The Pareto principle is popularly known as the 80/20 rule. It is applied in many areas like business, sales, and productivity. E.g.
- 80% of the outcome is delivered by 20% of the team members.
- 80% of revenue is from 20% of clients.
- 80% of your results will come from 20% of your efforts.
- 80% of outcomes come from 20% of causes
History:
Vilfredo Pareto, an Italian economist and sociologist wrote in 1906 that approximately 80% of land in the Kingdom of Italy was owned by 20% of the population. To his surprise, when he studied other countries, he was surprised that a similar distribution of land applied everywhere. In 1941, Joseph M. Juran, a Management Consultant came across this work from Vilfredo Pareto and developed it in the context of quality control. Later, Juran preferred to refer to this principle as ‘the vital few and the useful many’.
It is popularly quoted and debated that about 20% of people hold 80% of the wealth, as studied in many countries. It is also observed that the principle can be applied with multiple perspectives. E.g. Its believed that 80% of software code can be written in 20% of the time. Conversely, 20% of code requires 80% of the time. ‘Champagne glass effect’, ‘Pareto Chart’, ‘COCOMO Software Estimation’ have emerged or have references to this principle.
Chris Cane explains that this principle can be used in various areas like Client Management, Problem Solving, Time Management, Content Creation, Professional Development, and Professional Networking.
My experience:
In my career, I’ve observed that in most teams, it’s only a few people who hold the fort or serve as the backbone and help to achieve the maximum results for the team. The majority of the remaining team members lean into these performers. It’s very critical to retain this talent, as the results are achieved usually with a mix of skill + behavioral traits, an important combination that every company needs and not easily found.
I have also practiced letting go of trivial/unimportant/non-productive tasks to free up bandwidth for the most important tasks that yield maximum results. This habit has worked wonders for me in avoiding burnout, feeling overwhelmed and getting out of a continuous busy-ness vicious loop.
I had this dilemma about if we focus on only the 20% then what should we do with the remaining 80%? The answer I’ve realized is that it’s important to focus on 20% which gives maximum results and once you’ve cracked this piece, then you can move on to the remaining 80% and can apply this principle recursively. This way you can continuously optimize further.
It’s mentioned that this principle can’t be applied everywhere, but I couldn’t find any area where this can’t be applied.
Conclusion:
The Pareto principle is quoted quite often. It’s a simple yet powerful observation that can be practiced by anyone and anywhere. This mind-shift to focus on important things can be a game changer for many. We usually focus on high-priority tasks and this principle gives objective justification for it. Use it for your benefit!