In the early 1900s, Italian economist and philosopher Vilfredo Pareto noted that 80 percent of the land in Italy was owned by 20 percent of the population. With his curiosity piqued, he started looking around and noticed that 80 percent of his peas came from 20 percent of the peapods in his garden. The more he researched, the more central and universal this core 80/20 connection appeared to be. The Pareto Principle (also known as the 80/20 rule), was named after him and today is used across disciplines including economics, science, mathematics, sociology, business and more.
So, it turns out that Pareto was one smart cookie and his 80/20 rule has vast applications. So, how do we take this little gem and use it in our professional and personal lives? Here are three tips to use Signore Pareto’s Principle to make your life easier.
1. Know Your 80…and Your 20
In business, it’s important to know who your customers are, where they’re from, and what they need from you. Take a deep dive into customer profiles to get a clear idea of what your most successful and profitable customers and projects have in common. What is the 20 percent of your business that is driving 80 percent of your bottom line? And what is the 20 percent of your client base that sucks up 80 percent of your time and is just driving you nuts? Letting data and facts drive decision-making was central to Pareto’s economic philosophy, and it works to help understand where your business should, and shouldn’t, focus its efforts. Of course, the same is true in our personal lives. What drives the most value for you and your family? What takes a lot of time, but doesn’t have the same “bang for the buck?” Know your 80 and your 20 to start making decisions and weighing alternatives.
In our strategic facilitation process, Chartwell Agency helps clients to identify the unique organizational qualities and results that really drive the business – their most valuable 20 percent. Sometimes that outside perspective helps cut through the clutter and provide clarity around what makes their business/product/service really shine, which is an important first step to strategy.
2. Focus Your Attention where it Matters Most
Once you know your 80 and your 20, you can use that information to shape a strategy that really drives value. In your professional life, are you investing a ton of time on a project or activity that, at the end of the day, just isn’t all that valuable? Is there something else that has more potential for growth based on your 80/20 analysis? If so, cut out the fat and focus your attention where it matters most.
In our personal lives, we have to be equally disciplined. As an example, we love family dinners and feel that the time we spend around the table enjoying a meal and sharing our day is super-valuable, but the time and energy dedicated to meal planning, grocery shopping and cooking sucks up more than its fair-share of our energy and mental bandwidth. To focus our attention where it matters most, we use a meal-delivery service and don’t sweat eating out upon occasion. We enjoy dinners together without always fretting over nightly home-cooked meals.
3. Be Willing to Say “No”
This is where Pareto’s Principle meets the Law of Diminishing Returns (my almost-Minor in Economics is really paying off). If we can see big benefit from just 20 percent of our efforts, we may have to be willing and able to walk away from opportunities or tasks not in our sweet spot – those that will suck up a lot of time and resources without delivering equitable results. This also applies to the constant quest for perfection. When we stop killing ourselves over the stuff that, quite frankly, doesn’t really matter, we focus our mind, energy and outcomes on the stuff that really does. It’s about working less and getting more out of it – something Pareto would certainly applaud.
Emily Hartzog, Vice President