The 1 Percent Rule: Why a Few People Get Most of the Rewards

Authors

James Clear

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Top Highlights

• Scientists refer to this effect as “accumulative advantage.”

• This idea that a small number of things account for the majority of the results became known as the Pareto Principle or, more commonly, the 80/20 Rule.

• We can call this The 1 Percent Rule. The 1 Percent Rule states that over time the majority of the rewards in a given field will accumulate to the people, teams, and organizations that maintain a 1 percent advantage over the alternatives.

• Situations in which small differences in performance lead to outsized rewards are known as Winner-Take-All Effects.

• Any decision that involves using a limited resource like time or money will naturally result in a winner-take-all situation.

• The advantage of being a little bit better is not a little bit more reward, but the entire reward.

• Small differences in performance can lead to very unequal distributions when repeated over time.

• This idea is sometimes referred to as The Matthew Effect, which references a passage in The Bible that says, “For all those who have, more will be given, and they will have an abundance; but from those who have nothing, even what they have will be taken away.

• The margin between good and great is narrower than it seems. What begins as a slight edge over the competition compounds with each additional contest.

• To his surprise, he discovered that approximately 80 percent of the land in Italy was owned by just 20 percent of the people. Similar to the pea pods in his garden, most of the resources were controlled by a minority of the players.

• They typically occur in situations that involve relative comparison, where your performance relative to those around you is the determining factor in your success.

• Just 1.4 percent of tree species account for 50 percent of the trees in the Amazon.

• The 1 Percent Rule is not merely a reference to the fact that small differences accumulate into significant advantages, but also to the idea that those who are 1 percent better rule their respective fields and industries.

• The margin between good and great is narrower than it seems. What begins as a slight edge over the competition compounds with each additional contest.

• Imagine two plants growing side by side. Each day they will compete for sunlight and soil. If one plant can grow just a little bit faster than the other, then it can stretch taller, catch more sunlight, and soak up more rain.

• You only need to be slightly better than your competition, but if you are able to maintain a slight edge today and tomorrow and the day after that, then you can repeat the process of winning by just a little bit over and over again. And thanks to Winner-Take-All Effects, each win delivers outsized rewards.

• the winner begins the process of accumulating advantages that make it easier for them to win the next time around. What began as a small margin is starting to trend toward the 80/20 Rule

• Examples of the Pareto Principle exist in everything from real estate to income inequality to tech startups.

• Winner-Take-All Effects in individual competitions can lead to Winner-Take-Most Effects in the larger game of life.

• Like plants in the rainforest, humans are often competing for the same resources. Politicians compete for the same votes. Authors compete for the same spot at the top of the best-seller list. Athletes compete for the same gold medal. Companies compete for the same potential client. Television shows compete for the same hour of your attention. The difference between these options can be razor thin, but the winners enjoy massively outsized rewards.

Toughts & Comments

Kei

• The 1 percent rule is the hidden engine that drives the 80/20 Rule. • The 1 Percent Rule states that over time the majority of the rewards in a given field will accumulate to the people, teams, and organizations that maintain a 1 percent advantage over the alternatives. • It reminds me of the snowball effect.

Himanshu Sethi

Information Presented : - The 1% rule - Pareto chart Information aquired : - Advantages of just being slightly better Color Codes : Red : Heading Blue : General information or a Statement under the heading

Jordan Zollfrank

In nature as in civilization, small advantages can snowball into significant differences. If you win a game 100 to 99, you will get 100% of the win. That's why we have to stack little wins. If we do our good habits daily, we stack little wins

Dr. Karen Redd

I was at a presentation by Peter Vidmar, the highest-scoring American gymnast in Olympic history, where he said that he just did a little more than his teammates. He made the commitment to be the last one out of the gym each night. He worked 15-20 minutes more than the other hard-working gymnasts. You don't have to work twice as hard; a fraction more is sometimes all it takes. http://www.e-quantum.com/documents/Extra_Effort.pdf

Jiawen Lai

But human competition is different from that of trees because humans will tend to get back on the same starting line as others at some point in their lives. For example, all college students need to find a job after graduation. Students who have a clear cumulative advantage over you are likely to enter the same company as you, getting the same salary and doing the same job. At this point, in a way, you are on the same starting line.

Ashish Bhateja

1% rule also reminds me of leverage.

chinmay desai

The 1 Percent Rule

pl vls

great

Soumyadip Paul

The text explains how a small advantage can grow over time and lead to dominance in nature. It uses the example of two plants competing for resources in a forest. One plant grows slightly faster than the other and gets more sunlight and rain. This allows it to grow even more and crowd out the other plant. The stronger plant also reproduces more and spreads its seeds further. This process is called “accumulative advantage.” What began as a small margin is starting to trend toward the 80/20 Rule. The text implies that this effect can also apply to other domains, such as business or sports.

Bob CC

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