Why Price’s Law Makes A Strong Case For Brilliance Extraction

Perhaps you have heard of the Pareto rule which states that 80% of results stem from 20% of efforts. Or, 80% of revenues come from 20% of your customers. And so on. I knew this. I have seen this principle at work firsthand when I analyzed the results of various companies with which I was working.

That said, I came across Price’s Law only recently. Both the Pareto Rule and Price’s Law are empirical rules rather than rigorous laws. Nonetheless, they are eye-opening. The generalized version of Price’s Law says:

The square root of the number of people in a domain do 50% of the work.

That is pretty remarkable and worth a deeper look.

Derek J. de Solla Price initially stated the law as “Half of the literature on a subject will be contributed by the square root of the total number of authors publishing in that area.” But the law has been found valuable in lots of areas. This is especially true for areas that need creativity or somewhat complex expertise.

Let’s think about that:

  • In a company or organzation of ten people, three of them do half the work. The other seven do the other half.
  • In an organization of 100 employees it is ten people who do half the work. The other 90 people do the other half.
  • Worse yet, in an organzation of 10,000 people only 100 people do half the work! The remaining 9,900 people do the other half.

Wow! As your company or organization grows, incompetence grows exponentially and competence grows linearly.

What Practical Implications Does Price’s Law Have?

In practical terms what are you going to do with this information?

  1. One might say that Price’s Law is an argument against growing your company or organization too big (?)
  2. It is worth checking: To what extent is Price’s law at work in my company or organization?
    • Which also brings up the question: How can I measure the level of work done?
    • In most (especially larger) organziations, at least the gist of Price’s Law is correct. But Price’s law is empirical which means you are not stuck with it.
  3. Who are the people who are the high-performers? If they left, especially without prior warning, what would happen to my company or organization?

Price’s Law Makes A Strong Case For Brilliance Extraction

It strikes me that Price’s Law makes a strong case for the need of transferring the knowledge, wisdom, and expertise of these high performers! I call that “brilliance” – it is shorter to say and their unique combination of knowledge, wisdom and expertise is brilliant!

Furthermore, I invite you to consider how risky it is to transfer that brilliance merely through on-the-job training.

  • First off, the people you chose as recipient may not have the capability or motivation it takes to be a high-performer. They might not be suitable to be in “square-root-of-of-N” Club.
  • Let’s say you are lucky enough to have attracted another high-performing person as the recipient of this brilliance. How can you be so sure this person will stay with you forever? – Or at least long enough, so you can transfer the brilliance again?
  • Besides, what is the cost of this transfer? And how long does it take?

I created the Brilliance Extraction method to solve these dilemmas. Price’s Law has some good news – in a way. It means it makes sense to focus – at least initially – on capturing the knowledge, expertise, and wisdom (aka brilliance) of far fewer people than you might have thought. Do it with your high-performers first – the people who do half of your company’s work. The people who are essentially indispensable.

The other part is this: I say that everyone is “brilliant” because everyone has a unique combination of knowledge, wisdom, and expertise. If you can find a way to tap more strongly into the brilliance of all of your people you just might be able to shift the outcome you get to be better than Price’s Law suggests.

I’m Curious

  • To what extent do you see Price’s law at work in your company or organzation?
  • Who are the high-performing people in your company or organization?

Live Brilliantly,

Dr. Stephie

P.S.: I appreciate you commenting and sharing this Brilliance Nugget with others. Thank you!

Stephie Althouse

6 thoughts on “Why Price’s Law Makes A Strong Case For Brilliance Extraction”

  1. Stephie, thank you! I think I might not have understood this philosophy before, but you have explained it plainly. I have forwarded it to those I think it would be valuable to.

  2. One of the things that I’ve seen by working with a lot of sales organizations is that you have to ensure that your compensation plan doesn’t reinforce top performers keeping her brilliant ideas and best practices to themselves..

  3. Your work is excellent. And, the way you communicated this concept made it truly easy to understand and act on.. way to go Stephie!

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