‘The 80/20 Principle’

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25th July 2024

This “universal truth” about the imbalance of inputs and outputs is what became known as the Pareto principle, or the 80/20 rule.

While it doesn’t always come to be an exact 80/20 ratio, this imbalance is often seen in various business cases:

* 20% of the sales reps generate 80% of total sales.

* 20% of customers account for 80% of total profits.

* 20% of the most reported software bugs cause 80% of software crashes.

On a more personal note, you might be able to relate to my unintentional 80/20 habits.

I own an elaborate wardrobe, but 80% of the time or more I grab my khakis & white shirt in summer & a grey pant, a white / blue shirt with a blazer in winter. (Ladies, how many shoes or bags do you own, and how often do you grab the same 20%?)

I’m not sure how many miles of roads are in the town where I live, but I bet I only drive on 20% or less of them, as I make daily trips.

On my smartphone, I have 48 different mobile apps pinned to the tiles, but 80% of the time I’m only using the eight on my home screen.

Despite a huge family & several friends, Whenever I socialize, 80% of my time is spent with the same 20% of my friends and family members.

An executive is faced with the constant challenge of limited resources. It’s not just your time you need to maximize, but your entire team’s.

Instead of trying to do the impossible, a Pareto approach is to truly understand which projects are most important. What are the most important goals of your organization, and which specific tasks do you need to focus on to align with those goals. You need to delegate or drop the rest.

The temptation always exists to try the new & exciting things. There’s nothing inherently wrong with that, but it boils down to your goals.

Are you trying to grow your current business?

Would an 80/20 mindset help you to stay focused on your strategic plan and spend less time chasing endless new opportunities?

No matter what your situation, it’s important to remember that there are only so many minutes in an hour, hours in a day, and days in a week.

Pareto can help you to see this is a good thing; otherwise, you’d be a slave to a never-ending list of things to do.

So, which 20% of your work drives 80% of your results, decide & focus on that 20% to achieve your goals & stay blessed forever.