalyst for utilising the 80/20 principle to manage my focus, was a meeting I had with a potential investor. At the time, my partners and I were involved in 7 or so businesses, in addition to ad-tech company Popimedia. These ranged from systems to manage doctor appointments to a social network for new parents. The investor we met with was enthusiastic about us, but would not provide funding due to our lack of focus on a single venture.
It was sobering feedback. We decided to cut chords with the other businesses and focus solely on Popimedia (the golden 20%), a decision that I believe lead to the company’s success.
The Compounding Effect of Focus
The differentiating factor was focus. If we had chosen to pay attention to one of the other businesses instead, then that would have become the successful venture.
Focus works like compounded interest on an exponential curve; the more you centre your energy on something, learn, and reinvest your knowledge back into it, the better it will perform over time. Subsequently, any endeavour that is not receiving focussed attention from those heading it up is doomed to fail.
I use this principle in my VC investments too; I will only back someone who has unwavering focus on their venture, along with the ability to embrace failure.
Implementing it Day to Day
Being selective in what to focus on not only applies to those big business-defining decisions, but, perhaps even more importantly, to the day to day activities too. There are several ways in which the 80/20 principle can be utilised to guide the investment of focus:
1. You Cannot do Everything
Entrepreneurs are great at what they do, but we need to accept that we cannot do absolutely everything, on account of limited time. Choose the most impactful 20% of the tasks and focus on those.
2. Delegate to Smart People
I find it useful to accept that not everything has to be perfect. While you may not receive the same quality when you delegate, the freedom you gain from having time to focus on the important things provides a much higher return. And if you have surrounded yourself with people who are smarter than you, you may be surprised.
3. Make a Bad Decision if You Have to
I have one rule when it comes to decision making: “Rather make a bad decision than no decision”. When you have a solid vision-based framework, making quick decisions to prioritise (or omit) tasks becomes easy, and having the ability to embrace failure allows for quick adjustments if it turns out to be a bad decision.
As entrepreneurs, we need to continuously recalibrate our focus by asking ourselves; “Am I pouring this energy and effort into the right 20%?”