80/20 rule

World is unbalanced

This is a fact (and I would like to hear about your arguments if you think it isn’t true): The world is not fair, balance does not exist.
Indeed a minority of the world population own a majority of world wealth, a minority of your customers create a majority of your revenue and a majority of crashes are caused by a minority of bugs…

The Pareto Principle

This imbalance was first noticed by an Italian economist, Wilfrid Pareto, who observed that 80% of Italy wealth was owned by 20% of the population. This rule was then generalized and states that 80% of the output is created by 20% of the input.
This law known as 80/20 rule (or Pareto Principle) has applications in every area of life from economy to time management including relationships or money.

Why is so useful?

The most important about the 80/20 rule is not numbers but the fact that most of things are not distributed evenly. Knowing that you can focus on the minority that matters and minimize the majority that doesn’t have a big impact:

• 80% of your revenue come from 20% of your customers: Be sure to satisfy them in priority.
• 80% of your returns come from 20% of your time: Identify key inputs and keep focus on them to improve your output.
• 80% of your expenses become from 20% of your expense categories: Identify them to save money.
• …

I will explain in future posts how the Pareto principle helped me and how I’m living the 80/20 way.
The goal of this blog is to show you how the 80/20 rule may be useful, share tips and how apply this law to improve your life in any area.

Welcome on board and enjoy the trip.

photo credit: woodleywonderworks

© 2008 Unbalanced man.