The 80/20 Rule: The Pareto Principle

9TSJ...VNpu

2 Apr 2024

The 80/20 Rule: The Pareto Principle

The 80 20 rule is a tried and true principle that can set your life up for success.
You can apply it to any aspect of your life, including at work and home, with fitness and health, relationships, and personal progress.
Today, I will explain what the 80 20 rule is, why it is also called the Pareto Principle, examples of how it is used in real-life situations, and how you can apply it to your life to achieve the success you are looking for.

What is the 80/20 Rule?

The 80/20 rule, otherwise known as the Pareto Principle, is one of the most helpful concepts for life and time management.
The Pareto Principle states that 20 percent of your activities will account for 80 percent of your results; however, it is not a hard and fast mathematical law. It is a concept.
The key to following the 80/20 rule is to identify that roughly 20 percent of your actions or most productive tasks lead to the most success. This can apply to any area of your professional and personal life.

History of the Pareto Principle

In the late 19th century, Italian economist Vilfredo Pareto noticed that 80 percent of the pea pod harvest from his garden came from 20 percent of his pea plants.
Based on Pareto’s observation, he then calculated that 20 percent of the people in Italy owned 80 percent of the country’s wealth. This distribution of wealth is an example of Pareto distribution.
The term Pareto Principle was not coined by Pareto, however, but by Dr. Joseph Juran. In the 1940s, Juran applied Pareto’s observations to his field of operations management. He helped businesses improve production by noting that 80 percent of their product defects were caused by only 20 percent of the methods used in production.
So by using this Pareto analysis, he focused on reducing that 20 percent of production problems to increase production quality.
Juran called this strategy the Pareto Principle, and he also made popular the notion that we should focus on the “vital few” and ignore the “trivial many” to have the greatest success.

Why is the Pareto principle important?

Simply put, the Pareto Principle helps you determine which areas to focus your efforts on.
The 80/20 principle helps you decide which resources are the most important for you to use to achieve the greatest efficiency. It helps reduce wasting time, money, supplies, efforts, emotions, energy, and so on.
We all wish we had more time in the day to accomplish the things we want to do. The 80/20 rule helps you weed out what is not important and focus on the 20 percent that will help you achieve the greatest success in the least amount of time.

How Does the 80/20 Rule Work?

It is not uncommon to see people who appear to be busy all day but seem to accomplish very little. This is almost always because they are busy working on tasks that are of low value while procrastinating on the one or two activities that could make a real difference to their companies and to their careers.
The most valuable tasks you can do each day are often the hardest and most complex, but the payoff and rewards for completing them can be tremendous, according to the Pareto analysis.
Before you begin work, always ask yourself, “Is this task in the top 20 percent of my activities or in the bottom 80 percent?”
The rule for this is: Resist the temptation to clear up small things first.
If you choose to start your day working on high-value tasks, you will soon develop the habit of always starting and working on high-value tasks, so start your day by eating a frog first!

Benefits of Using the 80/20 Rule

By applying the 80/20 rule, you can not only hone in on the things that will bring you greatest success but also identify the main causes of problems or lack of progress.
Some additional benefits of using the 80/20 principles in your personal and professional life include:

Greater productivity
More effective leadership
Increased self-confidence
More efficient use of resources
Better problem-solving skills
Improved decision-making skills

6 Pareto Principle Examples

To understand how the 80/20 rule works, it often helps to see it in action in real life. Here are six examples of how you can apply the Pareto Principle to different circumstances.

Pareto Principle in Time Management

Being busy is not the same as being productive, according to Pareto’s principle.
Entrepreneurs, small business owners, and self-employed individuals often feel they have to work excessive hours to produce profits and avoid working for someone else.
This type of behavior actually creates a skewed work-life balance that can become unhealthy, lead to burnout, decrease productivity, and even give up on goals that once seemed so important.
To avoid this cycle, it is better to identify the 20 percent of tasks related to creating income that lead to the highest payoff. This includes what pays well now as well as what will pay off the highest dividends down the road.
With the time you save on your work tasks by using the 80/20 principles, you have more time to devote to personal enrichment, relaxation, exercise, mental health, and relationship building.
Apply the same Pareto analysis to these items. Identify your most important relationships to devote time and energy to and the activities in your personal life that bring you the most happiness and health. Make these your daily priorities.

Pareto Principle in Business Management

When you manage a business, team, or project, it is possible that 80 percent of the work that is completed gets done by 20 percent of the people involved.
Use the principles of Pareto analysis to determine who your most productive workers are. Task them with the most important items. Put them in leadership positions so they can teach others the same principles they follow.
Observe and interview these team members. Identify the unique traits, skills, and habits they have that lead to their productivity. Use this knowledge to train other staff members and thus improve the productivity of your entire team.

80/20 Rule in Relationships

The 80/20 rule can apply in a number of different ways to relationships.
You can look at the relationships you have with your group of friends, for example, and decide which 20 percent are the best examples and support to you in becoming the person you want to be. If you spend 80 percent of your downtime with this 20 percent, your personal gains will be greater.
To apply the Pareto Principle to building a good relationship with your spouse or partner, it may be helpful to understand 80 percent of the problems that couples face are likely caused by a small 20 percent of their actions or behaviors.
In other words, you must identify the root cause or causes (the small 20 percent) of your conflicts, communicate about them, and focus on improving them. This is healthier than getting caught up in the 80 percent of behaviors that are simply minor annoyances and do not matter.

Pareto Principle in Goal Setting

Thinking about using the Pareto Principle when it comes to goal-setting? Smart choice!
Here’s what you should do in order to effectively apply the Pareto Principle to setting SMART goals that will boost your overall productivity.
First, take a piece of paper and write down ten goals. Then ask yourself: If you could only accomplish one of the goals on that list today, which one goal would have the greatest positive impact on your life?
Then pick the second-most important goal. What you’ll find is that, after you complete this exercise, you will have determined the most important 20 percent of your goals that will help you more than anything else.
You should continue to work at those goals that you’ve chosen as the most valuable of all time.

80/20 Rule in Problem Solving

Problem-solving is an essential skill. You must be able to effectively solve problems, both large and small, because they are a natural part of every aspect of our personal and professional lives.
Use these steps and key tools when applying the Pareto Principle to problem-solving. You can even create a Pareto diagram to help you visualize the details of the problem and see the possible solutions.

Create a list of problems you are facing in your situation.
Determine what is causing each problem, particularly the root cause.
Give a score to each problem by listing them in order of importance. Those that are impacting your progress the most are the most important ones (20 percent) to solve first.
Organize your list of problems into groups according to those that have the same causes.
Add up the scores in each group. The group that has the highest score is your highest priority.
Start brainstorming solutions to this problem group and take action.

80/20 Rule in Sales

A friend of mine is one of the highest-paid commission professionals in the United States. One of his goals was to double his income over the next three to five years, so he applied the 80/20 rule to his client base.
What he found was that 20 percent of his clients contributed 80 percent of his profits. He also found that the amount of time spent on a high-profit client was pretty much the same as the amount of time spent on a low-profit client.
In other words, he was dividing his time equally over the number of tasks that he does, while only 20 percent of those items contributed to 80 percent of his results.
So he drew a line on his list of clients under those who represented the top 20 percent and then called in other professionals in his industry and very carefully, politely, and strategically handed off the 80 percent of his clients that only represented 20 percent of his business.
He then put together a profile of his top clients and began looking in the marketplace exclusively for the type of client who fit the profile—in other words, one who could become a major profit contributor to his organization and whom he, in turn, could serve with the level of excellence that his clients were accustomed to. And instead of doubling his income in three to five years, he doubled it in the first year with that one simple time management technique!

How to Apply the 80/20 Rule to Any Situation

You can find success in any aspect of your life by using strategic planning and applying the 80/20 rule. And it begins with you dreaming big.
There is nothing that works faster at casting off your own limitations than for you to begin dreaming and fantasizing about the wonderful things that you can become, have, and do.
As a wise man once said, “You must dream big dreams, for only big dreams have the power to move the minds of men.”
When you begin to dream big dreams, your levels of self-esteem and self-confidence will go up immediately. You will feel more powerful about yourself and your ability to deal with what happens to you.
The reason so many people accomplish so little is that they never allow themselves to lean back and imagine the kind of life that is possible for them.
Stay focused on what you really want, believe it can happen, learn how to make it happen, and get to work.

Understand the Theory of Constraints

A powerful principle that you can use to dream big dreams and live without limits is contained in what Elihu Goldratt calls the “Theory of Constraints.” This is one of the greatest breakthroughs in modern thinking.
What Goldratt has found is that in every process, in accomplishing any goal, there is a bottleneck or choke cord that serves as a constraint on the process.
This constraint then sets the speed at which you achieve any particular goal.
Goldratt found that if you concentrate all of your creative energies and attention on alleviating the constraint, you can speed up the process faster than by doing any other single thing.
Let me give you an example.
Let us say that you want to double your income. What is the critical constraint or the limiting factor that holds you back?
Well, you know that your income is a direct reward for the quality and quantity of the services you render to the world. Whatever field you are in, if you want to double your income, you simply have to double the quality and quantity of what you do for that income.
Or, you have to change activities and occupations so that what you are doing is worth twice as much. But you must always ask yourself, “What is the critical constraint that holds me back or sets the speed at which I double my income?”

Identify Your Productivity Constraints

Most people can typically identify a few things that stand between their time and their goals.
Sometimes there are feelings of helplessness. Sometimes they are simply excuses.
So, what’s holding you back? Is it your level of education or skill? Is it your current occupation or job? Is it your current environment or level of health? Is this the situation that you are in today?
What is setting the speed for you to achieve your goal?
Remember, whatever you have learned, you can unlearn. Whatever situation you have gotten yourself into, you can get yourself out of it. If your real goal is to dream big dreams and to live without limits, you can set this as your standard and compare everything that you do against it.

Live Without Limits

To live without limits, apply three Cs: clarity, competence, and concentration.

Clarify Your Desires, Goals, and Vision

Clarity means that you are absolutely clear about who you are, what you want, and where you’re going.
You write down your goals and you make plans to accomplish them. You set very careful priorities, and you do something every day to move you toward your goals.
And the more progress you make toward accomplishing things that are important to you, the greater your self-confidence and self-belief. And then, the more convinced you become that there are no limits to what you can achieve,.
Having clarity about your desires and a clear vision for your future will help you stay focused on your goals every day. Focusing on your goals daily is actually one of the most important habits of successful people.
Here’s why:
Goal-oriented people tend to have more clarity and more success in life than those who do not set goals regularly. They are also more likely to be interested in productivity techniques, such as the Pareto Principle.

Develop Competence in Your Key Areas

Competence means that you begin to become very, very good in the key areas of your chosen field.
You apply the 80/20 rule to everything you do, and you focus on becoming outstanding in the 20 percent of tasks that contribute to 80 percent of your results.
You dedicate yourself to personal development and continuous learning. You never stop growing. You realize that excellence is a moving target. And you commit yourself to doing something every day that enables you to become better and better at doing the most important things in your field.

Concentrate on Your Most Important Thing

Concentration is having the self-discipline to force yourself to focus single-mindedly on one thing — the most important thing — and stay with it until it’s complete.
The two keywords for success have always been focus and concentration.
Focus is knowing exactly what you want to be, have, and do.
Concentration is persevering, without diversion or distraction, in a straight line toward accomplishing the things that can make a real difference in your life.
When you allow yourself to begin to dream big dreams, creatively abandon the activities that are taking up too much of your time, and focus your inward energies on alleviating your main constraints, you start to feel an incredible sense of power and confidence.
As you focus on doing what you love to do and becoming excellent in those few areas that can make a real difference in your life, you begin to think in terms of possibilities rather than impossibilities, and you move ever closer toward the realization of your full potential.

Follow the 80/20 Rule on Your Path to Success

The 80/20 rule is a success principle that you can apply to any aspect of your life. By using the Pareto Principle, you focus on the 20 percent of items that help you achieve 80 percent of your success.
To help you get started on using the 80/20 principle in goal setting, which is the key to success at work and in your personal life, download my free 14-Step Goal Setting Guide.
And remember, the only real limitation on your abilities is the level of your desires. If you want it badly enough, there are no limits on what you can achieve.