What is the 80/20 Rule and could it actually make 80% of your work disappear?
If you’ve studied business or economics, you’re well familiar with the power of the Pareto Principle.
The Man Behind The Concept
Vilfredo Federico Damaso Pareto was born in Italy in 1848. He would go on to become an important philosopher and economist. Legend has it that one day he noticed that 20% of the pea plants in his garden generated 80% of the healthy pea pods. This observation caused him to think about uneven distribution. He thought about wealth and discovered that 80% of the land in Italy was owned by just 20% of the population. He investigated different
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industries and found that 80% of production typically came from just 20% of the companies. The generalization became: 80% of results will come from just 20% of the action.
Pareto’s 80/20 Rule
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.
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• 20% of the most reported software bugs cause 80% of software crashes.
• 20% of patients account for 80% of healthcare spending (and 5% of patients account for a full 50% of all expenditures!)
On a more personal note, you might be able to relate to my unintentional 80/20 habits.
I own at least five amazing suits, but 80% of the time or more I grab my black, well-tailored, single-breasted Armani with a powder blue shirt. (Ladies, how many shoes do you own, and how often do you grab the same 20%?)
I have 15 rooms in my house, but I spend about 80% of my time in just my bedroom, family room, and office (exactly 20%).
