Problems with Pareto Principle and Outsourcing

Problems with the Pareto Principle and Outsourcing

If you’ve read enough about how to become rich, you’ve probably encountered two concepts:

  1. Pareto Principle – 20% of the input is responsible for 80% of the output. In personal finance, people tout focusing on only doing that 20% responsible for the most return. That leads to principle number 2:
  2. Outsourcing – For the parts of the 80% of the job that are still necessary, you outsource them.

Let me start by stating that I agree that the Pareto Principle is real and outsourcing can be useful in some regards. Let me also state that I agree that while frugality has limits, income potential does not. I agree that everyone is capable of earning more and the amount is potentially limitless.

I also know there is a natural progression in employment and money. Your first minimum wage job was awesome. You got money! Now, you couldn’t force me to do things I hate for minimum wage. The money isn’t worth it to me. At some point in that progression, you realize what you’re willing to do and for how much money.

So what’s my beef? These two concepts assume that I want to progress to the point where I am disconnected to the output. Steve over at Think Save Retire has talked about the awesomeness of being unimportant. For some of us, being the one solely responsible for the success or failure of a project sounds horrifying. There is benefit in being the one that is getting paid to do the 80%.

I’m clearly biased. Do you know what I do for work? I was literally hired to replace an outsourced Indian research team for my company. I get paid hourly to do all of the research that is now outsourced to me, in Alaska. Am I brokering million-dollar deals? Nope. Do I have to travel constantly for work? Nope. (I only go to the office when I CHOOSE to go!) Am I making six digits a year? Not even close!Β Do I love it? Yes! Yes I do!Β 

I spend all of my billable hours in the 80%. I read TONS of stuff, put together research briefs, and send over connections I’ve seen in my research. Do all of my thoughts/research turn into something amazing? No. The Parebo Principle is real here as well. Probably 20% of what I do accounts for 80% of the success. But in a situation like this, the other 80% of what I do is important. There’s no way to predict which ones will be awesome and which ones won’t without doing all of the research. And sometimes, a connection made with some of those 80% projects that went nowhere turns into an awesome 20% project with a missing piece later.

Everyone is different. Some people spend their holidays and after hours hustling because they can’t help themselves. These are the people that outsource things like research to people like me because they want to spend their time in the 20%. Then there are people like us. We have creative, entrepreneurial aspirations, but we enjoy spending our time in the 80%. My passion is research. I love reading, studying, making connections, and learning. In my free time, I’m compelled to read more and learn more.

People like us also enjoy living unimportant lives. As I type this, Lui and Mr. T are stacking pattern blocks on the table, Florin is building a domino tower, and Penny is designing doll outfits on paper with stencils. I grabbed my computer to type this after reading Lui a story. On days like this, we don’t have our minds preoccupied with hustles or to-dos or the potential of limitless income.

Not all of us have to move past the 80% jobs where someone else makes the big bucks while we focus on keeping things moving. That’s okay. If you read those things and feel guilty that you’re just an employee to someone else, ask yourself: Would I actually be happier in that higher position? Do I like what I do?Β 

Remember that the process is part of the product. Don’t give up enjoying the process for the sake of the product. And if you feel guilty for enjoying your lower income job, don’t. If you’re happy, that’s more than most people can say!Β 


August 2016 Plan Update


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  1. I love this! (Typed from a plane that I had to wake up at 3:30 a.m. to catch, so I can travel to three places and be away from home for a week for work… because I’m “important.”) If anyone is aspiring to be important, feel free to send them my way. It’s definitely not all bad — it’s nice to have a little leverage to change the system, and I love the mentoring opportunities that come with higher levels of responsibility, not to mention that I don’t have to fight as hard to work on the things I really want to do — but it for sure comes with major drawbacks. Mr. ONL and I sometimes joke (not so jokingly) that we’d be willing to keep working if we could just get demoted. πŸ™‚

    • MaggieBanks

      Ha ha ha. I don’t know how you do it. I’m on day two of full-time office work (a trip I chose to come on) and I’m ready to go back to my jammies in bed part-time gig (which, luckily, I get to do after only 4 days here). I have a hard enough time balancing work and life. If I actually had to be in charge of the income-generating aspects, I would be a goner!

    • I have a friend who, instead of retiring, sold her company and works there as an employee. She loves it! She gets to do the work she loves, someone else takes care of all the things that she never was passionate about, and she has SO much less stress. It was a big pay cut. But it was either that or retire and have 0 income. She can see herself doing this for 4-7 years vs. maybe one more year as the owner.

      • MaggieBanks

        That’s a fabulous example! When you know what you like to do, it’s great! I know I do not like the administrative stuff and the negotiating stuff and I don’t like the stress of things being my fault if they go south!

  2. There’s this awesome scene in the Show Silicon Valley where the main character is seeing his doctor after being demoted to CTO, down from CEO. Stress levels down, test results amazing – but of course he later on wants his CEO job back for some reason.

    I’m most at peace with work and life when I have a good mixture of the “80%” and the “20%” kind of work. I simply cannot spend all my time in the high level 20% world. It’s just exhausting since you can never turn your brain off.

    • MaggieBanks

      I haven’t seen that show, but it sounds so true! And I agree. I really don’t like the idea of the fate of it all falling to me! I don’t want that kind of responsibility!

  3. Yeah I can see that “it could be fun if we were demoted” perspective from ONL’s comment. I went the other way and applied for a team lead position, even though i’m currently really happy in my current position.

    It’s something I have wanted to do and think could be fun, but would it be worth the added stress? I haven’t heard anything yet, since they’re still figuring out the re-org, but I definitely second guess that move. Like, “Oh man, maybe I don’t want to mess with a good thing. Our schedule is nicer now, I have little to no real work pressures, and I want to screw that up just because I think a team lead could be fun? What the hell are you thinking man?!” πŸ™‚

    Granted if it didn’t turn out to be fun, there’s a light at the end of the tunnel for me, but still. Not wanting to really climb the corporate ladder anymore made me question whether I really wanted that position if I got it. πŸ™‚ We’ll see…

  4. As always, you’ve provided a really interesting analysis. I can definitely see the Pareto Principle at play in my work. Over the past couple of years, I’ve tried to increase my productivity by really focusing on work for part of my day, but doing side hustle activities like blogging or playing on Swagbucks when my mind starts to wander.

    It’s great that you’re allowing yourself to be happy in your current situation. I find it quite challenging at times to do the same, but I’m working on it. And, it helps to remember that it won’t last forever.

    • MaggieBanks

      Oh I’m also a big fan of being completely unproductive sometimes! Life’s horrible if I feel guilt about all the things I’m NOT getting done all the time! πŸ™‚

  5. Heather M

    I generally hate when the Pareto principle is discussed because it is often used to justify ignoring the 80%. I hate that when it is used towards customers. Often doing the right thing is part of the 80.
    Thanks for your take on Pareto. I agree that I like some of the necessary but not critical parts of my job as long as I am not spending 12+ hours of my day on it.

    • MaggieBanks

      I always wonder if the Pareto principle is, in fact, always true, and you strive to work only on the 20%, does it readjust so that only 20% of the 20% becomes the most productive? Does that mean that you have to keep focusing more and more? Sounds like a vicious cycle of stress!

  6. Honestly, I’d argue there’s a lot of value in staying in touch with the details, in doing some part of the 80% on a rotating basis so you know what the heck you’re talking about when you do the big things. I like the compromise of my job that puts me in the top 20% type of work so that I can influence or dictate policy, but I also do a good amount of the 80% work which satisfies the enjoys-rote-work aspect of my personality and gives me an informed opinion with which to make important decisions. Without that insight, I wouldn’t be nearly as effective as a troubleshooter.

    • MaggieBanks

      Everyone is different. And we need some people that enjoy the 20% most of the time (though I agree I know a bunch of 20%ers that sound really dumb because they know nothing of the 80%ers).

  7. The Green Swan

    Good post Maggie! Like ONL said above, there are some perks besides higher pay. More often I have wondered how my life would be different I would have considered enjoyment of work as a higher priority in the decisions I’ve made. I think it is underrated by many people, but it is a mistake not to have it as a top consideration. We all spend so much of our time working to waste it on something we don’t find enjoyment in. Thanks for the post!

  8. Haha unimportant lives. Sounds harsh but I so agree. I can’t think of anything worse than being solely responsible for a project or programme. Coming up to review and career development time at work and as always, struggling To figure out what I want – which is essentially maintain a balance enjoy my work not be too stressed and make decent money.

    We are currently keeping time sheets as part of an efficiency review (sigh) and while so much of my day to day may not directly impact or improve our measurables they are crucial to operations.

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