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Pareto's Principle - 80/20 rule

 

 

The 80/20 Principle asserts that a minority of causes, inputs or effort usually lead to a majority of the results, outputs or rewards. Taken literally, this means that, for example, 80 per cent of what you achieve in your job comes from 20 per cent of the time spent. Thus for all practical purposes, four fifths of the effort—a dominant part of it—is largely irrelevant. This is contrary to what people normally expect. So the 80/20 Principle states that there is an inbuilt imbalance between causes and results, inputs and outputs, and effort and reward. A good benchmark for this imbalance is provided by the 80/20 relationship: a typical pattern will show that 80 per cent of outputs result from 20 per cent of inputs; that 80 per cent of consequences flow from 20 per cent of causes; or that 80 per cent of results come from 20 per cent of effort. Figure 1 shows these typical patterns. In business, many examples of the 80/20 Principle have been validated. 20 per cent of products usually account for about 80 per cent of dollar sales value; so do 20 per cent of customers. 20 per cent of products or customers usually also account for about 80 per cent of an organisation’s profits. In society, 20 per cent of criminals account for 80 per cent of the value of all crime. 20 per cent of motorists cause 80 per cent of accidents. 20 per cent of those who marry comprise 80 per cent of the divorce statistics (those who consistently remarry and re-divorce distort the statistics and give a lopsidedly pessimistic impression of the extent of marital fidelity). 20 per cent of children attain 80 per cent of educational qualifications available. In the home, 20 per cent of your carpets are likely to get 80 per cent of the wear. 20 per cent of your clothes will be worn 80 per cent of the time. And if you have an intruder alarm, 80 per cent of the false alarms will be set off by 20 per cent of the possible causes. The internal combustion engine is a great tribute to the 80/20 Principle. 80 per cent of the energy is wasted in combustion and only 20 per cent gets to the wheels; this 20 per cent of the input generates 100 per cent of the output! Joseph Ford comments: ‘God plays dice with the universe. But they’re loaded dice. And the main objective is to find out by what rules they were loaded and how we can use them for our own ends.’

 

This is a principle I apply to all areas of my life (or my inner scorecard) in order to maximise gains with minimal effort. An example of this in the adjusting  of body composition (gaining lean body mass) would be that 80 per cent of my progress is due to 20 per cent of movements. By focusing on squat, bench press, deadlift, shoulder press, horizontal row and pull ups I hit all major muscle groups. Progressive overload of the weight ensures that all major muscle groups are increasing in size. This does not mean I do a full body workout every day, I tailor my week depending on my schedule and achieve good results over time without spending too much time in the Gym.

 

An example in professional life would be as follows; Imagine I used to work 50 gruelling hours a week. 20 per cent of my customers were 80 per cent of my revenue. The other 80 per cent were often difficult clients to deal with as they were either unhappy with the product and wanted a refund or they were aggressive and difficult to work with. This meant that I was focusing majority of my time pleasing difficult clients that bought in a small revenue. Therefore I decided to ignore these unhappy customers and let them decide for themselves if they want to continue business. (which most did). By eliminating a lot of time wasted with monotonous tasks of replying to bad buyers, I now have time to focus on valuable customers, improve the neglected areas of the business  which are responsible for majority of revenues. In addition, this both makes both business life and personal life more enjoyable.  Therefore I used the loaded dice to suit me. At the very least this principle allows you to gain useful insights and question conventional thinking. 

 

 

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