It was on an innocuous day in 1906 that Vilfredo Pareto, an Italian economist, sociologist and philosopher noticed something startling – that 80% of the peas produced in his garden came from 20% of the pea pods. He had also observed that 80% of the land in Italy was owned by 20% of the people. These observations by Pareto led management consultant Joseph M. Juran to name the phenomenon of ‘the law of the vital few’ as the Pareto Principle. Amazingly, the ratio tends to hold good in many cases and can be stated thus: 80% of the output or results come from 20% of the input or actions.
The Pareto Principle is a vital tool for improving efficiency and productivity and is used by sensible people in business today. For example, 80% of a company’s sales are likely to come from 20% of its customers. Obviously, any sensible sales person would pay special attention to the needs of those 20% of the customers. Or that 80% of a company’s sales are likely to come from 20% of its products. Again, a sensible CEO would invest resources on those 20% of the products rather than scatter scarce resources across a large range of products.
What is important to note is that, not just work, we can use the Pareto Principle in all aspects of our daily lives to concentrate on things that matter and actually improve the quality of our lives. Here’s how:
The 80:20 Rule in Food –There are different ways in which you can use this principle in your eating habits. For example, not every food that you eat gives you the nutrients that you require on a daily basis – you will discover that most of what you eat is junk, adding calories and not doing anything worthwhile to your health. Categorise the food that you eat and you will be surprised to see that you get almost 80% of your proteins, vitamins and other nutrients from only 20% of the food that you consume. Make your diet plan or even your daily meals on the basis of this. You can also use this principle by eating healthy food 80% of the time and indulging yourself on sweets and junk food 20% of the time. Surely, you will find yourself healthier as a result!
Following the Pareto Principle is likely to help you lose weight as well (now wouldn’t we want that)! That is because you will discover that the food you should be eating daily will comprise of lean white meat, fish, vegetables, fruits, whole cereals, olive oil, nuts and seeds, yogurt and other healthy foods.
The 80:20 Rule at Work – How many of you find that you are always inundated with work? That you just don’t have the time to breathe. Well, if you are one such person, you need to apply the 80:20 rule immediately! While all jobs consist of a number of activities, all of them have a ‘core’, the key, critical part that just needs to be done and done well. Identify your key tasks by prioritising all that you have to do. Ensure that you tackle the core tasks first, leaving the minor ones for your secretary or for the executives reporting into you. For example, if you are a sales manager, concentrate your attention on the 20% of the clients who contribute 80% of your sales. Leave the other clients to your juniors.
On a daily basis, work out your job list for the coming day. Then make it a point to prioritise the jobs, keeping the important ones right on the top. The next day, tackle the first job first before moving to the second one. If the jobs at the bottom can be delegated, delegate. Very soon you will find that you are accomplishing more in much lesser time. You will actually be able to surprise your wife by taking her out for a romantic mid-week dinner!
The 80:20 Rule and Time Management – This one is similar to the point above. Use 80% of your day in taking care of the big priorities that will help you in achieving the bigger goals in life. Time is not to be wasted on petty things that can always be farmed out to your secretary or juniors. Complete the major task first before going to the smaller ones. Keep this advice of Stephen Covey in mind – “Don’t prioritize your schedule, schedule your priorities.” Do keep an important point in mind – secretaries can play a crucial role in taking care of your less important stuff, allowing you to concentrate on the important. Many executives make the cardinal sin of keeping their secretaries underemployed.
It was Edward de Bono who had advised that effective managers concentrated on ‘important’ stuff, letting other people handle the ‘urgent.’ Learn the difference between the two and let go!
The 80:20 Rule in Dealing with Customers – If you are running a small business prioritise and categorise customers. There are some customers who only make noise and do not contribute significantly to your business. Set up some rules for them and stop wasting your time in placating them. Rather, spend time on strengthening your relationship with customers who are actually beneficial to your business.
The 80:20 Rule and Relationships – If you were to analyse your relationships, you will find the following:
* 80% of your frustrations in a relationship are caused by 20% of the problems. If this is so, identify the few, key problems that may be affecting your relationship with your wife, your love or your best friend. Take care of these on priority and you may find that your relationship is back on terra firma.
* You would prefer to spend 80% of your time with 20% of your friends. If it is a small number of friends who provide you with happiness and security, why are you going after all and sundry? I am not saying that you should break up with friends – just ensure that you are spending much more time with the ones who really matter.
The 80:20 Rule in Cleaning your House – Using the 80:20 rule will help you eliminate a lot of unwanted stuff in the house. If you go through your closet, you will find that you wear only 20% of your clothes 80% of the time. This realisation will help you throw out the junk that does nothing but take space in your closet, in your room and in your house. Keep things that are important and that offer concrete benefits. De-cluttering your home will also allow you to make space for things that you were meaning to buy but just couldn’t because of constraint of space. Eliminating clutter will actually make you feel good and give you a sense of accomplishment and achievement. And your home will surely be more welcoming, to you and to your guests.
The 80:20 Rule for your Hard Drive and Desktop – I am sure there are many files you don’t need. There are some movies that you have seen once but won’t watch again. There is no reason why you should keep these in your hard drive. De-clutter at the earliest. Keep what’s important and delete the rest so that when you need to store something important, you will have ample amount of space; or, when searching for a file, you will not have to wade through the useless ones. The same goes for your desktop. Clear the cookies and files that you don’t need. Delete the short-cuts which are seldom used. Eliminate files which are too big and are not required but are slowing your computer down.
The 80:20 Rule for the Hosuehold Budget – List down all your monthly expenses. Now segregate them by importance and utility. You will find that you are able to save money on things that are not important and which you buy out of habit. You will soon see that you have more money to save or to spend on things that will give you more pleasure and satisfaction!
A couple of months ago, I bought a guitar. It wasn’t in the budget, so we used money that would have otherwise have gone into our savings. To make up for this extra expenditure, we cut out on eating out and on superfluous entertainment. We acquired something that we wanted while drastically reducing on activities that were monetarily wasteful.
The 80:20 Rule for Habits – Habits, good or bad, take time to build and to let go. Make out a list of all the good things that you would like to do (like going for a morning walk) and all the bad stuff you would like to give up (like smoking). Aim to introduce the good activities and remove the bad ones. Rising early? Yes. Doing Yoga? Yes. Partying till late? No. Getting up late? No. Having junk? No. Smoking? No. Use the 80:20 rule to invest your time in good habits and in eliminating the bad ones. Maybe you can get into some new habits which will both enrich and improve your life.
The 80:20 Rule for Goals – There are big goals and there are small one, important ones and not so important ones! Having too many goals may prove to be counterproductive. Pick 5-6 key, annual goals, make out an action plan for each and make a sincere effort towards achieving them. Ignore the less important goals – either they will take care of themselves or they just won’t matter.
The Pareto Principle is an approximation – 80:20 is not cast in stone. What the principle really shows is that small efforts can make big differences. Identify the important from the unimportant and go after them with zeal. Doing that could actually change your life.