How To Achieve More with Less

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. It’s the basis of achieving more with less.

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

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).

…. 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. More with less.

• 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.

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.

 

Article by celes