Feb 22 2013

80/20 Rule of the Vital Few

Imagine your overall effectiveness if you reduced your tasks to 20% of your normal work load. Choose the right 20%, your productivity and effectiveness could actually increase!

image01

Vilfredo Pareto, 1843-1923

It’s called the 80/20 Rule.

In 1906, Italian economist and sociologist, composed mathematical formula describing Switzerland’s dis-proportioned income distribution. Pareto observed 20 of the population held 80 percent of the nation’s wealth. Further studies of other countries, in other time periods, produced the dramatic result following the same pattern

—80% to 20%.

80/20 distributions are just as common in industry and economic as nature. Pareto’s Principle,” the “80/20 Rule,” and the “Vital Few and Trivial Many Rule” is to economy as Dynergy is to nature. In business, 20% of an organization’s efforts can generate the “trivial many,” 80% of the results. The manager’s challenge is to be mindful of 80/20 when distinguishing the “vital few” from the “trivial many.”

• Managers know 20 percent of the work (the first 10 and last 10 percent) consumes 80 percent of time and resources.
• 20% of service generates 80% of the complaints.
• Only 20% of a meeting produces 80% of its value.
• 20% of your products, projects or customers will generate 80% of your profitability.
• 20% of employees create 80% of the headaches.
• 20% of the customers generate 80% of the revenues, and 20% yield 80% of the profits however, these two groups are not necessarily the same 20%.

The 80/20 Rule increases effective and efficient use of resources. Accurate assessment of the necessary input for desired output brings the vital 20% into focus.

Pareto’s Principle, focus 80 percent of our time and energy on truly important 20 percent of your work. Don’t just “work smart.” Identify, and focus your resources on, the “vital few.”

80/20 Rule Examples
from Arthur W. Hafner, of the University of Arizona

• 80% of a manager’s interruptions come from the same 20% of the people.
• 80% of poker stakes will be won by 20% of the players.
• 80% of horse races are won by just 20% of the jockeys.
• 80% of a business’s profits come from 20% of its clients.
• 80% of a problem can be solved by identifying and correcting the right 20% of the issues.
• 80% of advertising results come from 20% of your campaign.
• 80% of an equipment budget comes from 20% of the items.
• 80% of an instructor’s time is taken up by 20% of the students.
• 80% of network traffic stays within the lane while 20% needs to cross the backbone.
• 80% of personal telephone calls are to 20% of the people in our address book.
• 80% of shipments utilize 20% of your inventory.
• 80% of the outfits we wear come from 20% of the clothes in our closets.
• 80% of the traffic in town travels over 20% of the roads.
• 80% of what we produce is generated during 20% of our working hours.
• 80% of your annual sales come from 20% of your sales force.
• 80% of your future business comes from 20% of your customers.
• 80% of your growth comes from 20% of your products.
• 80% of your innovation comes from 20% of your employees or customers.
• 80% of your success comes from 20% of your efforts.
• 80% of your website traffic comes from 20% of your pages

No responses yet

Trackback URI | Comments RSS

Leave a Reply