Pareto principle got its name from Italian economist Vilfredo Pareto, who stumbled upon the concept when observing that 20% of the peapods in his garden generated 80% of healthy peas. This observation caused him to think about uneven distribution.
He thought about wealth and discovered that 80% of the land in Italy was owned by just 20% of the population. Later he investigated different industries and found the same – 80% of production came from just 20% of the companies.
The 80/20 rule is one of the best concepts for life and time management.
It suggests that 80% of outcomes (outputs) will come from 20% of causes (inputs).
When I say uneven distribution, I want to say that each unit of time/work/etc. doesn’t contribute the same amount.
In a perfect world, every unit of X would contribute the same amount – every employee would contribute the same amount, every product would be equally loved by customers…
But life isn’t fair, so the uneven distribution and 80/20 rule exist. The common misconception is that the numbers 80 and 20 must add to 100, but this is not the case here.
For example, 20% of employees could generate 15% of the result. Or 25, or 50, 80, 99, even 100%.
The Rule 80/20 is only a rough guide about uneven distributions, but the numbers don’t have to be exactly 80 and 20 (it can be 70/30, 90/10, 99/1, and everything in between). As all things in life (effort, output, reward) are not distributed evenly – some contribute more than others.
I bet you can relate to some of the examples I’m going to provide from my personal life.
The 80/20 rule is a simple concept that can help you in everyday decisions. In business, you can achieve huge success by implementing it. In personal life, you can better manage your health, wealth, and life in general.
Use this mental model to be more effective and efficient at your job, to pursue new hobbies and ideas in your spare time, to be happier and less stressed in general. You can even connect the 80/20 rule and Parkinson’s Law to reduce the amount of time spent on trivialities.
In the next post, we’ll check out how to use the 80/20 rule to supercharge our productivity.
P.S.: This post is a part of a bigger one called The Best Productivity Systems in The World.
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