Definition: There is an inbuilt imbalance between causes and results, inputs and outputs, and effort and reward.
Reference: Vilfredo Pareto, 1897 discovered the patterns underlying the 80/20 Rule, or Pareto Principle. Found that the majority of income and wealth in 19th century England went to a minority of people.
Reference: George K. Zipf in 1949 discovered the "Principle of Least Effort", that around 20 percent of a resource accounted for 80 percent of the activity related to that resource.
Reference: Joseph Moses Juran, 1951, the Quality Control Handbook described how the 80/20 principle could be applied to industry to root out quality faults and improve reliability by focusing on a vital few variables.
Reference: In 1963 IBM discovered that 80 percent of a computer's time is spent executing about 20 percent of the operating code.
Insight: A minority of causes, inputs, or effort produces a majority of results, outputs, or rewards. Equally the majority have little impact.
Insight: You can use the 80/20 Principle in life to become happier by focusing on what matters.
Insight: Businesses can use the 80/20 Principle to become more profitable by focusing on the most valuable customers or products.
Insight: Complexity is costly.
Insight: A few things are always much more important than most things.
Insight: Progress means moving resources from low value to high value uses.
Insight: Big wins start small.
Insight: The majority of achievement and happiness takes place in 20 percent of our time.
Insight: A few key decisions have the biggest impact on our lives.
Insight: We are much more productive at some things than others.
Insight: Time management assumes we know what is and is not a good use of time, but using the 80/20 rule, this is not a good assumption.
Principle: Look for short cuts.
Principle: Strive for simplicity.
Principle: Use the least possible effort for maximum results.
Principle: Be selective.
Principle: Strive for excellence in few things, rather than good performance in many.
Principle: Delegate to specialists where possible.
Principle: Only do what you enjoy the most and best at doing.
Principle: Only play the games where winning matters.
Principle: Eliminate low value activities.
Example: 20 percent of workers produce 80 percent of outputs.
Example: 20 percent of the salesforce close 80 percent of sales.
Example: 20 percent of products return 80 percent of revenue.
Example: 20 percent of the population owns 80 percent of the wealth.
Reference: Developed by Vilfredo Pareto who observed that around 20 percent of any group is responsible from 80 percent of outcomes.
Insight: Doing a few important things can give a much greater return than doing many less important things.
Insight: Progress comes from prioritising and focusing on actions towards the very high priority items, and leaving the rest.
Insight: Just being slightly better than competitors and maintaining that advantage can reap high rewards.
Insight: The Pareto Principle is compounding: small advantages in the beginning become big over time.
Principle: Rank to-do items in terms of priority and work on only the top 20 percent.
Principle: Maintain a 1 percent advantage over competitors.
Insight: In any complex system, a minority of the inputs produce the majority of the output.
Insight: Noncritical inputs are significant opportunity costs including wasted time in meetings or noncritical expenses.
Principle: Focus on the critical inputs that produce most of the results that you want, weed out the rest.
Principle: Find inputs that strongly align with outputs that you don't want and focus on weeding them out.
Example: In sales groups, 80 percent of the revenue comes from 20 percent of the team.
Insight: 80 percent of your results come from 20 percent of your actions.
Insight: The Pareto Principle is a key to time management.
Insight: 80 percent of your actions are likely low value.
Insight: 20 percent of efforts produce 80 percent of results.
Insight: By distinguishing the "trivial many" from the "vital few" in many areas of life we can improve it significantly.
Reference: Vilfredo Pareto discovered the Pareto Principle.
Reference: Joseph Moses Juran, Quality Control Handbook - expanded on the Pareto Principle and called it "The Law of the Vital Few" - observed that you can greatly improve the quality of a product by resolving a minority of the problems.
Example: 20 percent of household items get used 80 percent of the time.
Insight: Around 80 percent of effects come from 20 percent of causes.
Insight: Applying the Pareto Principle to simplifying your house involves identifying in each room the items that we use regularly and letting go of the rest.
Principle: Remove all stored items from cupboards and put ask the following: (1) Is it working? Is it expired? (2) Do you use it regularly? (3) Is it a duplicate? (4) Does it have any health implications? (e.g. Teflon, plastics) (5) Is this item kept out of guilt? (6) Could another item achieve the same task? (7) Is it worth the effort to clean and maintain? (8) Could I use this space for something more valuable? (9) Is it reusable?
Example: In the home we might use 20 percent of items 80 percent of the time.
Example: Most people wear 20 percent of clothes owned 80 percent of the time.
Insight: In many situations around 80 percent of effects come from around 20 percent of causes.
Insight: When decluttering applying necessity as the basis for deciding what to keep can enable you to get rid of items more effectively.
Reference: Vilfredo Federico Damasa Pareto, Italian economist, studied the distribution of wealth in Italy in 1800s and discovered that 20 percent of the population owned 80 percent of the land. In his garden he discovered that 20 percent of pea plants contained 80 percent of the peas.
Example: 20 percent of business customers contribute 80 percent of revenue.
Example: 20 percent of products and services contribute 80 percent of profits.
Insight: By focusing energy on top customers you can cut expenses on serving less profitable customers, and free up time and energy to bringing in more profit with stronger customers.
Principle: Focus on serving top 20 percent of customers.
Insight: If you do the top 20 percent of items on your to-do list, it will yield 80 percent of the return on your efforts
Principle: Prioritise the things that yield high return.
Principle: Stay in areas of strength and out of areas of weakness.
Principle: Assign tasks to people in their areas of strength.
Principle: When deciding tasks to prioritise ask the following questions: (1) What must I do? (2) What provides the greatest return? (3) What is most rewarding?
Reference: Vilfredo Pareto, Italian economist in 1906 observed that 80 percent of income was received by 20 percent of the population.
Example: 80 percent of profit is generated from 20 percent of customers
Insight: In life when you prioritise what matters you will find more happiness, success and love.
Principle: Focus on the most valuable activities.
Principle: Focus on strengths and expertise.
Reference: Vilfredo Pareto, Italian Economist in 1985 concluded that an 80/20 rule seem to apply in many areas including wealth. He noticed that around 20 percent of individuals - he called the "vital few" - controlled 80 percent of wealth and property in Europe.
Example: 20 percent of tasks account for 80 percent of value produced.
Principle: List tasks and responsibilities in terms of priority, focus on the highest priority items only.
Reference: Named after Italian economist Vilfredo Pareto.
Insight: By focusing attention on the top 20 percent of all priorities, you get an 80 percent return on your effort.
Principle: In life give focus and energy to the things that give you the highest return.
Example: The top 20 percent of people enjoy 80 percent of the wealth.
Reference: The Pareto Principle was founded by Vilfredo Pareto in 1895.
Principle: In your career, your first goal should be to aim to be in the top 20 percent in your field.
Example: If you have 100 customers, the top 20 will provide 80 percent of your business - focus on them.
Insight: By focusing attention on the top 20 percent of all priorities, you get an 80 percent return on your effort.
Insight: A to do list of 10 items will contain 2 that will give you a 80 percent return on your time.
Insight: Also known as the 80/20 rule - 80 percent of the value of a task comes from 20 percent of the effort.
Principle: Focus on the critical 20 percent of tasks, and don't over-invest in the noncritical 80 percent.
Insight: Small minorities achieve disproportionate results.
Reference: Vilfredo Pareto discovered the Pareto Principle or 80/20 rule - 20 percent of people owned 80 percent of the land in Italy, and 20 percent of pea pods produced 80 percent of peas in his garden.
Example: In management, 80 percent of results flow from 20 percent of activities.
Key Insights & Principles
Business
Using the Pareto Principle can help businesses become more profitable by focusing on the most valuable products and customers.
Complexity is costly.
The majority of activities are likely to be low value.
Maintaining a slight advantage over competitors consistently can reap high returns.
Analyse the most valuable areas of business, focus on them, and eliminate the rest.
Strive for simplicity.
Shift resources from low value activities toward high value activities.
Productivity
A minority of tasks produce most of the results.
Rank to-do lists in terms of priority, and only work on the top priority items.
Look for short cuts.
Delegate tasks to specialists.
Eliminate low value activities.
Life
A few things matter much more than most things.
We use a minority of things in our home.
Only play the games where winning matters to you.
Strive for excellence in few things, rather than good performance in many.
