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The 80/20 principle, also known as the Pareto Principle was first observed by an Italian economist, Vilfredo Pareto. It states that about 80% of the results come from only 20% of the causes. This principle can help you boost your life and business, increase your productivity by focusing on priorities and the most important things.
This principle observed my V. Pareto states explains that not all tasks you come across are of equal importance. Not all inputs produce an equal amount of output.
The Pareto Principle was also published into a book with the name 80/20 Principle and is the most popular book written by Richard Koch that shares the way of using the Pareto Principle in life and business. Here are 3 great lessons to help you start off with this powerful principle:1. People expect life to be fair and balanced, but it’s not.
2. The most important aspect any business can optimize is their product range.
3. You don’t need exact numbers to use the 80/20 principle.
Lesson 1: People expect life to be fair and balanced, but it’s not.
You might understand it with the title that 80% of the effects come from only 20% of the causes. Not all things equally contribute in life or business. Assume a team of five. You mostly find only the leader of the team doing all the work. So, 1 out of 5 is 20%. You may have tens of friends, but only 20% of them may account to your happiness.
80% of the land is owned by 20% of the people, 80% of business happens due to 20% of the customers and there are many such examples like that. Imbalance is the natural state of life. You can relate the 80/20 principle to any and every aspect of your life and business and it really works.
Life works the same way, so stop blaming external factors and get started on creating those advantages so you’ll end up on the brighter side of the Imbalance. All you have to do is to focus all your energy and time onto the 20% which give you the 80% results.
Lesson 2: The most important aspect any business can optimize is their product range.
You may have noticed that for some companies, as little as the top 3 products end up making over 50% of the revenue and profits. You can drastically grow your business by focusing on these 3 top-sellers, but never make any progress when you keep trying to sell the other 97 ones you have that don’t really get great sales.
Richard Koch explains this with the help of the story of Steve Jobs explaining how focus means saying no. When Steve Jobs returned to Apple in 1997, Apple had more than 300 products in its line-up. Steve Jobs reduced that number to about less than 10 products.
This insane focus allowed him to improve those already well-performing bestsellers and turn them into the best-performing profit makers. So the best thing you can look at, to start simplifying and simultaneously growing your business, is your product range.
Lesson 3: You don’t need to have exact numbers to get the most out of the 80/20 principle.
You can use this principle throughout your life, not only in business and the best part is that you do not need any numbers to start off with. Of course it’s impossible to pinpoint the 20% of your friends that give you 80% of the happiness, but Koch says your gut feeling provides a good insight.
Richard Koch explains this with the help of the story of Steve Jobs explaining how focus means saying no. When Steve Jobs returned to Apple in 1997, Apple had more than 300 products in its line-up. Steve Jobs reduced that number to about less than 10 products.
This insane focus allowed him to improve those already well-performing bestsellers and turn them into the best-performing profit makers. So the best thing you can look at, to start simplifying and simultaneously growing your business, is your product range.
Lesson 3: You don’t need to have exact numbers to get the most out of the 80/20 principle.
You can use this principle throughout your life, not only in business and the best part is that you do not need any numbers to start off with. Of course it’s impossible to pinpoint the 20% of your friends that give you 80% of the happiness, but Koch says your gut feeling provides a good insight.
You can develop this 80/20 thinking and use it to dramatically improve the quality of your life, by focusing on exactly that.This 80/20 thinking will always help you find quality over quantity.
Ask yourself these questions:
Whom do I really enjoy spending time with?
How much time am I spending with them?
Whom do I really enjoy spending time with?
How much time am I spending with them?
You’ll see that you don’t have to look so much. It’ll be easy to spend more time with who really matters to you, instead of trying to manage many of those relationships. Your friends are just one example, and you can use the 80/20 principle to multiply your happiness in lots of other aspects of your life.
Written By – Aditya Neelakantam
Edited By – Nidhi Verma
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