Why Are There So Many Disparities Between Winners And Losers?

"The core of the 80/20 rule is a fact that is not intuitive but very common. There is a serious imbalance, imbalance and mismatch between effort and reward. The universe is unstable, but we still expect that the ratio of cause to outcome is equal. Richard Koch (RichardKoch)

Most of the wealth in the world is created by a small number of enterprises. The average yield of most enterprises in the world is only slightly higher than the cost of capital. The distribution pattern of return rate is also seriously unbalanced. Most enterprises can not earn the cost of capital, and only a small number of enterprises will return the value to shareholders. Therefore, the economic prosperity of the world is the result of a small number of strategists in a small number of enterprises. Just like 20% of the world's population has nearly 80% of the world's wealth, it is precisely less than 20% of the people created 80% of the wealth, and this is the meaning of the business strategy.

It can be brutally said that most enterprises pursue strategies that are failed or doomed to failure. In every competitive field, only one competitive strategy can win. Therefore, in a field where ten competitors competed, the probability of failure per person was 90%.

Because business strategy can create value or destroy value more than other factors controlled by managers, most strategies are probably not conducive to creating value. Wise strategists will admit that their strategies are fragile and their judgments are fallible. They admit that they may also be the makers of failure strategies.

There are many inherent management bias in management capitalism. Italy economist and philosopher Pavifredo Pareto (VilfredoPareto) first discovered that losers in the market are always more than winners. From an economic point of view, the value of 80% comes from 20% factors, while the rest 20% comes from 80% factor.

For example, 80% of a market's revenue, profits or growth may be concentrated in 20% of enterprises. Any major industry in the world is dominated by a few enterprises. In addition, in any enterprise, whether the winner or loser, 80% of the product is always created by 20% of the enterprises, 20% of the customers and 20% of the employees. That is to say, people who are advocating egalitarianism are alarmed that only a small number of people in the world can have a real impact. Most of us benefit from these talented people.

Therefore, the first and most obvious explanation for strategic failure is that failure is one of the intrinsic characteristics of capitalism. Of course, there must be losers in any kind of competition. For example, the "competition" of biological evolution is also consistent with this rule. The distribution of species number is similar to the distribution of enterprise performance. There must be many losers in a market with multiple participants.

But people sometimes ask why there are so many disparities between winners and losers. The objective difference between competing products and competing enterprises is very small. Why does it lead to such a big gap between their popularity and success?

This is unfair from the surface. But the struggle for evolution of countless species for survival has come to a conclusion today. Is there any justice?