What Is The 80/20 Rule And Why It Will Change Your Life

I mention the 80/20 rule frequently in my writings so I thought it was about time to write a proper introduction to the concept. I believe it’s fundamental to every business person – to every human being – so if you have never heard of this rule, please read on and absorb everything I’m about to tell you, it could potentially change your life.

The 80/20 rule sounds like a statistic and in some ways it is. Personally I’m not a big fan of maths and beyond basic web statistics like pageviews, impressions, unique visitors – and when I stretch myself – conversion rates and split testing, I try and avoid all complex numbers. I work better with feelings, ideas and concepts.

The good thing about the 80/20 rule is that you don’t have to understand statistics to be a believer. Yes it has foundations in economics and yes, it was “proven” using statistical analysis by a man named Pareto, but it is not meant to be understood only by economics professors.

Here’s what the Wikipedia has to say about it:

The principle was suggested by management thinker Joseph M. Juran. It was named after the Italian economist Vilfredo Pareto, who observed that 80% of income in Italy was received by 20% of the Italian population. The assumption is that most of the results in any situation are determined by a small number of causes.

Living The 80/20 Way: Work Less, Worry Less, Succeed More, Enjoy More by Richard KochI can’t remember exactly when I was first exposed to the 80/20 Rule but I know when it first really hit home. I was in my local bookshop and I picked up a copy of Living The 80/20 Way by Richard Koch. Koch took the 80/20 Rule and made it his own by writing a series of books on the topic. Living The 80/20 Way fit me well because it discussed living life productively seeking maximum satisfaction by focusing on your passions (Koch has written other books focusing on the 80/20 Rule for business and managers that I didn’t enjoy quite as much). At the time I sometimes accused myself of being lazy for not “working hard” but I realized what I was doing was living an 80/20 lifestyle and in fact probably being a lot more productive than those working harder than myself.

What Exactly Is The 80/20 Rule?

By the numbers it means that 80 percent of your outcomes come from 20 percent of your inputs. As Pareto demonstrated with his research this “rule” holds true, in a very rough sense, to an 80/20 ratio, however in many cases the ratio can be a lot higher – 99/1 may be closer to reality.

It really doesn’t matter what numbers you apply, the important thing to understand is that in your life there are certain activities you do (your 20 percent) that account for the majority (your 80 percent) of your happiness and outputs.

You may have expected me to say that 20 percent of your activities produce 80 percent of your financial rewards, and that is true, there are probably a handful of activities you do each week that produce your income. You can definitely apply the 80/20 Rule to most aspects of your business or working life, however I believe your overall happiness and satisfaction are much better variables to focus on. Money certainly plays an important role in your happiness and your money is influenced by 80/20 relationships, but it is only a component that leads to your overall well being, which should be your primary concern.

80/20 Examples

There are many economic conditions, for example the distribution of wealth and resources on planet earth, where a small percentage of the population controls the biggest chunk, which clearly demonstrate the 80/20 Rule. There are business examples such as 20 percent of employees are responsible for 80 percent of a company’s output or 20 percent of customers are responsible for 80 percent of the revenues (or usually even more disparate ratios). These are not hard rules, not every company will be like this and the ratio won’t be exactly 80/20, but chances are if you look at many key metrics in a business there is definitely a minority creating a majority.

At a micro level just by looking at your daily habits you can find plenty of examples where the 80/20 Rule applies. You probably make most of your phone calls to a very small amount of the people you have numbers for. You likely spend a large chunk of your money on few things (perhaps rent, mortgage payments or food). There is a good chance that you spend most of your time with only a few people from the entire pool of people you know.

I’ll present to you how the 80/20 Rule applies to my life and how I have used the concept, although not always deliberately – it’s just the way I construct my life (for maximum pleasure!) -to improve the efficiency of my output and enhance my overall lifestyle.

My 80/20 Life

In my life I’ve noticed plenty of 80/20 ratios and generally they relate to my core competencies and passions. I really enjoy writing articles such as this, recording podcasts and interacting with other business people through Skype and blogging. In terms of rewards, the two-to-four hours or so per day that I spend writing – when I’m in the creative zone and my best work comes out almost effortlessly – is my money time. My articles and podcasts work hardest to generate income for me, create business opportunities and allow me to express myself creatively. I get the most financial and intrinsic satisfaction from this time.

I expect you could tell me a similar story about your life. During times you really enjoy yourself your output is at its peak. Your passion activities probably don’t pay your bills at the moment, which unfortunately means that you can’t sustain your life by indulging only in what you enjoy. I’ll talk more about transforming your life to a financially stable and personally fulfilling 80/20 format later in this article.

During some times in my life I struggle and waste time performing activities I don’t enjoy or I am not good at. For example bookkeeping is not high on my fun list. I don’t always like managing keywords in Google AdWords campaigns because I don’t have the patience to thoroughly test the variables and track the numbers. The same can be said for things like Google Analytics. These activities are more numerical in basis, I’m not a numbers person so when possible I leave these tasks, along with other activities like programming, graphic design and proofreading to other people, the specialists who enjoy them.

Some of my time is spent procrastinating or working inefficiently doing activities that provide very little benefit. This often occurs when I am tired or below peak physical condition. I sometimes lack the mental throughput to motivate myself to be productive (and boy, my writing stinks when I’m tired!), but I’m working on it and getting much better at reducing time wastage. When I’m in this state it’s smarter for me to study – read books and ebooks – because I’m not capable of producing quality output, but taking input – learning – is a good use of time when I am not there 100 percent mentally.

80/20 Business

When I look at one of my businesses, BetterEdit.com, it’s very clear that a small handful of repeat customers account for most of the income. The customers who become longterm users, who gain the most from the services and fit well demographically and socially with the business model, are key. They provide 80 percent of the value but only represent 20 percent (or much less) of the overall people that use the business. My job is to determine the best way to attract and convert more customers into longterm users.

With blogging I learnt (and teach in my Blog Traffic Tips newsletter) that there are a handful of activities that I do every day that produce the most results. Breaking things down further, there are usually a key 20 percent of elements within an individual blog article (think article headline) that have the most dramatic affect on results. The numbers of course are not clean 80/20 ratios but there are definitely dominant factors at play.

In a business sense, finding the 80/20 ratios is crucial for maximizing performance. Find the products or services that generate the most income (the 20 percent) and drop the rest (the 80 percent) that only provide marginal benefits. Spend your time working on the parts of the business that you can improve significantly with your core skills and leave the tasks that are outside your best 20 percent to other people. Work hardest on elements that work hardest for you. Reward the best employees well, cull the worst. Drop the bad clients and focus on upselling and improving service to the best clients.

How You Can Live An 80/20 Lifestyle

When you start to analyze and breakdown your life into elements it’s very easy to see 80/20 ratios all over the place. The trick, once your key happiness determinants have been identified, is to make everything work in harmony and avoid wasting time on those 80 percent activities that produce little satisfaction for you.

The message is simple enough – focus on activities that produce the best outcomes for you. This applies to both your business/working life and your “other” life (I think they are all part of your “life” but people often prefer to distinguish them). The problem for most people is how to make a living from what you really enjoy, so lets focus on that…

I’m sure you have heard the phrase “struggling artist”. The stereotype where a creative person, musicians, actors, writers and artists, struggle to get discovered and work long hours on horrible day jobs, often in retail and hospitality, until hopefully they finally break out, get discovered and become famous. It shouldn’t surprise you that the ratio of struggling artists who actually become famous enough to live off their craft also follows an 80/20 Rule – only a small few of the overall total manage to get that far.

The same can be said for entrepreneurs. How many of you now reading this article are working day jobs, jobs you probably don’t like much, while you work hard after-hours to get your dream business up and running?

In truth, and this is a sad fact, most people in the world work jobs they don’t like and only truly live their passions on weekends and outside of working hours. Only a small sample actually live their passions day in and day out, how they want to and when they want to. If you want to become one of the special few so you can live your passions on your terms there are a few things you can do.

Focus On Your Passions, Not Material Possessions

The simple fact is not everyone can be a famous artist. Not everyone will start a million dollar business. I’m not going to tell you stop striving for those goals, I’m working on them myself, however you can work smarter TODAY to find greater fulfillment, and that is what living an 80/20 lifestyle is all about. Best of all, your likelihood of becoming one of the famous artists or entrepreneurs is enhanced if you tweak your life to follow the 80/20 Rule because you tap into what you do best more often.

The first thing you must decide, and this is often the hardest step, is to determine what it is exactly you have passion for. Some people can answer this question easily – “I want to be a famous pianists/singer/poet/author”, “I’d like to run my own real estate agency/coffee shop/advertising company” etc. Others may have a general idea “I don’t want a day job” or “I want to run a business” but the specifics are not sorted yet. If you are not sure what your passions are all I can suggest is test yourself. It’s usually easy to determine what you DON’T like so keep doing that until you find what it is you DO like.

Outputs Vs Inputs

I’d like to make a point about outputs vs inputs before moving on. Most humans are good consumers – we are good at taking inputs. Chances are you can easily rattle off a bunch of things you do enjoy about your life: eating out at nice restaurants, consuming junk food, reading books and magazines, going to parties and dance clubs, watching movies and DVDs, listening to music, meeting new people, surfing the net, having sex, playing sports and shopping. All of these activities more or less are inputs which means you consume the outputs of other people.

You may consider the activities I just mentioned passions but it’s hard to find a sustainable passion if all you do is consume. To foster an 80/20 lifestyle you need to locate activities that are passions for you because you �reate output for others to enjoy. Yes you can get paid to have sex, watch movies, eat at restaurants and read books, but chances are you won’t find it fulfilling or sustainable for very long OR you will be required to provide something back as part of your involvement – that’s your output, the value you create.

It’s okay to love eating out at restaurants and claiming your passion is food, if your intention is to also create output by starting your own restaurant, or a restaurant reviews website or a newsletter or magazine or becoming a chef. If you enjoy listening to music you might also enjoy producing your own music or covering the music industry as a journalist on your own blog.

Only by producing output for other people to enjoy or make practical use of can you expect to convert a passion into a sustainable income. You should understand this already as I suspect the times in your life that you have created something for others or worked on something that benefited other people you experienced the most fulfillment. If you suffer from a lack of direction now, if you are depressed because you don’t even know what your passions are to start applying the 80/20 Rule to, you need to do one thing – start being creative and giving back – produce output! You won’t find fulfillment only by consuming.

An 80/20 Lifestyle Blueprint

To start living 80/20 today you have only to do one thing – focus your energies on what you enjoy.

Part time work – Part time passion

Many people work a full time job and work after hours on a business or hobby or creative talent. If this is you I suspect your ratio is not 80/20 and probably closer to 20/80. You spend way too much time at a job you don’t like, you are probably not very motivated to do it well so you don’t fall into the vital 80/20 employees for that company, and by the time you get home you are too exhausted to spend time on your passion. You feel like you are getting nowhere fast. This lifestyle is not good for anyone since all the relationships fall into the 80 percent that produce 20 percent of the value. You get very little from it and the people you work for get very little from you.

If this currently describes your situation what you need to do is start changing those ratios. Reduce the amount of time you spend at a job you don’t like and increase the amount of time you spend on your passion. You may say you can’t do that because you need the money but I suspect you don’t really need as much as you think you do. Most people can live off part time work but choose to work more because they want more things. You may see your peers enjoying material goods which creates desires in you. Your wants start to outweigh your needs, which is probably the biggest pitfall in our modern, advertising driven, materialistic society.

I’m not saying you have to live like a pauper but I know that your real happiness comes from spending time doing things you enjoy the most, not from earning more money. Chasing the dollar for the sake of the dollar does not work. Chasing passion often leads to a greater income because the quality of your output is so much higher. Focus your energy on increasing investment in your core strengths and you will reap rewards.

Drop your working hours to three days per week and spend more time attracting more clients, booking more singing gigs, finding more time to write your novel or to develop your invention or code your software or find investors or whatever it is you really want to do.

For those of you who have no intention of turning your passions into money generating enterprises this is still a good option. If money isn’t your primary concern but your music is, why do you spend so much time working to earn more money than you need? Yes you need to plan for the future and build assets, but clearly for your musical soul it’s not something that needs to take the major�ty of your time and energy. You can be happy without that mansion by the sea and you never know, if you spent more time on your music the eventual album sales may one day lead to that mansion by the sea. If not, at least you will be a lot happier for following your enthusiasm rather than the dollar.

If financial freedom is important to you and a big part of your plans look at this step as phase one and work to convert your passions into income generating propositions. Grow your business client-by-client, gig-by-gig or sale-by-sale. keep adjusting your work vs passion time ratio as your business grows to support you and you no longer need your job income. Look for 80/20 activities in everything you do and drop any inefficiencies as soon as you can.

Don’t Let Fear Stop You

The biggest factor that stops most people from chasing their dreams and working towards their real goals is fear. Fear of the lack of security, the reduced paycheck and of the unknown future keeps people locked into routines that are not satisfying. That path leads to sadness, depression, poor health, low income and ultimately an early death. Who wants that!

Don’t let fear be the reason for not achieving your goals. Stop, reassess your real passions, remove the money equation long enough so you can think without worrying about finances, and make plans to move towards your 80/20 lifestyle activities. Maximize what you are good at. Find the activities that produce the most results for you and your business and put your energy where the big rewards are.

By Yaro Starak

More

80/20 Rule

Vilfredo Pareto was an economist who is credited with establishing what is now widely known as the Pareto Principle or 80/20 rule. When he discovered the principle, it established that 80% of the land in Italy was owned by 20% of the population. Later, he discovered that the pareto principle was valid in other parts of his life, such as gardening: 80% of his garden peas were produced by 20% of the peapods.

# Some Sample 80/20 Rule Applications

  • 80% of process defects arise from 20% of the process issues.
  • 20% of your sales force produces 80% of your company revenues.
  • 80% of delays in schedule arise from 20% of the possible causes of the delays.
  • 80% of customer complaints arise from 20% of your products or services.

(The above examples are rough estimates.)By Kerri Simon

Apply the 80/20 rule to your life

The 80/20 rule says that 80% of consequences stem from 20% of causes (in economics.) Productivity blogger Scott H. Young says you can apply that rule to your life to cut out inefficiencies, like time spent at work:

Write down all the broad categories of tasks you do at your job. You can make a little table that shows the amount of hours spent at each category (say, 1 hr for E-mail, 1 hr for contacting clients, etc.) and on another column write down a value estimate for what percentage you believe it contributes to your productivity. Eliminate, simplify or delegate low %’s and focus on high %’s.

The 80/20 rule coupled with Parkinson’s Law can reduce the amount of time spent on anything. Do you find that tasks (and people) that take up 80% of your time contribute a lot less to your bottom line? Tell us about it in the comments.

Twenty Unique Ways to Use the 80/20 Rule Today

Lever

I’m sure most people are familiar with Paret’s principle, developed by an Italian economist and most commonly known as the 80/20 Rule. While Pareto originally�used the rule noticing that 80% of the wealth was owned by 20% of the population, the rule has applications in almost every area of life.

There are many ways you can use this rule. Here’s twenty:

  1. Work Tasks – Write down all the broad categories of tasks you do at your job. You can make a little table that shows the amount of hours spent at each category (say, 1 hr for E-mail, 1 hr for contacting clients, etc.) and on another column write down a value estimate for what percentage you believe it contributes to your productivity. Eliminate, simplify or delegate low %’s and focus on high %s’.
  2. Food – Record your eating habits for a week. Calculate up the calories of the different items of food. I’ve done this before and I’ve found it surprising how some treats contribute a high percentage of your calorie pie for no nutritional value, when other vices consumed in smaller portions take up only a sliver but still offer a tasty treat.
  3. Daily Time Log – Do a time log on your activities for an entire day. Record the stop and start point for any activity. Then broadly shuffle the different activities into categories. Figure out what parts of your day aren’t contributing to either productivity, entertainment or personal happiness and cut them out.
  4. Reading – Look at the last few dozen books you’ve read. Rate them according to the amount of useful info or entertainment value. Look for trends and use that info to skim or skip future books to save time.
  5. Relationships – Look at your social circle and friends. Do a rough estimate of the amount of time and energy you invest in each relationship. Compare that to the amount of stress or satisfaction. You might find that certain relationships are toxic and others are valuable and should be invested in more.
  6. RSS Feeds – Look through your feed list. Write down the percentage of articles you enjoyed out of the last ten in the feed. Eliminate the lowest %’s. You may want to take into account article length or posting rate, but quality is probably the best measurement of all.
  7. E-Mail – Group the types of e-mails you answer into basic categories. Consider developing a template for the most common e-mail responses that contribute the least potential value for answering personally.
  8. Magazine Subscriptions – Same as RSS feeds. Go through all your subscriptions and give a percentage scale of what you perceive to be the value of the last several editions. Cancel subscriptions to the bottom and leave the top.
  9. Television Shows – Record your television watching habits for a week or two. After watching give a subjective rating of the television show. After your done, total up the amount spent on different shows or channels. If you have a special subscription service, cancel the channels that you don’t watch or have little value. Otherwise, consider eliminating live television entirely and recording the shows you feel are valuable to watch later. I’ve done this before and it can be a big time saver while still allowing you to enjoy some passive entertainment.
  10. Web Surfing – Record your web usage for a day or two. Write down the sites you visited or tools you used to get there (StumbleUpon, Digg, etc.) Figure out sites took up the most time and which had the least value. You?d be surprised how often they are the same thing.
  11. Spring Cleaning – Although it’s only a few weeks from summer, you can use this on any organization attempt. Go through your items and trash all the items that you haven’t used recently (except for important documents). Just because you have storage space, doesn’t mean it should be filled with garbage. Eliminate clutter and it becomes far easier to find and use the things you actually need.
  12. Clients/Customers – This one comes from Tim Ferriss, in the Four Hour Workweek. Figure out which customers contribute the most complaints and the least revenue. Notify them that things will need to change and set down some guidelines. Then fire the ones that don’t comply. Goes against the doctrine that the customer is always right, but some people just aren’t worth the trouble they cause.
  13. Hard Drive – Sort through your computer documents, comparing the last modified date for various major folders. Create a separate folder system where you can move these rarely used files. This will eliminate your computer clutter and make it far easier and faster to find the stuff you actually use.
  14. Desktop – Same thing as the hard-drive, but I do it every week or two. Just go through your desktop and delete any short-cuts or move documents that haven’t been used in the last two weeks. You don’t have to completely eliminate everything, but it will make your desktop a more efficient workspace.
  15. Applications – Go through all your computer applications. Figure out which ones are distracting and are either rarely used or contribute little value. Uninstall those. If this seems like too much work, a complete computer reformat can get rid of the trash.
  16. Home Appliances – Determine which appliances cause the most frustration, stress and break down the most. Once you’ve done this you have three options: learn to use the tool better to understand it and prevent stress, buy a new one or find a substitute that is less damage prone. Save yourself the headache and 80/20 your lawnmower.
  17. Budget – Calculate all your discretionary expenses (after taxes, food and necessities). Now compare the money value of each expense with the utility of the purchase. If you wanted to compare different entertainment items in your budget, you could value each expense on the pleasure it brought you. If you wanted to compare different investments or tools you could compare return rates or productivity gained.
  18. Blogging – Classify the types of posts you write into different categories. I’ve done this grouping by, post length, subject, format, style, images, etc. Multiply each by the amount of time to write each type of post. Then compare that data to your estimate of traffic gained from each. Use this as a guide for future writing.
  19. Habits – Figure out which behaviors (or lack thereof) contribute the most to your life. Exercise? Rising Early? Family Dinners? Use this as a basis for making new habits.
  20. Goals – It doesn’t matter whether you have them written down or just in your head. Look at all your goals and compare the resources required to accomplish each (time, money, energy, etc.) with the benefits gained. Benefits could be physical rewards, purposeful work or emotional quality. Pursue the goals with the highest value.

By Scott H Young

The 80-20 rule can help you and your business

Q: Steve – I have heard of the “80-20” rule and get the basic idea, but I was wondering if you could explain how to really use it to my advantage. Thanks. — Armando, Texas

A: Happy to oblige. As many of you know, the 80-20 rule in business says 80% of your profit comes from 20% of your customers. But the idea is a bit more complicated than that.

Some background: The rule of 80-20 was first stated in 1906 by Italian economist Vilfredo Pareto, so the rule is also known as Pareto’s Principle or Pareto’s Law. Pareto observed that 20% of the Italian population owned 80% of the wealth.

Since then, the 80-20 principle has been applied to other scenarios:

  • 20% of your time creates 80% of your results.
  • 20% of your inventory takes 80% of your space.
  • 80% of your stock comes from 20% of your suppliers.

The essential ideas is that only a few things are responsible for the vast amount of your productivity and results. Think what an amazing insight this can be for your business.

If you have five things to do today, the 80-20 rules states that only one of those will be vitally important, the other four will be much less so. Figuring which one is most important can not only go a long way to making you far more effective, it can also yield amazing results.

But to create truly spectacular results, consider applying Pareto’s Principle, judiciously, across the board. For example:

If 20% of your employees produce 80% of your results, you need to figure out who those 20% are and reward them appropriately.

If 20% of your products produce 80% of your sales, it would behoove you to know what those 20% are, and display and price them accordingly.

If 80% of your profit comes from 20% of your customers, know who they are, and reward them.

If 80% of your visitors see only 20% of your web pages, it would be wise to know which 20% they visit, why, and figure out how to monetize those pages.

You get the idea. The important thing is to begin to notice in your business which 20% of activities / people / products are responsible for 80% of your success. Spending more time on the things that have the best chance of making the biggest difference can go a long way to making you more successful, with less effort.

By Steve Strauss

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 work.

This may come as a surprise, but despite all the talk about life 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.

Vilfredo Pareto, an Italian economist, “discovered” this principle in 1897 when he observed that 80 percent of the land in England (and every country he subsequently studied) was owned by 20 percent of the population. Pareto’s theory of predictable imbalance has since been applied to almost every aspect of modern life. Given a chance, it can make a difference in yours.

Recognizing your 20 percent

Twenty percent of your efforts produce 80 percent of the results.

Simply put, the 80/20 rule states that the relationship between input and output is rarely, if ever, balanced. When applied to work, 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, staff and patients 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 work. Ask yourself, “What do I really want to do with my life and my time? What 20 percent of my work should I be focusing on?”

Implementing the 80/20 rule

Even if you’re skeptical, follow the 80/20 principle for a few days just to see what happens. You can start by implementing these “20-percent” tasks right now:

Read less. Identify the 20 percent of the journals you get that are most valuable. Read them and trash the rest.

Keep current. Make yourself aware of new technological innovations. [For example, “A Palm-Top Computer in Every Practice?” on page 59 shows how physicians are incorporating hand-held computers into patient care.] 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 your practice, remember your ethics and values. Let them guide your decision making, and you’re bound to end up focusing on your 20 percent.

80 percent or 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 investment 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 in your 20 percent if:

  • 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 hiring people to do the tasks you are not good at or don’t like doing.
  • You’re smiling.

If you’d like more information on this time management principle, I’d suggest The 80/20 Principle: The Secret of Achieving More With Less by Richard Koch (New York: Bantam Doubleday Dell Publishing; 1998). However, you don’t need to read the book to begin using the 80/20 rule. Gain more control over your time and your work by taking one small step right now. Simply begin to look for the signs that will tell you whether you’re in your 20 percent or your 80 percent. This increased awareness of what’s vital to your life and your life’s work may be all you really need to start using your time more effectively.

By Pamela J. Vaccaro, MA

Pareto’s Principle: The 80-20 Rule

The Pareto principle (also known as the 80-20 rule and the law of the vital few) states that in many things, 80% of the consequences come from 20% of the causes.

Vilfredo Pareto, an Italian economist is credited with it. He observed that 80 percent of the land in England (and every country he subsequently studied) was owned by 20 percent of the population.

Over the years, he and many others observed this rule in action in different spheres. Some examples:

  • Relationship: Twenty percent of the people you know (friends, colleagues, family) provide you with 80 percent of nurturing support and satisfaction.
  • Business: Twenty percent of customers will account for 80 percent of profit.
  • Productivity: Twenty percent of your activities will account for 80 percent of your success.
  • Gardening: Eighty percent of garden peas are produced by 20 percent of the peapods.

How can we put the 80-20 principle to good use?

The Pareto principle is great to increase focus. Don’t try to do more. Just do more of the right things. For example, out of our many maladaptive behaviors, twenty percent of it will contribute to 80 percent of all our hardship and misery. So working on just these 20 percent can greatly contribute to our personal growth. Time management is another area where the rule can be very effective. If you have a lot of work to do, break it down to specific activities and figure out what twenty percent of the tasks listed contributes to eighty percent of the results you seek. Second, give your maximum concentration to those 20 percent tasks.

So how do you know if you’re working on the twenty percent that really matters?

  1. It makes you feel good because you are doing what you always wanted or you know it’ll help with your goals.
  2. You are doing the tasks that you’d like to procrastinate, but know that it is essential.
  3. You delegate tasks to others that you aren’t good at.
  4. You are doing something that uses your creativity

Hints that you aren’t utilising your time effectively:

  1. You are doing things that other people want you to do.
  2. You are doing things that you aren’t good at.
  3. You are doing things you don’t enjoy doing (provided that it doesn’t also contribute to your goals).
  4. You are doing things that always take you a lot of time and energy.

With a little effort, and the application of the 80-20 rule, we can save a lot of our emotional and physical energy to concentrate on stuffs that really matter and enrich our life.

Seth Godin, author, provides another useful insight in The real 80/20 rule – Most people settle for 80% and move on to the next thing. If “just enough to get the job done” is our goal, the 80% is enough (and for most things in our life “just enough” is good enough). But when you really want to succeed and / or do something exceptional, focus on the remaining 20% too.

(Please note that the 20% and 80% used above are intended as rough estimates since actual proportions are rarely exactly 20% and 80%. However it is a very useful rule of thumb to remember Pareto’s principle.)

By Sam

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One Response to “What Is The 80/20 Rule And Why It Will Change Your Life”

  1. webclassroom Says:

    Try to apply 80/20 to all your actions creatively and smartly.

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