When people apply this rule- it can be life changing! The 80 20 rule, is also known as the Pareto Principle; first discovered by the Italian economist-Vilfredo Pareto. This is a concept that states approximately 80% of outcomes or results come from only 20% of the causes or inputs. It’s a fundamental concept in understanding efficiency and productivity.
In 1906, Vilfredo Pareto observed that 80% of the land in Italy was owned by 20% of the population. Over time, this principle has been applied in different fields to illustrate the imbalance between effort and results.
To help answer this question further- What is the 80 20 rule about?, it helps to look at specific examples.
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Applications of the 80 20 Rule:
- Business: Often, 80% of a company’s revenue comes from 20% of its customers. When a business can identify these customers, they can give more time and attention to the top 20%. This can also be reversed. 80% of issues come from 20% of it’s customers. If there is a customer that is not in the top revenue category- and is included in 80% of the issues, then it could make sense for a business to let this customer go.
- Productivity: 80% of your productivity comes from 20% of your time or tasks. People can be busy…., but not productive. You want to identify your top 20% of tasks that are most crucial to your goals.
- Sales: 80% of sales typically come from 20% of the products or services. So, let’s say a company has 10 products and 2 of them are the top sellers, it may make more sense for the company to focus mainly on those products.
- Health and Fitness: In dieting or exercise, 80% of the results might come from 20% of the most effective habits or workouts.
- Software Development: 80% of software bugs are often caused by 20% of the issues.
So, now you know what the 80 20 rule is about. Use this principle as a guideline to help you focus on the most important tasks, customers, or resources that drive the majority of success. If you take the time to analyze every aspect of your life- personal and professional for the top 20%, you could see huge shifts in how much you accomplish and your overall well being!