80/20 Rule – Do you follow?

“Most of us spend too much time on what is urgent and not enough time on what is important” – Stephen Covey, the author of “The 7 Habits of Highly Effective People”.

More than a century ago, in 1906, a now well-known Italian economist Vilfredo Pareto created a mathematical formula describing the unequal distribution of wealth in Italy. Pareto observed that twenty per cent of the people owned eighty per cent of the wealth in his country.

In the late 1940s, Dr. Joseph M. Juran attributed, albeit inaccurately, the 80/20 Rule to Pareto, calling it Pareto’s Principle. While it may be misnamed, Pareto’s Principle can be a very effective tool to help businesses manage themselves effectively.

In business, the value of the Pareto Principle means to focus on the 20 per cent of clients that which bring in 80 per cent of revenue.  Therefore, out of all the things done during the day, only 20 per cent really matter. Those 20 per cent produce 80 per cent of your results and your revenue. 

Despite the popularity of the rule, few people seem to understand it. The main misconceptions are as follows.

1) 80 + 20 = 100

Often a pie chart is drawn, where a large portion is labelled 20% and the rest is labelled 80%. While most of us can use our basic math skills to add it up to 100%, this type of calculation undermines what the rule is about.

The 80/20 rule argues that 20% of the input creates 80% of the output. Inputs and outputs aren’t the same thing, and therefore can’t be made into the same pie chart. Thus, do not get caught up on the numbers, but understand the conceptual value of this theory.

2) Literal Application

It is often argued that if you keep applying the 80/20 rule, eliminating the wasteful 80%, eventually you will end up with nothing. This is once again a literal mathematical interpretation of the rule.

The concept is not about the numbers.  It is about utilising your time efficiently and effectively, as you cannot perform every task possible. The 80/20 rule suggests you prioritise those tasks which create the most results and focus on them first. Whatever time you have left after, can be spent on the less productive 80%.

3) All tasks still need to be done

Most people would argue that although some tasks are less valuable than others, the other tasks will still need to be done.  Whilst a valid argument, it conceals the truth of you having no control in adjusting where the time gets spent. You can reduce time expended on non-important emails or reduce your time contribution to meetings which do not create the results. Prioritising becomes the key!

Some suggested uses of 80/20 Rule

  1. Look at your business (and your life in general) and find where there is the imbalance of input and outcome.
  2. Identify the areas / people / clients / connections which create the most results. It may not necessarily equate to 20 per cent.
  3. Prioritise the ones achieving results and allow them more.  These areas / people / clients / connections should be placed first on your daily list of things to do.
  4. Find how to deal with the rest of your workload / people / connections that do not achieve the same outcome.
  5. Re-assess your priority list on a constant basis – weekly / monthly / quarterly.

The 80/20 Rule should serve as a daily reminder to focus 80 per cent of your time and energy on the 20 per cent of you work that is really important. As Stephen Covey said: “You have to decide what your highest priorities are and have the courage—pleasantly, smilingly, nonapologetically, to say “no” to other things. And the way you do that is by having a bigger “yes” burning inside. The enemy of the “best” is often the “good”.”


About Jane Garber-Rosenzweig

I am a mother, a senior franchising and commercial lawyer, a writer and a social media enthusiast. I live a very busy lifestyle but believe that you need to take time to ‘stop and smell the roses’. I also believe in taking educated risks and celebrating all achievements in life, regardless of how big or small they are. I am a lateral thinker and an optimist. My goal in life is to ensure the saying “we make our own destiny” becomes a reality.
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