The Pareto Principle
The Pareto Principle, founded by the Italian economist Vilfredo Pareto in 1895 is one of the most helpful concepts in leadership and management. It is also called the 80/20 rule. Pareto noticed that people in his society seemed to divide naturally into what he called the “vital few,” (the top 20% in terms of money and influence) and the “trivial many,” (the bottom 80%). He also applied this theory to all economic activity.
For example, this rule says that 20% of your activities will account for 80% of your results. 20% of your customers will account for 80% of your sales. 20% of your products or services will account for 80% of your profits. 20% of your tasks will account for 80% of the value of what you do, and so on.
This means that if you have a list of ten items to do, two of those items will turn out to be worth as much or more than the other eight items put together. Here is an interesting discovery. Each of these tasks may take the same amount of time to accomplish. But one or two of those tasks will contribute five or ten times the value as any of the others.
Often, one item on a list of ten things that you have to do can be worth more than all the other nine items put together. This task is invariably the one that you should do first. That’s what Pareto is trying to teach us. Apply this principle today.
