How Pareto’s Principle can turn 20 percent of your effort into 80 percent of your results

Your friend and mine, Vilfredo.

Allow me to introduce someone who can profoundly affect your productivity. You may know him by his reputation, if not by his name or face.

Name: Vilfredo Pareto.

Claim to fame: formulated/discovered the Pareto Principle, also known as the “80/20 Rule.”

Pareto was an Italian economist who first observed that in developed economies, about 80 percent of the wealth was owned by 20 percent of the population. Additionally (and to simplify quite a lot) Pareto noted a consistent, predictable  imbalance between inputs and outputs.

Relatively little was made of this discovery for many decades after Pareto published it. Still, other applications of Pareto’s discovery cropped up in odd places.

For example, most people find that they wear about 20 percent of their clothes 80 percent of the time. When carpeting is replaced in public areas, about 80 percent of it was still perfectly sound; only 20 percent was seriously worn. Many business owners find that 80 percent of their sales come from 20 percent of their customers. And 80 percent of their complaints come from 20 percent of their customers, too — but not the same 20 percent that accounts for the sales.

Pareto’s discovery was astonishing to him and to us because it runs counter to some of our basic beliefs about how the world works. We tend to believe that all actions have proportionate results. We behave as though all of our efforts are of equal importance, as though everything on our task list had equal weight. We behave as though Pareto’s Principle didn’t apply to us.

How can we use this 80/20 Rule to work for us? Recognize that the majority of what we do in a typical work day will have little impact while a small minority will have a major impact. Begin by identifying those things that are likely to make a real difference. Do those things first. Devote your best time of the day to making progress on the 20 percent of your activities that will likely yield 80 percent of your results.

Know where your revenues come from — which customers and which of your products — and focus your attention there. Let go of marginal (or unprofitable) activities. Be strategic in your use of all resources — time, capital, other people’s help, everything you’ve got.

Remember, it’s not the busiest person who wins, but the one who works most effectively. Use the 80/20 Rule to focus your energies on the activities that matter.

If you’d like to dig more deeply into how Pareto’s Principle can transform your life, pick up The 80/20 Principle: The Secret to Success by Achieving More with Less by Richard Koch.


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