In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country. Pareto observed that twenty percent of the people owned eighty percent of the wealth. In the late 1940s, quality guru, Dr. Joseph M. Juran, attributed the 80/20 Rule to Pareto, calling it Pareto's Principle. Pareto's Principle or Pareto's Law is a useful tool to help you prioritize and manage the work in your life. This article offers an overview of the rule and examples of how it can help you improve your personal and professional productivity and effectiveness. What It Means The 80/20 Rule means that in any situation, 20 percent of the inputs or activities are responsible for 80 percent of the outcomes or results. In Pareto's case, it meant 20 percent of the people owned 80 percent of the wealth. In Juran's initial work applying the 80/20 rule to quality studies, he identified 20 percent of the defects causing 80 percent of the problems. Project Managers know that 20 percent of the work (the first 10 percent and the last 10 percent) consumes 80 percent of the time and resources. Other examples you may have encountered: 80% of our revenues are generated by 20% of our customers. 80% of our complaints come from 20% of our customers. 80% of our quality issues occur with 20% of our products. Or: 20% of our contributors provide 80% of our funding. 20% of our employees are responsible for 80% of sick days. 20% of my ideas generate 80% of the traffic on my blog. There are a nearly unlimited number of examples of how we tend to apply the 80/20 rule to in our personal and working lives. Most of the time, we are referencing Pareto's Rule without applying rigorous mathematical analysis to the situation. We generalize about this 80/20 metric, but even with this sloppy math, the ratio is uncannily common in our world. 7 Areas the 80/20 Rule Can Help Your Productivity:
1. If you scrutinize the items on your
“To Do” list, chances are just a few of the items.
are tied to important issues. While we may take satisfaction in crossing a large number of the smaller issues off our task lists, the 80/20 rule suggests we should focus on the few, larger items that will generate the most significant results. The list might not grow much shorter, but you will be practicing effective prioritization.
2. In assessing risks for an upcoming project, not every risk carries equal significance. Select the top risks that pose the highest potential for damage (given the probability of occurrence) and focus your monitoring and risk planning activities on those items. Don’t ignore the others, however, distribute your focus proportionately.
3. As a sales representative, work hard to understand the attributes of the 20 percent of your customers that make up the majority of your revenues and invest your prospecting time on identifying and qualifying similar customers.
4. Regularly evaluate the 80 percent of your customers that generate approximately 20 percent of your business and identify opportunities to shed those customers for those that drive better results. Some managers and firms actively cull their customer listings every few years, effectively firing the bottom-performing customers.
1. If you work in customer support or a call center, look for the 80/20 distribution where 80 percent of your customer calls or support issues are attributable to either 20 percent of your offerings or 20 percent of your total number of customers. For the offerings generating all of the calls, focus on root cause analysis to identify quality or documentation issues, and then take corrective action. For the high call, volume customers strive to understand the reason for their calls and offer alternative methods of obtaining answers.
2. Entrepreneurs, soloists, and independent professionals should evaluate their workloads and assess whether the gross majority of their time is spent chasing small-value activities, including administrative work that is easily and inexpensively outsourced.
3. When evaluating your mid-year progress on your goals, focus on the few goals or activities that are most critical to your development or success. Similar to the task list, not all duties and goals are created equal.
Practical Limits to the 80/20 Rule:
As we’ve explored, the 80/20 Rule has many applications in our work and personal lives. However, there are opportunities to misapply this tool and make critical mistakes. You should not focus on just the 20 percent of top performers on your team at the expense of the other 80 percent. You are accountable for increasing the number of top performers as well as assessing and potentially eliminating those who are consistently poor performers. The 80/20 rule might suggest reducing the level of diversification you strive for with investments. Careful attention must be paid to your overall portfolio mix and adjustments made if only 20 percent of your investments are driving 80 percent of the results. While 20 percent of the time invested in a project through planning and execution might generate the majority of the results or progress, you cannot afford to ignore the details of the initiative.
Other such situations follow; there are many in real life.
- 20% of the time expended produces 80% of the results
- 80% of your phone calls go to 20% of the names on your list
- 20% of the streets handle 80% of the traffic
- 80% of the meals in a restaurant come from 20% of the menu
- 20% of the paper has 80% of the news
- 80% of the news is in the first 20% of the article
- 20% of a home collects 20 percent of the dust
- 20% of the people cause 80% of the problems
- 20% of the features of an application are used 80% of the time
The Bottom Line:
Pareto’s Principle or the 80/20 Rule is a useful construct when analyzing our efforts and outcomes. It is priceless when applied to task or goal lists, and it provides a useful analytical framework for many problem situations. Use it liberally, but don’t accept it as an absolute or you are likely to misstep.
The 80/20 Rule of Time Management This technique teaches you to focus on what's really important in your life and your life's goals. This may come as a surprise, but despite all the talk about life and balance, you can benefit tremendously from introducing a little imbalance into your day. I'm referring to the 80/20 rule of time management, which is rooted in what is known as the Pareto Principle. Simply put, the 80/20 rule states that the relationship between input and output is rarely, if ever, balanced. When applied to serves, it means that approximately 20 percent of your efforts produce 80 percent of the results. Learning to recognize and then focus on that 20 percent is the key to making the most effective use of your time. Here are two quick tips to develop 80/20 thinking: Take a good look at the people around you. Twenty percent of your colleagues probably give you 80 percent of the support and satisfaction you need. They are your true advocates. Take good care of them. Likewise, you can probably name several friends and family members who would be there for you under any circumstances. Try not to put them on the back burner. Examine your Task. Ask yourself, "What do I really want to do with my life and my time? What 20 percent of my efforts should I be focusing on?" Implementing the 80/20 rule Even if you're skeptical, follow the 80/20 principles for a few days just to see what happens. You can start by implementing these "20percent" tasks right now: Read less. Identify and read the 20 percent of the study materials you get that are the most valuable. Keep current. Make yourself aware of new information and innovations. [For example Rick Warren’s Book The Purpose Driven Life: What on Earth am I Here For?] At the very least, you may be moved to challenge established routines that could be shifting your focus away from your 20 percent. Remember the basics. As you grow in your life’s journey, remember your ethics and values. Let them guide your decision making process, and you're bound to end up focusing on your 20 percent.
Here are some signs that will help you to recognize whether you're spending your time, as you should:
You're in your 80 percent if the following statements ring true:
- You're working on tasks other people want you to, but you have no interests in them. · You're frequently working on tasks labeled "urgent." · You're spending time on tasks you are not usually good at doing. · Activities are taking a lot longer than you expected. · You find yourself complaining all the time.
- · You're engaged in activities that advance your overall purpose in life (assuming you know what that is — and you should!). · You're doing things you have always wanted to do or that make you feel good about yourself. · You're working on tasks you don't like, but you're doing them knowing they relate to the bigger picture. · You're designating people to do the tasks you are not good at or don't like doing. · You're happy with your journey in life.
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