Use The 80/20 Principle
The 80/20 is also known as “The Pareto Principle” or “The Law of the Vital Few” — referring to the vital few factors that contribute to the majority of the outcome.
So, what is the 80/20 Principle?
Imagine you are the CEO of a company and you have a salesforce. In a world where everything is equal, you will assume that everyone contributes to your sales proportionately — i.e., 20% of the employees contribute to 20% of the sales, 50% contribute to 50% of the sales, and 80% of the employees contribute to 80% of the sales. But what if instead of a 1-1 relationship, you find out that 80% of your sales are actually contributed by 20% of your staff?
What the 80-20 Principle is About
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This is what the 80/20 rule is about — 80% of the effects in a situation come from 20% of the causes. This phenomenon was first discovered by Vilfredo Pareto, an Italian Economist who found that 20% of the people in Italy control 80% of the wealth and land. He first observed the principle when gardening and noticing that 20% of his peapods in his garden yielded 80% of the total harvested peas.
Examples of 80/20 in Action
Here are just some of many situations where the 80/20 rule can be observed:
- Population: 80% of the population in England (25.8 million out of 32.3 million) comes from 20% of its cities (53 out of 263 cities).
- Resource Consumption: 70% of the world’s energy, 75% of its metals, and 85% of its timber are consumed by 20% of the world’s countries (which have far fewer than 20 percent of the world’s population).
- Natural Resources: 80% of Earth’s mineral wealth is produced by far less than 20% of the Earth’s surface
- Wealth: 85% of the total global assets is owned by 10% of adults.
- Crimes: A large percentage of crimes tends to be committed by repeat offenders, which make up a small proportion of the overall population — actually even criminals. In Sweden, 26% of the total violent crime offenders were re-convicted three or more times, which resulted in 1% of the population being responsible for 63% of violent crimes. In the UK, 36% of crimes in 2009 were committed by criminals who just completed a previous sentence within the past year. More than half of these were by criminals with at least 25 previous convictions or cautions.
- Books: 80% of the value in a book can be gleaned from 20% of its content.
- Clothes: Most of the times you wear the same few clothes in your wardrobe.
- Divorces: A large proportion of divorces tend to be by a small proportion of married individuals. It’s also why a significantly higher proportion of second and third marriages fail compared to first marriages.
- Consumption: In every industry, a small selection of brands dominate the world’s consumption, e.g. Coca Cola / Pepsi for soda, MS Windows for operating systems, Samsung and iPhone for mobile phones.
- Daily Life: When you eat out, you usually dine at the same restaurants (20% out of all possible choices).
- Smoking: 100% of cigarette consumption is by nearly 20% of the world’s population (are you one of them?).
- Business: 80% of sales tend to come from 20% of customers (your loyal customers who love your work and purchase regularly). 80% of complaints tend to come from 20% of customers.
- Relationships: 80% of the value you get from relationships is from 20% of the people you know (your close friends, family, partner).
- Goal achievement: 80% of the results in your goal will be from 20% of your actions (meaning a few vital tasks will contribute to the biggest results in your goal).
…. and so on.
Applying 80/20 Principle in Our Life
The 80/20 rule tells us that a large proportion of effects is due to a small portion of causes.
- 20% of causes lead to 80% of results. These are what I call the 20% high-impact-tasks. High-value because they lead to high-impact results.
- On the other hand, 80% of causes lead to 20% of results. These are what I call the 80% low-impact-tasks.
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It doesn’t have to be a literal 80-20 ratio — for example, 70% of the effects can be contributed by 15% of the causes, or 60% of effects can be contributed by 30% of the causes. The percentages of effects and causes don’t have to add up to 100% either — 80% refers to the effect while 20% refers to the cause, meaning they are not of the same denominator. It just happened that Pareto’s observation was 80-20 (rather than 70-20 or 60-10).
The point of the 80/20 rule is to know that (a) the relationship between cause and effect is often not 1:1, and (b) some causes have more weight than others.
Read more about the 80/20 rule by clicking on the link below.
Article by Celes. Source: How To Achieve More With Less Using The 80/20 Principle – Personal Excellence