The Pareto principle (also known as the 80/20 rule) is a phenomenon that states that roughly 80% of outcomes come from 20% of causes. This article breaks down how you can use this principle to help prioritize tasks and business efforts.
Italian economist Vilfredo Pareto developed the Pareto principle in 1896. Pareto observed that 80% of the land in Italy was owned by only 20% of the population. He also witnessed this happening with plants in his garden—20% of his plants were bearing 80% of the fruit. This relationship is best mathematically described as a power-law distribution between two quantities, in which a change in one amount results in a relevant change into the other.
The 80/20 rule is roughly described by a Power-Law distribution (also known as a Pareto distribution) for a particular set of parameters. Many natural phenomena have been shown to exhibit such a distribution. It is an adage of business management that “80% of sales come from 20% of clients.
When someone gets into the office in the morning, what’s the first thing they do? Most people grab their caffeinated beverage of choice, check their email, and prioritize their tasks for the day. But what techniques does anyone use to identify what needs to get done first?
One common technique is the Pareto principle, also known as the 80/20 rule. This technique can help everyone determine and prioritize their highest-impact tasks, increasing your productivity throughout the day.
General examples of the Pareto principle:
- 20% of a plant contains 80% of the fruit
- 80% of a company’s profits come from 20% of customers
- 20% of players result in 80% of points scored
The basis of the Pareto principle states that 80% of results come from 20% of actions. If you have any kind of work that can segment into smaller portions, the Pareto principle can help you identify what part of that work is the most influential.
Productivity
We can use the 80/20 rule to prioritize the tasks we need to get done during the day. The idea is that out of our entire task list, completing 20% of those tasks will result in 80% of the impact you can create for that day. So to get the most impact done, identify which jobs have the most impact on our team and focus on those for the day.
Decision Making
The Pareto principle can help you make the best decisions during the problem-solving process. When there are many different causes to one problem, the Pareto principle can help you prioritize solutions.
Advantages of using the Pareto principle
The most significant advantage of using the Pareto principle is that you can create the maximum impact with the least amount of work. The rule can allow your team to work more efficiently and focus on specific initiatives.
The 80/20 rule can help your metrics increase in less time simply by prioritizing initiatives in the correct order.
Other benefits of using the Pareto principle:
- Clear priorities both for you and your team
- Increased daily productivity
- Ability to portion your work into manageable segments
- More focused strategy
The 80/20 rule is not a formal mathematical equation but a generalized phenomenon observed in economics, business, time management, and even sports.