The 80/20 concept states that the majority of results come from a small amount of activity. The aim of this is to utilise time on things that deliver more of the intended outcome. Economists, bankers and athletes have been using it for decades to maximise their output. The strange reality of the Pareto Principle is that it's not a new idea. In 1896 Italian economist Vilfredo Pareto, was the first to notice this phenomenon when he found that 20% of his garden pea-pods produced 80% of the peas.
As much as anything, the Pareto principle is a reflective exercise to get a better return on investment (ROI). The main investment here is time vs results. Minimise time spent on minimal output activity. Instead, maximise time spent on activity that produces the most results.
The idea that most of your activity is wasted is hard to digest. Yet, it is important to consider the following questions. Which 20% of actions contribute 80% of progress towards the end goal?
When exercising, there will always be that one exercise that will only take up 20% of time spent in the gym, but will also result in 80% of your results. Like a gruelling 20-minute deadlift session, over a full 2-hour workout using back machines.
There are other advantages to the Pareto principle. Instead of trying to manage 6 projects, you could focus on the top 3 that generate the most revenue. The time is then redistributed into thinking about ways to capitalise on already producing projects.
The Pareto Principle in practice:
A case study of a company that applied this to their business would be the Candy Kittens sweet company. Whilst they beat their target on Kickstarter, they realised they had too many stakeholders. This resulted in an equity nightmare (over 600 people owned a stake in the business). 6 of those 600 people represented the minority - yet had contributed well over a majority of the funding the business needed. Their solution was to use the 80/20 Pareto principle. They refunded the other 594 people and offered the extra equity to the majority investors. This saved Candy Kittens a whole lot of hassle dealing with the opinions of 600 investors whenever they wanted to make a decision.
This 80/20 rule applies to business, finances, work, health and anything that requires any form of result or outcome. It's worth identifying what 20% of an activity is resulting in 80% of the results.
What persuasive part of the argument will convince this person to see my view? Amplify it. The rest is background noise.
Here at Crowd we've used the Pareto Principle to scale into a global digital marketing agency with a network of clients all over the world. If you want help streamlining your businesses marketing then get in touch.
