The biggest impact

The biggest impact

In management theory, there is an important principle – the so called 80-20 rule or the Pareto principle. The principle states that, for many events, roughly 80 % of the effects come from 20 % of the causes. Examples in practice would be that 80 % of your sales come from 20 % of your clients, fixing top 20 % of the most reported bugs also eliminates 80 % of related errors and crashes, you wear 20 % of your clothes 80 % of the time (except if you are minimalist) and so on.

The Pareto principle is also very important when you are implementing changes in your life. You can decide to do linear or rapid changes in your life. Linear changes are smaller changes you make in your behavioral patterns. You improve your diet a little bit, you wake up a little bit earlier, you decrease the number of hours you spend watching television. You make more effort in your job and ask for a raise, and so on.

Rapid changes are big changes that totally shift your life to the better, if you do the right change. Instead of watching TV, you start reading books. No TV at all. You go from a standard carbohydrate-based diet to another diet that suits you much better. You get rid of all the relationships that don't empower you. You shift from being an employee to being an entrepreneur.

Usually, when you pick a life area you want to improve (health, money, career…), you start with small linear changes. Some changes suit you and others don't. You are in the search mode, looking for small improvements that lead to a better life. Some changes you preserve, others you discard (pivot). But after a while, every new linear change brings less value into your life. The marginal value of linear changes decreases over time. Then you hit the so called “local maximum”. Every additional change brings no additional value into your life. You run out of ideas for new experiments.

When you hit the local maximum, it's time for a rapid change. Rapid change means you try to do things completely differently, looking for another maximum that brings much more value to your life. Usually a rapid change enables you exponential growth. In some cases, your “local maximum” is your highest potential in life, but in others, there could be a much better setting for you and your potential. Sometimes I also call it leveling up your game.

Now let's get back to the Pareto principle.

20 % of all the changes you will make in your life will have 80 % of the positive (or negative) impact on your life. That is to say, what will have the biggest impact on your life are the first few linear changes and the rapid changes you will make. That is where your focus should be.

In the life areas where you totally suck, you should implement the first few linear changes. They will have the biggest impact on your life. For example, if you are in bad shape, just start doing some kind of exercise you like. If you are completely in debt, just save 1 dollar per day. If you want to change your career, just try a couple of new things to find what suits you best.

The idea is that when you make the first few linear improvements, other changes will follow by themselves if your motivation to improve your life is big enough. You get engaged when you see the first small benefits, and your human nature will push you to get more. You just have to make the first few linear improvements and stick to them. They will have the biggest impact on your life and the rest will follow.

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If you totally suck at something it is almost impossible to do a rapid change. There are statistical exceptions, but that’s just because some people really find themselves in something, they are naturally good at. But in general, you first have to start with a few linear improvements.

For example, if you want to get fit and you are totally out of shape, it doesn’t make sense to go straight to bodybuilding and hyper-intensive training. You first have to prepare your body for new efforts. If you can’t get a job, it’s usually not very smart to get self-employed or become an entrepreneur. That is the so-called push entrepreneurship and the success rate in this kind of situations is the worst.

It’s different for life areas you are already good in. You first have to decide if it’s enough or you want more. If you want more, you should look for potential rapid improvements. You should get yourself into the search mode and start curiously exploring how other, more successful people are doing the same things, whether there is a completely different way you could be doing it, are there any additional leverages you could use and so on.

For example when you are really good in an industry, have the knowledge, the social network, and know what the market wants, you should switch from being employed to being self-employed. When you master the basics of exercising, you can start with hardcore exercises. When you are able to save up small amounts of money, you can start thinking about big money.

Local maximum

Achieving local maximum. But is there a higher hill to climb.

When making rapid improvements, there is one very important question you should ask yourself, namely what is holding you back. Usually there are one or more personal values that hold you back from doing things in a significantly better way.

For example, maybe you think that you do everything better than everyone else, thus you don't delegate. With no delegation, you also do all activities with low value added. Starting to leverage other people's time would be a big rapid improvement in this case. But first you have to deal with your values.

And one more thing. The Pareto principle also works in a negative way. That is why you must thoroughly analyze what is strategic testing, experimenting and improving, and what is doing stupid things. Because 20 % of the negative changes will have 80 % of the impact on your life. Some of these changes are very obvious. Starting to drink too much alcohol, eating too much sugar, starting to cheat on your spouse, going into bad debt etc. These are all big negative rapid changes (one big or a series of small ones) that can have the most negative effect on your life.

When living an Agile and Lean Life, you don’t just do work and execute tasks. You have to think regularly about why you are doing something and how you are doing it, and whether you are making real progress. One of the aspects you have to reflect on is also which change will have the biggest positive impact on your life.

No matter if you are implementing linear or rapid improvements, always go straight to the best knowledge for ideas how to do it.

Homework

The biggest impact on your life

Knowing that 20 % of the changes will have 80 % of the positive (or negative) impact on your life, you should carefully analyze which changes fall into this 20 %. Based on that, you should update your Kaizen list of improvements.

Here is what you should do:

  • Open your personal Kaizen list. If you don’t have it yet, you should make one. You can help yourself with the template below and with the article Growth mindset and continuous improvement on how to make the Kaizen list.
  • You should do a general evaluation of every life area, how satisfied you are and how well you are mastering a specific life area.
  • Then you write down all the linear and rapid improvements you should make in different life areas. You note your own suggestions and suggestions from other people.
  • Based on your evaluation, you can easily determine the magnitude of every improvement you have listed.
  • For the areas you suck in, the first linear improvements will already have a big impact on the quality of your life. For the areas you are already good at, rapid improvements will probably have the biggest impact.
  • On your Kaizen list, you should have a maximum of five changes of big magnitude for the next few years. Remember: you cannot implement many changes at once, and the big ones even less so.
  • You should constantly update your Kaizen list and stay flexible depending on the feedback you are getting from your inner self and the environment.

You can help yourself with the spreadsheet below to do the analysis. You can also look at my own spreadsheet and see how I have done my analysis.

Practical example

My own analysis

As you can see in my spreadsheet, based on my analysis, I have found that the following changes would have the biggest impact on my life. Therefore they will be my focus in the following few years, alongside some other minor linear improvements.

There is one more thing you should be aware of. Never overestimate what you can achieve in a month and never underestimate what you can achieve in a few years’ time.

Changes and improvements take time. First you have to sow, then you can reap. So make sure that for rapid changes, you have a long-term goal without a fixed deadline, especially if you are still in the search mode, looking for a perfect fit. What is important is that you make small daily progress. What is important is that you make small steps that accumulate into a much better life. For more guidance, please read the Agile and Lean Life manifesto.

But now let’s get to my own analysis.

Learning how to code

Here I am learning how to code.

Going back on my own and writing down business ideas

I was always self-employed or owned a business. It was only after the 2008 financial market meltdown, when I had to close my small venture capital fund and had lost a lot of money (100k€+), that I had decided to get a job. I needed a more stable income and less stressful work for a while. Thus I was in the management board of the biggest technology park in Slovenia.

I know that entrepreneurship is not for everyone, but I personally feel much better as a freelancer, a business owner or an investor. I am not against having a job at all costs. Well, somewhere in the future I want to experience working for a faculty (educating students), a global blue chip company in ICT, investment banking and some other industries. And those can be all jobs.

But for now, going back on my own is an important step, an important rapid improvement for me. For me, it means more focused time without many unnecessary meetings, a bigger value added, a stronger motivation and many other benefits. Shifting from being employed to being a freelancer or a business owner is an important big decision towards a rapid improvement for many people.

I have quit my job in October 2014 and started my own consulting/contracting business. I already have a few clients on the domestic market, but the next big challenge is going international. It was a half-year long process, but I do feel much better now and I already feel the power of being on my own, having a much better control over my life. For this change, I already went from the search into the execution mode.

I also decided to systematically write down business ideas and to find the next big thing I really want to devote following decade of my life to.

Update – Nov 2015: I am over a year on my own and it feels great. I am still more or less in the startup business as a contractor, but with the New Year I am making another big change in this area.

Changing the country/language

I live in one of the smallest countries in the world. Slovenia only has 2 million inhabitants with a not-so-good economic outlook. It’s a very well developed country, with many life quality benefits, but after doing business here for more than 10 years, I basically know everyone and the additional potential is quite limited. The maximum potential the country could offer to me definitely doesn’t suit my ambitions.

Therefore an important identified rapid change for me is changing the country or, to be more specific, the language in which I operate. What I have found out in all these years is that small markets only give you headaches. If you want to be really successful and you are from a small country, you have to be globally oriented nowadays.

The challenge is not easy, since it’s much easier to operate in your mother tongue and the competition on the global market is much stronger, but the unlocked potential is enormous.

That is why I started this blog. Besides the opportunity for sharing my knowledge globally, it is also a great way to sharpen my skills – from English skills, writing skills to internet marketing. And I can also get some global exposure, of course.

In the future, I would also like to spend a few years living abroad, but I want to stay flexible – lean and agile. This blog is the first step to a different kind of settings, but it’s still way too early to know what will come out of all this.

For this change, I am somewhere in-between the search and execution mode. I have done a lot of research, planned my first steps etc. What I plan to do now is make regular adjustments based on the feedback I will be getting from the market.

Building products

The work I am currently doing has one big downside: even if I am self-employed, I am still selling my time. Selling your time quite limits your earning potential. Selling products is totally different to offering consulting services. You can sell many products without any time restrictions.

Right now, I see three ways for how I can capitalize my knowledge via products. The first one are info products like books, e-learning courses, membership forums, premium content. The second one are mobile or SaaS applications related to the subjects I am mastering. The third one is to not only have a blog, but to build a real global media site on personal productivity.

I have no idea where the future will take me, but I will definitely work hard on one of these options. I am a very hard-working person, but I also very much like passive income.

At the moment, I am totally in a search mode, not even close to a proper execution. I am researching, testing, getting to know the market, analyzing what the competition is doing, and so on. It may take me a few years to get to the right product, but you know how it is: you only have to be right once.

Core muscles and flexibility

The previous four rapid improvements were connected to my money and career. This one is about my health. I have invested a lot of energy into finding my perfect diet and the sports I like, so that I can be as active as possible and live a healthy lifestyle. I still have a few linear improvements to make, but overall I have made big progress in the past few years.

However, when it comes to my health, there is one rapid improvement I have to make and is really holding me back. That is the flexibility of my body and strengthening my core muscles. I was fat for most of my life, therefore I have always had weak core muscles and a completely inflexible body. Both contributed to a bad posture and, consequently, to many health issues like nerve entrapments, back pain and so on.

Yes, I have to lose a few percentages of fat. Yes, I have to further work on my physical condition. But those are linear improvements that currently won’t bring the biggest value added. What I really have to do are daily exercises for flexibility and strong core muscles. That will be a big improvement for my overall health.

The thing that is really holding me back is that I feel much better when lifting weights or doing highly intensive training than when stretching and planking. But I know very well that if I don’t work on my core and flexibility, I won’t be able to gain muscle mass and improve my overall health.

Thus I am going to yoga with my girlfriend every week now, I do some daily stretching, resistance band training, planking and similar exercises. I also try not to overdo it with exercising, since I am only doing damage to my body, because I don’t have strong enough foundations yet.

I was in a search mode for more than a year in order to figure out where my weak spots are. I visited a few doctors, physiotherapists and other specialists, read many articles on the internet and tried many things to identify the weaknesses and exercises that really help me.

So for this rapid change, I am in the execution mode. The rapid change was going from weightlifting and overdoing it to doing “girly” exercises for core and flexibility. Now I have to do proper execution. I have to keep a daily routine for a whole year. Then I hope I will be able to switch back and work more on my muscle mass.

Learning how to code

The last rapid improvement is connected to my skills. I would like to learn how to code. Many people see that as a big waste of time, but I have a couple of strong arguments for why that would be a big rapid improvement in my life.

First of all, it’s a big intellectual challenge; and I like that. Secondly, I already have a strong business mindset, but I would also like to install a more engineer kind of thinking into my brain. Thirdly, the skills are really useful, since if you get a new idea, you can just take a focused weekend, execute, and test the market. Fourthly, when I was a kid I was a computer geek, but then somehow business started to dominate my life. Thus this is a wish from my childhood.

The problem that’s holding me back is a lack of time. Learning how to code isn’t that easy. You need big blocks of time with no interruptions, and fresh brain.

For this rapid change, I am still in the search mode. My searching is not so much connected to what to do – it’s more about how to do it. I have enrolled into Lynda and Threehouse courses, I am watching videos and trying to do some basic front-end work myself, but I am still far from any serious development skills. I also visited a two months Python course.

The real question for me is how to do it. I am thinking about three options:

  • Taking one day per week totally off and focusing only on learning how to code
  • Taking one whole week every quarter totally off and really improving my knowledge
  • Going to one of the coding academies for three months

Since this rapid change is my last priority, I am not yet sure how and when I will go from the search into the execution mode. It strongly depends on how other things will turn out.

The conclusion

You change yourself by finding a way to do things better. With changes for the better, you remove waste from your life, thus improving your overall happiness, productivity and quality of life. You can make linear or rapid improvements/changes in your life. Linear ones are the first small steps or final optimizations, while rapid ones are completely new ways of doing things.

In the life areas where you suck, the first few improvements will have the biggest magnitude. In the life areas where you rock, finding rapid changes is the way to go. Your Kaizen list should have up to five changes of a big magnitude and with a big impact on your life. Based on the Pareto principle, these 20 % of changes that you plan to make will bring 80 % of the new value to your life. You should constantly update your Kaizen list and ask yourself: which improvement will have the biggest positive impact in my life? That should be your focus.

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