Entrepreneur
Article
By Alyssa Gregory

The Pareto Principle: Does the 80/20 Rule Apply to Your Life?

By Alyssa Gregory

80/20 ruleThe 80/20 Rule states that 80% of the output comes from 20% of the input. The rule is also known as the Pareto Principle, named after Italian economist Vilfredo Pareto, who observed in 1906 that 80% of the land in Italy was owned by 20% of the population.

Examples of the 80/20 Rule

The 80/20 Rule can be applied to many areas of business:

  • In sales: 80% of your business comes from 20% of your customer base.
  • In productivity: 80% of your accomplishments come from 20% of your task list.
  • In day-to-day business: 80% of the work you do is from 20% of your service offerings.
  • In marketing: 80% of your achieved response comes from 20% of your marketing efforts.
  • In customer service: 80% of the complaints come from 20% of your customers.

The 80/20 Rule is everywhere. In fact, I even see it with my dog and four cats. My dog makes up 20% of the household pet population but requires 80% of the work. Another example: When the mail arrives and I weed out the junk, I’m left with 20% that requires the remaining 80% of my attention. And I have stacks of recipes, but probably use just 20% to make 80% of our meals.

Applying the 80/20 Rule

The point of the 80/20 Rule is that you need to focus primarily on the critical 20% to achieve 80% satisfaction. Of course this is a general rule, not an irrefutable statistic; for some actions, the breakdown may be closer to 90/10 or 70/30. But the point is the same, and it can be eerily accurate when you measure the variables in your life.

The challenge, however, comes from identifying that critical 20%. With some areas that have measurable metrics, such as the number of clients, amount of income and time spent on each of your services, it’s a no-brainer. But it can be difficult to take the same analysis and apply it to your daily life, especially when you have a lengthy to-do list with lots of items that still need to get done.

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Making 80/20 Work for You

The 80/20 Rule acknowledges the imbalance in effort and results, and allows us to use that imbalance to our advantage. But that doesn’t mean we can write off everything that falls in the non-critical or less-critical 80%. I can’t ignore my cats, for example, just because they need less hands-on care than my dog. I can, however, modify my actions so I focus the most where I need to. I won’t waste my time taking my cats for a walk, just because I do that with my dog.

It’s about recognizing the imbalance of what needs to be done to reach satisfaction/completion/happiness and doing only that and not extra work that doesn’t result in anything positive. This extra effort should be reserved for the critical 20%.

Room for Debate

Despite its popularity, though, the 80/20 Rule isn’t without its detractors. To start, opponents say that only hindsight is 20-20 when determining the 20% to concentrate on, and many times, that 20% changes by the time you’re ready to address it. Critics also argue that focusing on just 20% and doing enough to scrape by on the remaining 80% encourages mediocrity.

But what do you think? Have you been successful applying the 80/20 Rule to your life? Has it benefited you?

Image credits: Chemtec (80) and andrewatla (20)

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