Price’s Law

One of the first jobs I did as a consultant was to follow a high producing car salesman around and find out why he did so well.  He took massive action, and treated his role not like a job, but like a business.  Out of the 20 or so people there, he and 4-5 others made the lion’s share of the sales.

This is something that I’ve observed in so many companies that I work in.  It’s described as “Price’s Law.”

The law states that in any productive community, 50% of the results will be achieved by the square root of the total group.

So my car salesman experiment was pretty accurate.  5-ish salespeople sold 50% of all cars sold.  Price’s law also describes the productivity of partnerships, groups of volunteers, and most staffs or departments.  Think about it.  If you have 100 people in a company, 10 will produce 50% of the overall results.  If you have 1000, about 32 people will be responsible for 50% of the results.

Here are two take-aways that each of us can learn from Price’s Law.

  1. If you’re in management, hire only A-players: The more A-players you have, the more your results will skew higher, because overall results will be higher.  You’ll have a more productive community.  Plus, you’ll have a better chance of finding or developing one of the ‘square-rooters’ that bring all the results. Learn more about how to hire good employees.
  2. Only do what you’re good at: If you do what you’re good at, you’ll obviously be much more productive.  You’ll have a chance to be one of the square-rooters.  These folks find more meaning in their work, produce more, and also get paid more.  Our merit-based society doesn’t treat everyone equally.  The best get more of everything.

So ask yourself what you do that absolutely drains your energy.  Are there ways you can stop doing those activities, or minimize the amount of them you take on?

Then ask what makes you feel energized?  On top of the world?  Amazing?  Are there ways you can focus on doing more of those things?

In my career I’ve done things that I’m terrible at (anything mechanical), okay at, and really good at.   And the more I focus on what I’m really good at, the more productive I feel, and the more I want to work.  Maybe one day I’ll be a square-rooter!

But the best part of doing what you’re good at is that you enjoy your days, and look forward to them.  You get to wake up and compare your strengths to others’ weakness.  You immediately have a huge competitive edge.

So, work on your areas of weakness, not in your areas of weakness.  And learn from Price’s Law.

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