Post vacation followed by sickness, I was sighing over a huge pile of clothes staring at me, waiting to be pressed. While the iron was getting up, I made a quick sort through the pile. Most of them were T-Shirts that could be easily pressed with little effort. So I decided to clear that pile first when my daughter asked me, “Mama, du machst es immer so. Du sortierst immer die T Shirts aus und bügelst die zuerst. Wieso?” which means she wanted to know why I always sort out the T Shirts first and iron them. That’s when it dawned upon me. She was right. Unconsciously that was exactly what I had been doing all along. But now the difference was that I knew why I was doing it so and will continue to do so thanks to an italian economist, called Vilfredo Pareto, the man behind the “Pareto Principle”. He first made an observation in 1906 that 80% of the land in Italy was owned by 20% of its population. This is famously known as Pareto efficiency which was then later extended to the Pareto Principle in the 1940s by the mathematician Dr. Joseph Juran.
The Pareto principle states that for many outcomes, roughly 80% of output come from 20% of input or vice-versa. I recently finished reading a book based entirely on this principle. The book by Richard Koch, “The 80/20 Principle” walks us through the backround of the principle and potrays a beautiful picture of how it was applied in the past across different walks of life.
There are numerous examples that you can observe around your life to see how Pareto applies, like my ironing example from above. There are a few more observations that I have made after reading the book. For example, the other day, I was swapping winter and summer clothes and realized only 20% of the clothes were being worn by us 80% of the time. I can see many heads nodding with me on this one. In business, 20% of the portfolio usually contributes to 80% of the revenue.
Like the author correctly clarifies, 80/20 is just used to explain the imbalance between input (effort) and output (outcome) and should not be taken literally. 80/20 could be 99/1 as well, 70/30 as well, depending upon the situation and its sample size.
Coming back to my observations, how many of you have noticed that 20% of your financial portfolio yields 80% of the results most of the times? Are you also one of those people who would not like to change your hair dresser? If yes, you might know that 80% of a shop’s customer wait for 20% of its hair dressers most of the times? Project managers reading this might resonate with me on the fact that 80% of the delay in the projects is caused by 20% of the factors. Well, it isn’t always planning fallacy.
Having made those observations with the help of the perspective that I got from the book, I decided to prioritize my life and work a bit more. In my life, I stopped doing somethings that I was constantly repeating in the erstwhile. I stopped doing things I was forced to do by others, tried to identified things that mattered the most to me and channelized my energy there. I often said yes to obligations which I don’t do anymore. I don’t spend up every weekend socializing but ensure that I spend quality time when I am out with my friends. At work, I spend the first ten minutes reviewing my To-Do for the day, irrespective of urgent emails awaiting my action. This clears up my head and helps me focus and when I close the laptop that day, I close it with a broad smile and a sense of accomplishment.
This apart, there are several techniques that the author puts forth in the book that relates to building your financial wealth, emotional relationships and so on. To the fag end of the book, the author shares about his views on how 80/20 applies to the trends of the future. He quotes for example, how 80% of the electric vehicle market is towards 20% of the participants, and you and I both know what the author means here. He also ideates on how we could be a contributor of 80/20 to the future that awaits us.
Read the book, its worth your time and start 80/20 thinking to achieve more with less!
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