The Pareto principle, also known as the 80/20 Principle and…or Rule, is a theory maintaining that 80 percent of the output (achievement/results/wherewithal) from a given situation or system is determined by 20 percent of the input (action/effort/work).
By the numbers it means that 80 percent of your outcomes come from 20 percent of your inputs.
The principle is named for Vilfredo Pareto, an Italian economist. He “stumbled” upon the concept when observing that about 20% of the peapods in his garden contained 80% of the peas. And then he kept observing the same pattern everywhere else. In 1906, Pareto noted that 20 percent of the population in Italy owned 80 percent of the property. He went on to study the land distribution in other countries and found a similar pattern. He proposed that this ratio could be found in many places in the physical world and theorized it might indicate a natural law.
It really doesn’t matter what numbers you apply, the important thing to understand is that in your life there are certain activities you do (your 20 percent) that account for the majority (your 80 percent) of your success and output.
In the 1940s, Pareto’s theory was advanced by Dr. Joseph Juran, an American electrical engineer who is widely credited with being the father of quality control. It was Dr. Juran who decided to call the 80/20 ratio the “The Pareto Principle.” Applying the Pareto Principle to business metrics helps to separate the “vital few” (the 20 percent that has the most impact) from the “useful many” (the other 80 percent).
The little things are the ones that account for the majority of the results. The ratio: 80/20… are simply common numbers for simplification purposes. In reality, it can mean 90/10, 95/5, or even 99/1.
What I enjoy about the 80/20 principle is that it actually works and impacts all matter of life. And by putting your focus in the right place, whether it’s money, work, productivity, hobbies, or literally anything else… you start being in charge of your life and achieve what you set out to do.
Very quickly, let’s say you do a lot of marketing on Facebook. OK, and you spend five hours this week doing your thing on Facebook. Well that’s great OK. Now how many contacts, connections, or leads has that driven you this week? If it drove you one prospect let’s say, then only you can determine if you landed that business if it made sense with your activity on Facebook. If it didn’t, then you need to look at that and say OK what did that five hours really cost me? Apply the 80/20 principle. In a nutshell busyness does not equal business… Results do.
Some things to note:
- 20% of prospecting is accomplished by enrolling 80% into your business
- 80% of value is achieved with the first 20% of effort
- 20% of the emails are 80% of the important conversations
- 80% of your distractions come from 20% of sources
- 20% of the food you eat damages 80% of your energy
- 80% of your muscle gains come from 20% of the effort
- 20% of your nwm conversations will bring in 80% of your revenue
Using the 80/20 Principle Wisely
- Goals: focus on 20% of the goals that will achieve 80% of the results; compare the resources needed… time, money, energy, etc. to the potential benefits.
- Habits & Routines: 20% key power habits create 80% of value in your life; such as meditation and exercise.
- Decluttering: throw away 20% of the things that take 80% of the space.
- Daily tasks: if possible, outsource 20% of daily chores that bring you 80% of the stress. Sometimes a machine can be a solution.
- Digital: 20% of your files use up 80% of the space; you use 20% of applications (in both computer and phone) 80% of the time; you use 20% of the gadgets 80% of the time, remove, sell, or give away the rest.
The 80/20 principle is a simple concept to grasp and a hard one to practice.
In business, you can achieve huge financial savings by rationalizing your efforts, products, and tasks according to the 80/20 principle.
And in personal life, you can better manage your finances, health, relationships, and space by decluttering your possessions.
Use this mental model to pursue new hobbies or career paths, be more effective/efficient at your business, or find ways to be less stressed.
You can even link the 80/20 principle with Parkinson’s Law to reduce the amount of time spent on anything.
By cutting the non-essential and the things that generate little value, you declutter your mind, space, and time.
At its essence, the 80/20 principle is telling us to only work on the important stuff, and not to sweat the small stuff.
The 80/20 principle is not about doing less work. It’s about finding the most valuable areas in your schedule and spending more time doing those things.
There is an unlimited amount of work that needs to be done, and a very limited amount of time available. You’ll never finish all the work. If you try to get on top of every single thing, you’ll notice that the work is finishing you off. Instead of wishing for more energy to get more done, why not use your energy to only do the most important things?
When we start to adopt the 80/20 princple, we’ll notice that we have more time left over… the work quality and productivity will be higher. We’ll be able to prioritise our day like never before, because we’ll know all the essential actions that will help us get the best results. The best part is that this strategy is repeatable and cumulative. The more we repeat it, the more value we’ll get from our 20% of tasks.
And that ultimately leads to a successful life.