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Learn How to Achieve More with Less – The Pareto Principle

Learn How to Achieve More with Less – The Pareto Principle

The Pareto principal, commonly known as the 80/20 rule tells us that some things are going to be more important than others. Simply put, 20 percent of causes yield 80 percent of the result or problems. Fundamentally here is what happens:

  • 20% of our input give 80% of our output
  • 20% of the causes give us 80% of the consequences
  • 20% of the effort give 80% of the result

Some examples would be:

  • 20% of the customers give 80% of the profits
  • 20% of the products give 80% of the sales
  • 20% of our efforts yield 80% of our results
  • 20% of the staff give 80% of the output of the company
  • 20% of the consumers use 80% of the product or services offered

For example, by concentrating your efforts on say the 20% of the customers who give you 80% of your business, your returns will be significantly higher than chasing customers in 80% group who only give you 20% of your income. This gives you a great clue to how you should select and foster customers and where you should be spending your time.

Understanding where these imbalances are in a business or organization and leveraging them is a vital driver of productivity. It is probably the most important concept for business intelligence professional to understand and apply and it is also vitally important to anyone creating a business strategy. It is equivalent to the concept of constantly always ‘building on the best and disposing of the least successful’. This rule is the key to finding the best. This 80 20 imbalance in any population really indicates that in the world things are not evenly distributed as one might think. This concept is not intuitive. In fact the imbalance does even need to add up to 100. It can be 70/30 but often it can be 90/30, 50/10 or 80/28.

Italian economist Vilfredo Pareto first discovered this 80/20 concept, over 100 years ago. It has been reinvented by Zipf in 1949 using the term ‘Principle of Least Effort.’ In 1951 Joseph Juran, the great quality Guru, used the principle to improve quality by using it to identify the faults or defects that were having the biggest impact. Every business intelligence practitioner, manager and leader should think and act 80 20.

 Applying The 80/20 Rule For Your Success:

Consistently review your calendar to manage your time. Plan forward and look back each day. Focus your time on 80/20 rule. Don’t throw away your time by doing non-highly productive work. Determine your hourly rate, then identify activities in terms of:

  • CRITICAL: Worth your hourly rate you do
  • CORE: What needs to get done but is not worth your hourly rate – delegate
  • NOT NECESSARY: What you need to stop doing

When doing an activity ask yourself would you pay someone your hourly rate to do that activity? Or should you delegate it to someone with a lower rate?Manage calendar with this filter until you build it as a new habit.

We hope that this approach provides you value. If you need more help for you and your team please do not hesitate to reach out to us.

Regards, The Churchill Leadership Group Team