The 80/20 Principle

The 80/20 Principle can give you a significant advantage in the decisions you make and by being super-effective with those decisions. The 80/20 Principle, also known as the Pareto Principle, looks at cause and effect relationships and finds a very common occurrence:

There is a natural lack of balance between inputs and outputs, causes and consequences, and efforts and results.

Simply stated, the 80/20 Principle holds that for most relationships. 80% of the results come from 20% of the efforts. Of course, the percentages may not be exact from situation to situation, but are found to be strikingly close. These are some examples of relationships that are found to fit the 80/20 Principle:

· 80% of profits coming from 20% of customers
· 20% of the world’s population control 80% of the wealth
· 20% of an office’s problems will come from 80% of the staff
· 20% of our clothes we wear 80% of the time

(OK Chris – where is this going?)

· 80% of our effort produces 20% of the value we receive

· 20% of our effort produces 80% of the value we receive

We spend the bulk of our time doing things that are not beneficial to us and do not help us reach our goals.

Let the last few lines sink in – reread them even.

We are wasting our efforts approximately 80% of the time. Wow! It’s time to rethink what we do.

What if we could take that 20% of the things we do that are really helpful and repeat that part, while avoiding wasting our time, energy and efforts doing what we do 80% of time with little or no results? This implies that we can create more success in our lives, by being very aware of how we spend our time and focusing on the things that really make a difference in our success.

As a few examples:
· In business, we should consider which group of customers is really providing our revenues and consider how to create more of those customers. Likewise, if some small group of our customers is creating most of our problems, maybe it’s time to “fire” those customers?
· On a personal level, are we wasting large portions of our time at home doing things that aren’t helpful and are actually distracting us from doing the few things that will really make a difference in our lives?

I realize that this all seems abstract, but living in a day when there never seems to enough time or enough money, can we afford to not see when we are wasting our time and money, with most of the decisions we make? Take the time to understand this natural inefficiency and learn to become more productive with the time you spend towards any goal.


(For more information, I would encourage readers to read more on the subject. The book "The 80/20 Principle: The Secret to Success by Achieving More with Less", by Richard Koch is a real eye-opener to how we can become substantially more effective using this perspective.)