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The Ultimate Guide to the Pareto Principle / The 80-20 Rule


What is the Pareto Principle / The 80-20 Rule ?

Named after the Italian philosopher Vilfredo Pareto, the Pareto Principle (otherwise known as the 80-20 rule) is a concept which states that certain actions contribute more to your results than others.

He originally developed this idea when he noticed that 80% of Italy's wealth in the 1800's was controlled by only 20% of the population. 

Pareto then started to notice that this trend crossed over into all facets of life, he found that around 80% of the effects in the majority of situations come from only 20% of the causes. 

The principle has now become an incredibly productivity strategy, as it allows you to gain insight into what actions are responsible for most of your results. From there you can double down on the most effective actions and try to eliminate or outsource some of the actions you are taking which are not resulting in a sufficient return on investment. 

Woman using the Pareto Principle

How the 80-20 Rule grew in Popularity

The 80-20 Rule has rose to become one of the most popular productivity strategies due to how incredibly effective it is, especially in business management. 

Many Businesses have found the following:

  • 80 percent of their sales revenue are made by 20% of their customers
  • 80 percent of their employee's are responsible for only 20% of their sales
  • 20% of their costs are responsible for 80% of their expenditure
  • 20% of their products are responsible for 80% of their sales revenue 

Due to how incredibly accurate it is in the majority of situations, business owners have been able to eliminate or reduce 80% of their efforts which only result in 20% of their results whilst focusing upon the 20% of their efforts which result in 80% of their results.

How to Utilise the 80/20 Rule in your Daily Life

Step one - Analysing your Daily Actions

Identify which actions are responsible for the majority of your desired results.

I.e. the 20% of your efforts which lead to 80% of your results. This can be incredibly hard to do; therefore, we recommend you take your time and try to examine your actions and results in as much detail as you can.

Analyse your tasks for the Pareto Principle

For example, you may find that only 20% of the work you do on a daily basis contributes to 80% of your desired results.

A great way to analyse your daily efforts is through logging your daily actions and then at the end of the day, examining which actions are responsible for you progressing towards your desired results. 

Step Two - Eliminate/Outsource the Majority

Next, you should try to eliminate the majority of your efforts which are not providing you with a great return on investment. 

For example, if only 20% of the work you do inside the gym is responsible for 80% of your desired improvements, you can eliminate the unnecessary 80% to both save time and reduce your energy spent.

Step Three - Focus your Energy on the Minority

Now that you've identified which of your actions are providing you with the greatest return on investment and you've created free time for yourself by eliminating the tasks that are not providing a great contribution to your desired goals, you can focus your energy on the tasks that do provide you with a great return on investment. 

By focusing your energy upon the 20% of your tasks which result in 80% of your results, don't be surprised to find yourself achieving more than you've ever thought you could. 

Examples of the 80/20 Rule in your Daily Life:

Not only can the 80-20 rule be utilised in business situations, it can also help you to become more productive and reduce unnecessary work in your daily life.

Here are some examples of how the 80-20 rule plays out in your daily life:

  • 20% of your actions are responsible for 80% of your happiness
  • 20% of your gym exercises are responsible for 80% of the gains you make
  • 20% of the books you read are responsible for 80% of your knowledge gains
  • 20% of your clothes are worn 80% of the time
  • 20% of the people in your life are responsible for 80% of your emotional fulfilment
  • 20% of your income sources may result in 80% of your total income

The 80-20 rule can be applied in the gym too

The Benefits of Using the Pareto Principle / the 80-20 Rule

  • Free Time - You can create an incredible amount of free time in your daily life by outsourcing or eliminating the majority of your actions which do not contribute to your desired results
  • Get More Done - By focusing your energy on the tasks which contribute the most, you can speed up the progress towards achieving your goals
  • Gain more Awareness on your Actions - By being aware of the fact that there is different levels of impact of different tasks, you ensure that you know the levels of return on investment 

Remember 80/20 is just a Guideline

Whilst he did use 80/20 as a guideline, it's important to note that these numbers are indeed just guidelines. The Pareto Principle can play out in many different shapes and forms. 

For example, maybe 90% of your employee's are only responsible for around 20% of your profits.

Or maybe, 90% of the gains you have made in the gym are the result of only 30% of your exercises. 

The point is the Pareto Principle does not advocate one set number; the concept revolves around not all actions contributing evenly to your desired results. 

It's important to bear this in mind when utilising the Pareto Principle in your daily life so you don't fall victim to wrongly applying this concept.

Conclusion

Even if you attempt to only implement the 80-20 rule / the Pareto Principle in one area of your life, you should expect to see a great return on investment by ensuring your daily actions are as efficient as possible. However, if you're able to implement this principle in all areas of life, there's no stopping you in your pursuit of great productivity. 

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