Are you wondering what Pareto principle is? Are you wondering how it can help your business?
A history lesson of the 80/20 Rule or Pareto Principle – Don’t worry it won’t be boring
In the 19th century, an Italian economist called Vilfredo Pareto wrote a mathematical model for income distribution. He recognised that people in society naturally seemed to divide into what he called the vital few, the 20% at the top in terms of property, money and influence and the trivial many (bottom 80%).
He continued his research and discovered that virtually all economic activity was subject to the same rules and principles. During this period in Italy, 80% of the wealth of the country was controlled by 20% of the population.
In fact, according to Pareto, it was actually concentrated in a highly predictable way. Understanding and applying these principles will not just bring you wealth beyond your wildest dreams but give you a fulfilled enlightened, healthy life.
We should be thanking Joseph M. Juran for bringing us the 80/20 rule as it was Joseph’s research for his book Quality Control Handbook where he labelled the 80/20 concept, the Pareto Principle. Whereas another might have called it the – Julian Principal!
History lesson almost over, enjoying it so far?…
Think about it… We can take Pareto’s 80/20 rule and apply it to almost any situation-it’s as real as gravity! Bizarrely, most people fail to see the seriousness of it. This is not just a theory, it’s one of the most important, if not most significant productivity, health, wealth and relationship truth’s, ever discovered. These are all vital if you are running a handmade business.
- 20% of our efforts create 80% of our revenue
- 20% of our staff do 80% of the work
- 20% of the customers and clients generate 80% of our revenue
- 20% of our marketing efforts produce 80% of our leads
- 20% of our customers and clients cause 80% of our headaches
And on and on…
But stop right there…
You must be careful using this principle in your business…
The common misunderstanding is that the numbers 80 and 20 must equal 100 – they do not!
It is a guideline, not a prerequisite; 20% of your staff (if you have staff) could be responsible for 60% or 90% or even 99% of your results.
If you recognise that “80” and “20” don’t have to be exact, the critical point is – most things in life are not distributed evenly – some perform better than others.
The Applications of Pareto 80/20 Rule
We can apply it to goal-setting, productivity, time management, work, relationships, well, just about anything you can think off. According to this principle, 20% of your activities will account for 80% of your results.
Think about it…
If you have a list of 10 goals or tasks to accomplish, two of these items will account for more than the other eight, all put together.
The sad fact is, the masses procrastinate about their top 10 list. They do not focus on the 20% of items that are the most valuable, the most important, the vital few that account for their success.
Instead, they busy themselves with the least significant 80%, the trivial tasks that do nothing for success, turning them into busy fools.
Know anyone like this?
The Uses of Pareto 80/20 Rule
Want to improve your productivity? Looking to achieve your goals or just to improve your results… here’s how to efficiently apply the 80/20 rule.
Grab pen and paper, now write down your top 10 tasks or goals. Ask yourself this question, “If you can only achieve just one of these tasks or goals on your list today within the next 24 hours, which one would have the biggest positive impact on your business and life.”
“What right now is your most important goal in life?” – You need to know this if you want to be successful. Then choose your second most important task or goal.
Now you have your number one goals, go ahead and ask the question again, “If you could only accomplish one MORE of the goals on your list today, within the next 24 hours, which ADDITIONAL tasks or goals would have the biggest positive impact on your life.”
What you’ll find is that after you have completed the above exercise, you will have identified your most important 20% tasks or goals. Its these that will bring about the success and increased productivity that you most desire.
Work all the time at the goals you have chosen and nothing else. I’m sure you have seen people who look super busy all day long, but never seem to accomplish anything.
This is almost always because…
They are busy working on the bottom 80% tasks, which have little to no value, while procrastinating about the top 20%, the one or two activities that would make a real difference to their goals and productivity.
Let’s face it we are all guilty of putting off those difficult tasks. Even as far back as the 1800’s Mark Twain knew it: “If it’s your job to eat a frog, it’s best to do it first thing in the morning. And if it’s your job to eat two frogs, it’s best to eat the biggest one first.”
The most valuable tasks, yep, you got it,….the top 20%, are often the most complex and challenging to complete, (especially if it involves frogs!)
If you stick with it, however, the payoff’s and the rewards you get for completing them can be priceless. They can be life-changing.
Before you tackle any of the tasks, ask yourself this question, “Are these tasks in the top 20% of your activities or are they in your bottom 80%?”
Use the Pareto Principle (80/20) for time management, and only do what is essential…
The Pareto Principle 80/20 – Habits you will develop if you’re not careful – the trivial many, the bottom 80%.
Don’t fall into this trap… If you start your day, every day working on low-value tasks, you’ll soon develop the habit of the trivial many (bottom 80%). Don’t fall into this trap because it will cost you big.
I see people all the time with their massive to-do lists, always starting and working on low-value tasks. You’ll be like a dog chasing its tail, hamster on a wheel- you get the gist- never makes any progress.
What you can learn from the Rich
Rich people v Poor people’s attitudes when setting and establishing goals?
- 87% of wealthy people work on one big goal all the time, they live and breathe it
- Poor people, on the other hand, a poor 3%, only, have a big goal – and they don’t work on it very often.
Do you want to be successful? Then make sure you follow these rules… Successful people pick and focus ONLY on one big goal. They live and breathe it until it’s completed.
Do this, and it will change your life – GUARANTEED.
Think about this…
When you establish crystal clear goals, you come up with the perfect strategies and answers to achieve them – at the exact right time.
Now It’s Your Turn…
I’d love to hear how you are going to use the 80/20 rule for goal-setting and time management.
What is your 20% to work on? What actions are you going to take for your future?
Or maybe you have a question.
Either way, please leave a comment quick below.