# Pareto Principle

## The 80/20 Rule: A minority of input produces the majority of results

In 1906, Italian economist and avid gardener Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country. He observed that 20 percent of the people owned 80 percent of the wealth. While gardening, he later observed that 20 percent of the peapods in his garden yielded 80 percent of the peas that were harvested.

## Where It Came From

After Pareto made his observation and created his formula, many others observed similar phenomena in their own areas of expertise. Quality Management pioneer, Dr. Joseph Juran, working in the United States in the 1930s and 1940s recognized a universal principle he called the "vital few and trivial many" and reduced it to writing in his Quality Control Handbook. In an early work, a lack of precision on Juran's part made it appear that he was applying Pareto's observations about economics to a broader body of work. The name Pareto's Principal stuck, probably because it sounded better than Juran's Principle. As a result, Dr. Juran's observation of the "vital few and trivial many", the principle that 20 percent of something always are responsible for 80 percent of the results, became known as Pareto's Principle or the 80/20 Rule.

## What It Means

The 80/20 Rule means that in anything, a few (20 percent) are vital and many (80 percent) are trivial. In Pareto's case, it meant 20 percent of the people owned 80 percent of the wealth. In Juran's initial work, he identified 20 percent of the defects causing 80 percent of the problems. Project Managers know that 20 percent of the work (the first 10 percent and the last 10 percent) consume 80 percent of your time and resources. You can apply the 80/20 Rule to almost anything, from the science of management to the physical world.

For example, in the business world:

80 percent of decisions come from 20 percent of meeting time 80 percent of a manager's interruptions come from the same 20 percent of people 20 percent of a sales force will develop 80 percent of the annual results

For example, in the martial arts world:

80 percent of competition trophies are won by the same 20 percent of competitors 80 percent of your school problems involve 20 percent of your students 80 percent of the work that get done in your school is done by 20 percent of the staff.

Of the things you do during your day, only 20 percent really matters. That 20 percent produces 80 percent of your results, so identify and focus on those things in the 20 percent group. When tasks begin to pile up, remind yourself of the 20 percent you need to focus on. If something is not going to get done, make sure it is not part of that 20 percent.

You focus on the 80 percent if the following statements ring true:

• You are working on tasks other people want you to, but you have no investment in them.
• You are frequently working on tasks labeled "urgent."
• You are spending time on tasks you are not usually good at doing.
• Activities are taking a lot longer than you expected.
• You find yourself complaining all the time.

You focus on the 20 percent if the following statements ring true:

• You are engaged in activities that advance your overall purpose in life (assuming you know what that is). You are doing things you have always wanted to do or that make you feel good about yourself.
• You are working on tasks you do not like, but you are doing them knowing they relate to the bigger picture.You are hiring people to do the tasks you are not good at or do not like doing.
• You are smiling.

You have to be careful in how you apply the Pareto Principle. One management theory, Superstar Management, claims that since 20 percent of your people produce 80 percent of your results you should focus your limited time on managing only that 20 percent, the superstars. However, you should spend 80 percent of your time doing what is really important. Helping the good become better is a better use of your time than helping the great become terrific.

When it comes to managing your time, there are four types of tasks:

• Those that require low competence and add low value.
• Those that require low competence and add high value.
• Those that require high competence and add low value.
• Those that require high competence and add high value (these tasks are where you should spend 80 percent of your time).

How does one identify ones areas of high competence and high value? Very often, by identifying which areas of the life we enjoy. Many successful people are those who have identified what they enjoy doing and spent most of their time doing just those things. When we enjoy doing something, we are also open to learning more about it; when we learn more as well as enjoy the activity, our performance improves. So to be successful, identify what you enjoy doing, find a way to incorporate it into your job, and then invest more and more time in that activity or job.

In relationships, the 80/20 rule also applies. 20 per cent of the people we deal with cause 80 per cent of our problems and 20 per cent of the people we deal with give us 80 per cent of our satisfaction and happiness. That covers about 40 percent of the people we deal with regularly. The remaining 60 percent do not affect us much in one way or the other. Once you have identified the 20 percent of problem causers and the 20 percent satisfaction givers, you may now deal with them on a case-by-case basis. Do something to move persons in the problem-causing group into the neutral 60 percent group, and spend more quality time with the satisfaction givers? In both cases, focus on what you can do, not on what they should do.

With regard to time, in many successful lives, the most productive work often occurs in only 20 percent of their time. Look at any successful project and you will find that the maximum effort and productivity occurs in the last 20 percent of the project. Therefore, if you can slash a project's time by half, you have doubled your productivity.