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The Pareto Principle

 

PARETO - the 80/20 rule - the principle of imbalance.

The Pareto Principle is known by many names and seems to be an almost intrinsic law of nature. Amongst its other names two in particular pinpoint what it is about: the law of imbalance and the 80/20 rule. The principle can be expressed in many ways and is applicable, some would say, almost universally in whatever field of human endeavour you work.

In time management terms it suggests that, unless we actually try to do something about it then, for most us for most of the time around 80% of what we achieve comes from just 20% of what we do. In other words, there is a huge imbalance between effort and results.

It's like saying that in the equivalent of just one day we achieve the bulk of what we do that is worth doing in the whole week. Our contribution in the other four days merely adds up to a small fraction of what matters. It's an appalling statistic but, generally, it has far more than just a core of truth behind it.

However, if you learn from it - this natural imbalance - and start to apply standard time management ideas then you can blow the 80/20 rule apart. You can, indeed you should, spend far more than 20% of your time and effort on what matters. You will then achieve far more than what you have been used to; not a little bit more, but far more. From 80/20 you can move to something like 160/50 or even better.

In practice, if you are being reasonably successful at work you are probably already instinctively beating the Pareto rule. But, with some application and thought, you can probably improve much, much more.

So who was Pareto and what did he discover that has caused so much fuss and is worth attaching the word 'principle' to?

In the 19th century, Vilfredo Pareto, an Italian, studied the distribution of wealth in England and found that, not all that surprisingly, a few families owned a disproportionate amount of the wealth of the country. There was an imbalance. Specifically, he discovered that about 20% of families owned about 80% of the wealth, 10% owned roughly 64% of it (80% of 80%) and 5% owned roughly 50% (80% of 64%). A very unequal distribution!

He even found that this appeared to be universal, in whatever country or age he looked. The 80/20 rule was born - although, apparently, Pareto himself did not express it so succinctly (1) - and it seems to be endemic.

Examples often quoted include:
  • about 80% of the wear in your carpets at home is in roughly 20% of the floor area (the doorways and corridors);
  • 80% of crime is committed by about 20% of criminals;
  • 80% of personnel problems in companies are caused by about 20% of staff.

Often it is more extreme than 80/20.

  • In a football match the action that matters (scoring or conceding goals) occurs in a tiny fraction of the game. When a match goes to a penalty shoot out after extra time the outcome is decided by just 10 kicks taken in a few minutes of melodrama after a game in which the ball has been booted around for 120 minutes. (The 10/120 rule on time; 10/5000 on kicks?)
  • In a light bulb only a few percent of the electricity used is converted into light, the rest is wasted as heat (95/5 rule?). Think what could be achieved if you could double that efficiency - half of the electricity would be saved and atmospheric warming reduced.
  • What small percentage of pop records do you think earn most of the money in the pop industry?
  • Publishers say that only a handful of books provide the profits that subsidise the others.

We could go on, but instead of piling up more examples, let's turn to using the rule to help us to get better use of our limited time. Once you accept that the productivity of your time is unbalanced you are part way to doing something about it.

As usual in time management, we come back to priorities. Every moment you spend working on some task that in reality has a low importance, whilst higher importance tasks are waiting, then you are reinforcing the 80/20 rule of shame. Whereas every time you drop a task of low importance to make way for something more important then you are smashing the 80/20 rule and making your way to higher productivity.

Of course, you are probably not aiming to achieve 100/100, where every single moment of your working day is fully accountable and totally productive. You are not a machine, you do need to interact with your colleagues and that includes a bit of chit-chat. If your organisation is to move forward, and most seem to want to, then some time must be spent speculating on 'what ifs'. That is good use of your time, even though most time spent speculating in this way will lead nowhere (80/20). But some will...

Simply be aware of the reality of the 80/20 rule. If you use it sensibly, not blindly, to help you to judge priorities and to judge if you are using your time as well as you might, then you will find it helps you to make a difference and helps you to improve your productivity. And that is no bad thing.

To read more about the Pareto Principle take a look at 'The 80/20 Principle,' by Richard Koch; published by Nicholas Brealey, London, 1997, 1998.

 

 

About the author:
Tony Atherton is a freelance trainer and writer with over 25 years' experience. He runs in-company courses in Business Report Writing, Technical Report Writing and Taking and Writing Minutes. For course details click home.

 

Enquiries: E-mail direct to Tony Atherton or call 07976-390960

Based in Hampshire, England

Last updated 24 July 2014