Pareto Principle

The observation that in any complex system a minority of inputs produce a majority of the outputs.

• 20 percent of the population owns 80 percent of the wealth.
• 20 percent of products return 80 percent of profits.
• 20 percent of tasks produce 80 percent of the productivity.
• 20 percent of the salesforce produces 80 percent of closed sales.
• 80 percent of our happiness comes from 20 percent of our time.

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Key Insights & Principles

Business

1. Using the Pareto Principle can help businesses become more profitable by focusing on the most valuable products and customers.
2. Complexity is costly.
3. The majority of activities are likely to be low value.
4. Maintaining a slight advantage over competitors consistently can reap high returns.

1. Analyse the most valuable areas of business, focus on them, and eliminate the rest.
2. Strive for simplicity.
3. Shift resources from low value activities toward high value activities.

Productivity

1. A minority of tasks produce most of the results.

1. Rank to-do lists in terms of priority, and only work on the top priority items.
2. Look for short cuts.
3. Delegate tasks to specialists.
4. Eliminate low value activities.

Life

1. A few things matter much more than most things.
2. We use a minority of things in our home.

1. Only play the games where winning matters to you.
2. Strive for excellence in few things, rather than good performance in many.
3. Be selective.
4. Eliminate that which is not valuable.

Book References