A guy named Vilfredo Pareto found an interesting distribution between wealth in the year 1906. There he said that 80% of the wealth is approximately distributed between 20% of the population. So some people are just a lot richer than others.
Cool, I know that’s nothing new I thought. However, what Pareto also did not know was that this principle not only applied to wealth distribution. Actually, one can find this principle almost everywhere!
When looking at some examples:
80% of the customer complaints are created by 20% of the customers
80% of a companies revenue is created by just 20% of the workers
80% of a blog's traffic is created by 20% of blog posts
So, in general, it talks about that 20% of your efforts result in 80% of your outcome. Now, we are getting to the useful part. How can you apply this for yourself and take knowingly advantage of this?
This is super helpful when you are working on a project on your own, as a creator or an entrepreneur, and you see that 80% of your results are created by 20% of your efforts. So the only logical solution would be that you try to focus even more on the 20% and try to increase the value of that. Another way would be that you try to outsource or eliminate the 80% of your efforts that do not drive such a high output.
Also, this can be used for to-do lists and goal setting as a lay person. I remember a great phrase from Tim Ferriss for productivity hacks. "If this task was the only thing I accomplished today, would I be satisfied with my day?" and "Will moving this forward make all the other to-do's unimportant or easier to knock off later?” Leaning on to the Pareto Principle. He suggests that you should only focus on the couple most important tasks rather than on 10 tasks a day because then you’ll probably never get anything done properly. This is something he describes more thoroughly in his book the 4-hour-workweek.
Pareto did not know what he found when he first encountered the 80/20 rule and certainly did not imagine this wide application of his rule.
I like this rule because it’s so simple, easy to understand and practical at the same time. Whenever a decision is ahead on what you want to spend your time when working on a project this little reflection about the 80/20 rule is extremely useful for creating to-dos and setting goals.
What do you think about the 80/20 rule and have you ever actively used it?