Vilfredo Federico Damaso Pareto was born in Italy i848. He would go on to become an important philosopher and economist.Legend has it that one day he noticed that 20% of the pea plants in his garden generated 80% of the healthy pea pods.
This observation caused him to think about uneven distribution. He thought about wealth and discovered that 80% of the land in Italy was owned by just 20% of the population. He investigated different industries and found that 80% of production typically came from just 20% of the companies. The generalization became:
80% of results will come from just 20% of the action.
Pareto's 80/20 Rule
This "universal truth" about the imbalance of inputs and outputs is what became known as the Pareto principle, or the 80/20 rule. While it doesn't always come to be an exact 80/20 ratio, this imbalance is often seen in various business cases:20% of the sales reps generate 80% of total sales.
• 20% of customers account for 80% of
• 20% of the most reported software bugs cause 80% of software crashes.
• 20% of patients account for 80% of healthcare spending (and 5% of patients account for a full 50% of all expenditures!)
How You Can Use It So how can you apply Pareto's principle to gain more time in your life?
Are you an executive? You're surely faced with the constant challenge of limited resources. It's not just your time you need to maximize, but your entire team's. Instead of trying to do the impossible, a Pareto approach is to truly understand which projects are most important. What are the most important goals of your organization, or boss, and which specific tasks do you need to focus on to align with those goals. Delegate or drop the rest.
Are you a freelancer? It's important to identify your best (and highest-paying) clients. Of course, you don't want all your eggs in one basket. But too much diversification will quickly lead to burnout. Focus on the money makers and
strengthening those long-term
Are you an entrepreneur? The temptation
always exists to try the new and exciting.
There's nothing inherently wrong with that, but it boils down to your goals. Are you trying to grow your current business?
Would an 80/20 mindset help you to stay focused on your strategic plan and spend less time chasing endless new opportunities?
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