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Business // Thinking Smart
David S. Chang

Putting The 80/20 Rule To Work For You

In 1909, an Italian economist named Vilfredo Pareto observed in his garden that 20 percent of his pea pods contained 80 percent of the peas. As an economist, he also noticed that 80 percent of the land in Italy was owned by 20 percent of the population.

“Today, the 80/20 rule is a common rule of thumb, stating that 20 percent of people in an organization will do 80 percent of the work…”

In the 1940s Dr. Joseph Juran took it one step further with a universal principle that 80 percent of results come from 20 percent of the causes. Juran took Pareto’s observations and applied them to a broader perspective, hence the Pareto Principle, also known as the 80/20 rule, was born.

Today, the 80/20 rule is a common rule of thumb, stating that 20 percent of people in an organization will do 80 percent of the work, 20 percent of a product will account for 80 percent of sales, and 20 percent of projects will account for 80 percent of the profits. It also can be applied in opposite: 80 percent of problems are created by the 20 percent, and 80 percent of losses come from 20 percent of the projects. If you are in a management position, knowing that 20 percent of the people and 20 percent of products and services create 80 percent of sales and profits can help you focus on what matters and is more important. Many organizations use this rule to focus on being more productive, efficient, and to manage more effectively.

The 80/20 rule isn’t just for organizations; it is useful for all facets of life. In today’s society, we are all bombarded with things to do, people to see and places to go. The 80/20 rule states that of all the things that you do, only 20 percent really matter, so you should identify and focus on those things. This is an excellent way to pri-oritize your tasks.

One exercise is to list all of the things you have to do and prioritize them from most important to least important. If the rule holds true for you, 20 percent of the tasks will account for 80 percent of your productivity. If you are overwhelmed and some things need to be put aside, make sure it isn’t the 20 percent.

Another way to look at the rule is to spend 80 percent of your time on the important 20 percent, since most things in life are not distributed evenly. Whether it is work, family life or your social life, remind yourself that time is limited and you can’t do everything. Remember the rule is an observation, not a law of nature, so this may or may not apply. But using the 80/20 rule wisely can help you focus on what is truly important. Top quality requires all 100 percent, but if time is short, the 20 percent can be a huge time saver and the best bang for your buck.

It is important to work smart but even more important to work smart on the right things.

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