Most of us work five days a week, but in four of those days—we’re only creating 20% of what we do in the week; there’s a single day buried in there when we create 80% of our output for that week. If you’ve studied business or economics, you should be well familiar with the power of the Pareto Principle, also known as the Pareto Principle. The Pareto principle is extremely helpful in bringing swift and easy clarity to complex situations and problems, especially when deciding where to focus effort and resources. Pareto's 80-20 theory applies particularly to time management at the workplace, in a business, organizational management events and certainly it helps with personal time management outside of work too.
It got its name from the individual that came up with the concept. Vilfredo Federico Damaso Pareto was born in Italy in 1848. He would go on to become an important philosopher and economist. It is not entirely certain how he came up with the principle, but the 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 could have been a coincidence, but he thought that the concept is really interesting so he decided to explore this further. Sadly Pareto didn't live to see the general appreciation and wide adoption of his principle; he seems to not have been particularly effective at explaining and promoting the theory beyond academic circles, and it was left to other experts such as George Zipf and Joseph Juran to develop and refine Pareto's theories to make them usable and popular in business and management later towards the middle of the 20th century.
Thus, he took more of a pragmatic approach and applied the rationale in different contexts to check its validity. He considered the notion of wealth and after in-depth research, he discovered that 80% of the land in Italy was owned by just 20% of the population. Furthermore, he looked into other industries and surprise, surprise: Pareto found that 80% of the production of many industries usually came from just 20% of the companies. Taking this into consideration he simply concluded the following golden rule: 80% of results will come from just 20% of the action. In other words, you can achieve more by doing less. How great is that!?
The notion quickly began to become popular (especially during recent times) and it was widely recognized as the Pareto principle or the 80/20 rule. While it can be argued that it’s not always an exact ratio of 80/20, this imbalance between the efforts put in and the results obtained can be observed in many examples. Here are some of them:
o 80% of outputs come from only 20% of the inputs.
o 80% of all consequences come from only 20% of causes.
o 80% of your results come from only 20% of your effort and time.
o 80% of your company’s profits come from only 20% of the products and customers.
o 20% of the sales reps generate 80% of total sales.
o 20% of customers account for 80% of total profits.
o 20% of the most reported software bugs cause 80% of software crashes.
o 20% of patients account for 80% of healthcare spending.
