The Pareto Principle first popped up on my radar while reading The 4-Hour Workweek by Timothy Ferriss a little over a year ago. At it's most simple The Pareto Principle simply states that 80% of outputs come from 20% of inputs. This has been found to be true across all manner of disciplines including time management, customers, and economics.
A few alternative ways to look at the principle include:
• 20% of your customers generate 80% of your income
• 20% of your customers create 80% of you problems
• 80% of your results come from 20% of your effort and time
It drives home the concept of prioritization. What you focus on matters immensely. If you are focusing all of your efforts on the wrong things you won't get the results your working so hard to achieve. You will run yourself ragged with nothing to show. Thankfully, you can learn and apply the 80/20 principle to your life and alter the outcomes you are working so hard to reach.
Pareto and the 80/20 principle will be of most help to you if you leverage them to assess your current efforts. Here are three ways you can apply it:
1. Take stock of current efforts. Write down everything you are doing and outcomes it is producing. Be unattached from the outcomes here, simply list out your activity and how it has impacted your work, life, etc.
2. Reprioritize what's producing. Perhaps you find that phone calls are driving your business and resulting huge returns for you, despite the fact that you make very few. In that case, pick up the phone and start making more calls. The key here is to determine your areas of strength and multiply them.
3. Eliminate waste. Consider cutting those things that are wasting your time and energy. It might be something you think would be generating results but its just sucking up resources. Cut it ruthlessly. Find your inefficiencies and eliminate them. This will free you up to focus on what's actually generating for you.
These three steps show where to double down and where to eliminate. Apply this principle to your life, get a hold of the few things that truly matter, and see how drastically it transforms things for you.