Warren Buffett: The Power of Elimination
Episode #2 of the course Productivity hacks: Lessons from top leaders and billionaires by John Robin
Welcome to Day 2 of our course and our second case study. As promised, we’re going to focus more on how to work better, by way of a man whose wealth has grown steadily every year for decades. Worth $84.4 billion as of November 1, 2018, Buffet has devised a work routine that’s gotten him results since the 1970s, establishing himself as the world’s top investor and giving him the nicknames, “Wizard,” “Oracle,” and “Sage.”
What’s the secret to his success?
To most who admire him, they might want to emulate his methods and learn how to invest like a pro, but Buffett’s secret is one meant for everyone, be they starter entrepreneurs, project managers seeking to make a difference, or average self-employed business owners wanting to be more effective.
The 5/25 Rule to Help You Focus
Buffet’s recipe for success was relayed to us through one of his employees, Mike Flint. Flint was a pilot who had been working for Buffet for ten years, and as the story goes, Buffet told Flint that the fact he was still working as a pilot meant Buffett wasn’t doing his job.
He took Flint aside later and asked him to lay out his career goals. Everything was fair game.
Initially, Flint listed numerous goals. Buffet told him to push it to 25. Once Flint was finished, Buffet asked him to select the top five. After some deliberation, Flint did that as well.
Then Buffet asked him, “What are you going to do with the remaining 20?”
To which Flint replied, “Since they’re important, I’ll work on them intermittently as I focus on the top five.”
To which Buffett replied sternly, “No. You’ve got it all wrong. Everything you didn’t circle just became your ‘Avoid-At-All-Cost’ list. No matter what, these things get no attention from you until you’ve succeeded with your top five.”
The Power of Elimination
Bruce Lee once said, “One does not accumulate, but eliminate. It is not daily increase, but decrease. The height of cultivation always runs to simplicity.”
Buffett’s strategy for Flint reflects his own wisdom of how he’s focused on his business. The key to his success is intense focus: Instead of doing more, he does less. How much less? Exactly 80%—and there’s the key.
The Science behind It: The Pareto Principle
Buffett’s 5/25 rule is based on the famous Pareto Principle. Italian economist Vilfredo Pareto coined the term in 1896 when he noted that 80% of the land owned in Italy was owned by the wealthiest 20%. Since then, this phenomena has been noted in numerous business and economic analyses.
Why is the Pareto Principle, and Buffett’s 5/25 rule, so effective?
The Pareto Principle is a phenomenon found throughout nature. It’s been analyzed as a mathematical model as the Pareto distribution. In short, it works because successful results have far more impact than unsuccessful ones. This means the majority of successful results (~80%) end up overwhelming the less successful results.
If your time and energy are going into efforts that don’t get your top 80% of results, then the results you see in your life won’t represent your full potential. Learn from nature and from Buffett: Focus on the top 20% and eliminate the rest!
In the end, Mike Flint has done well following Buffett’s advice. Moving on from private flight, he launched an Indiegogo campaign that’s allowed him to co-found Visionary Airlines, aimed at training pilots while they travel for business or pleasure. They’re planning to expand to flight tourism, as well as charter services, and Flint is convinced by his vision that within five years, small private planes will be the new car.
In the end, Warren Buffett did his job. No doubt now, Mike is working his way through his top five list and keeping it focused so he drives himself to his top results.
Your homework is to apply Buffett’s 5/25 rule. Write down the top 25 things you want to accomplish. Circle the top five. Now put those in order. Work through that list in order. Periodically, do this all over again to be sure your top five priorities and the order you’re doing them are ranked correctly as your vision sharpens and evolves. Work like this consistently and who knows? You might be the world’s next billionaire sooner than you think!
Tomorrow, we’ll move on to another critical key to success, from the wisdom of Oprah Winfrey.
The 80/20 Principle: The Secret to Achieving More with Less by Richard Koch
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