What is the 80/20 rule?

Written by Daily Fix - Published 09-Jul-2023, last updated 21-Jun-2024

The 80/20 rule, also known as the Pareto Principle, is a phenomenon that states that roughly 80% of outcomes come from 20% of causes. This means that a small number of factors (20%) have a disproportionately large impact on the overall outcome (80%). In other words, 80 per cent of your success is probably coming from 20 per cent of your activities and effort.

The 80/20 rule can be applied to a wide variety of situations, including:

• Business: 80% of a company's profits may come from 20% of its customers.
• Health: 80% of a person's health may be determined by 20% of their lifestyle choices.
• Productivity: 80% of a person's productivity may come from 20% of their tasks.

The 80/20 rule can be a powerful tool for identifying the most important factors that contribute to an outcome. By focusing on these key factors, you can make significant improvements to your results.

Who was Pareto?

Vilfredo Pareto (1848-1923) was an Italian polymath who noted that approximately 80% of Italy's land was owned by 20% of the population.

In 1941, the Romanian-born American engineer Joseph M. Juran came across the work of Pareto and Juran applied the observation that 80% of an issue is caused by 20% of the causes to quality issues.

Later, Juran preferred to describe this as "the vital few and the useful many" to highlight that the contribution of the remaining 80% should not be discarded entirely.

Tips for applying the 80/20 rule

Here are some tips for applying the 80/20 rule:

• Identify the key factors that contribute to your desired outcome. This may involve some experimentation and analysis.
• Focus your efforts on the most important factors. This may mean delegating or eliminating less important tasks.
• Measure your results and track your progress. This will help you to see the impact of your efforts.

The 80/20 rule is a simple but powerful concept that can help you to improve your results in a variety of areas. By applying this rule, you can focus your efforts on the most important factors and achieve significant improvements.

Examples of the 80/20 rule

Here are some examples of the 80/20 rule in action:

• In business, 80% of a company's profits may come from 20% of its customers. This means that the company should focus its marketing and sales efforts on these key customers.
• In computing, in 2002 the Microsoft CEO sent out an email in which he wrote "One really exciting thing we learned is how, among all these software bugs involved in the report, a relatively small proportion causes most of the errors," and went on to say "About 20 percent of the bugs causes 80 percent of all errors". [Source: CRN]
• In health, 80% of a person's health may be determined by 20% of their lifestyle choices. This means that the person should focus on making healthy choices in these key areas, such as eating a healthy diet, exercising regularly, and getting enough sleep.
• In productivity, 80% of a person's productivity may come from 20% of their tasks. This means that the person should focus on completing the most important tasks first.

Closing thoughts

The 80/20 rule is not a hard and fast rule, but it is a useful guideline for identifying the most important factors that contribute to an outcome. By applying this rule, you can make significant improvements to your results.

And now you know what the 80/20 rule is, you'll probably start noticing its patterns everywhere!