Thursday 13 December 2018

Principle of 80/20

Principle of 80 20

The principle of 80/20 (or "80 to 20") also known as the Pareto principle, is the result of the observation that almost a hundred years ago, conducted and published the Vilfredo Pareto. The Italian scholar pointed out that 80% of the wealth is in the hands of just 20% of the population. (Pareto did not invent "Pareto principle" or "rules of 80/20" noted only the aspect ratio)

Later it turned out that rule 80/20 applies not only in economics but in other areas of life. Generally, it can be formulated as follows: "80% of the results falls 20% effort".

Certainly you will find a lot of examples from my own life, that confirm the existence of this policy.

If you are a Manager in the Sales Department, then the principle of Pareto, you'll find listed in the sale, where 80% of all revenues will be generated by 20% of the products and customers.

If you are a company in the service industry, this is the principle of 80/20 will reflect a situation in which 20% of the services provided by your company generates 80% of the revenue.

Pareto principle is not always 80/20 proportions. Sometimes it will be 90/10, 75/25 or even 95/5. In different cases is different, but the most common is the ratio of 80 to 20. The message is: the less part of the inputs generates the greater part of the results.

4 steps to the implementation of the principle of 80/20

Create a criterion

If in your life you want to apply the policy 80/20 it without specific criteria will be difficult.

Let's say you approach to the subject very generally and want to find the 20% of working time, in which you achieve 80% of the results. Good luck ...

Instead of such a level of generality, specify the criteria to be met by "results". There is like happiness-everyone has their own and everyone defines it differently.

Split into smaller areas

When you specify the criteria, you will be able to extract more detailed areas, where you look for rules 80/20.

For further consideration, assume that you have chosen to focus on activities that generate profit and eliminating time wasters.

Look for repetitive tasks

You already have the area associated with the generation of profits. Now look for all the actions that directly or indirectly generate profit, these repetitive.

There will be telephone calls, client meetings, team meetings, editing documents, create products, etc.

Analyze these activities taking into account the principle 80/20 consider that the telephone calls to the greatest extent contributed to generate a profit. Who is leading these conversations? On what topic? What was the characteristic?

Similarly, you can do this in the case of meetings and in the process create a product or service.

Eliminate time wasters need to begin from the define them (implicitly are already steps repeatable). If for example. every day you spend a few tens of minutes to decide about what you dress today, consider that the clothes you wear most often. What you have? Is it about their color, can that make up several different sets and may be comfortable?

Use the principle of 80/20

Based on the above observations, you can extract is 20% of the meetings, discussions, projects, or in the case of the daily dilemma of dressing room – 20% of the clothes.

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