A young friend of mine was very livid the other day. I could sense his frustration as he spoke ruefully about how his boss handled the launch of a new software product that the team had developed. His grouse was that while it was he and other two colleagues who had worked on it day and night, the boss credited the whole department without taking the names of the actual three who’d worked on it. He being fresh in the industry, I had to clarify to him that such things happen all the time and that the boss was not wrong in crediting the department’s work rather than just the three of them.
Doesn’t this happen to all of us that while a few work hard, others just get to bask in the limelight? Well, that’s the 80/20 rule which is applicable at several such occasions.
Origins of the 80/20 Principle
First noted by Wilfredo Pareto who showed that 80% of the land in Italy was owned by 20% of the wealthy people, it soon came to be known as the 80/20 principle, the Pareto Rule (made popular by Joseph M. Juran) and many other names, it’s main premise being that the ratio of efforts to outcome or cause and effect is skewed most of the times. Pareto came up with this universal principle when he observed that 80% of the pods in his garden came from 20% of the pea plants. Intrigued by the uneven distribution, he decided to apply it to wealth creation and found similar trends elsewhere too. Ex. 80% of the profits come from 20% of the sales, or 80% of the taxes come from 20% of the taxpayers, 80% of the problems can be solved by dealing with 20% of the key issues and so on. The broader premise of this principle states that it may not necessarily be 80/20 all the time and could even be 90/10 or 70/30. The idea is just that the distribution is uneven.
Why is the ratio skewed?
The balance between input and output is skewed because though the facilities or resources are present, not all of them are put to use and hence don’t generate outcomes as much as the others. Ex. We use only a few apps on our mobiles, you order only a few dishes from the menu card every time you go to a restaurant or that only a handful of employees generate most of the profits for the company. It’s not that the other employees are idle or that you have ordered the other dishes and found them not worthy. It’s just that you haven’t used the other options as much as you ought to have and preferred to use the ones most productive.
Using the Pareto Principle
Understanding why and how we get the most outcomes from which tasks or preferences enables us to focus more on them and relegate the others to the back-burner. That is prioritizing at its concentrated best. Ex. If you head a company and realize that 20% of your team is producing 80% of the results, you would respond in one of the following ways
- Incentivize the 20% differently
- Assess the remaining 80% on a different scale and know how to bring them to perform better
- Bridging the gap between the two
Focus, prioritize, invest in and spend more time on those employees/ clients/ tasks that provide the highest output. Now you’d say, why have you kept the others in the first place and why don’t you just get rid of them if they’re not delivering the best? That’s because you can never have a team that uniformly delivers above average output. Imagine if you have to retain only those 20% of the employees who deliver the highest results. They will be overburdened for one, secondly, you need other employees to manage the balance 20% of the business too.
Another example would be in your personal life. If 80% of the arguments happen because of 20% of the reasons, wouldn’t you want to deal with those and eliminate the risk of stressed relationships? Note down all those tasks, clients, ideas that generate the maximum results for you on a day to day basis and focus more on working on them. Allocate more time to those than a uniform distribution of time/ resources for all. Match the input to the output. Simply put, it means that you ought to spend more (time-money-efforts) on things that give you the maximum output.
What about the poor performers
Have a rational and pragmatic assessment of the work that you do, the people who work for you and the clients you are dealing with. If you feel you’re allocating too much of your time-effort-money on the above while they deliver poor outcomes, be wise and practical in eliminating the others too. That is a wise decision to put the money where the mouth is.
How would you go about eliminating the unproductive?
- Make a list of the things you possess and use. Discard those that you don’t use
- Look at the apps on your mobile phone and delete those apps that occupy valuable space and are rarely used
- Take a deep look at how you spend your time. Mark the unnecessary ones and learn to say no to them if those tasks are not productive and in which time you can do something better instead.
By simply understanding what works and how, you will be better able to allocate your resources wisely. That goes on to imply that you don’t have to put in all the 100% hard work to achieve 100% of the results all the time. By using wise discretion, you can very well derive the most results in the least efforts and then use the remaining for few more productive tasks. This principle allows us to relook at life in a new way that focuses on first things first. It eliminates unwanted tasks and spending on aspects that are not fruitful. Now which ones are those that need focus and which ones need to be eliminated is for you to decide.
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