West Corporation

Posted on December 2, 2013 by West Corporation 



The Secret to Being More Effective: Pareto’s 80/20 Rule

The true secret of Pareto’s 80/20 rule is not in the understanding of the rule itself, but in remembering to consistently apply it to everything you do.

Vilfredo Pareto was an Italian economist who in 1906 made a scientific observation that evolved into the Pareto Rule, or 80/20 Rule. This rule states that 20 percent of a process’ inputs drive 80 percent of the outputs.

Some common illustrations of the rule are the following:

  • Twenty percent of your clients are most likely driving 80 percent of your profitability.
  • Twenty percent of your employees are most likely driving 80 percent of your productivity.
  • Twenty percent of you expense drivers are causing 80 percent of your costs.

This rule is useful and can be powerful, but it is an easy rule to overlook and forget. In today’s fast-paced environment of information overload and constant multitasking, sometimes we forget to stop and take a moment to focus on what really matters.

Every project or initiative should start with the identification of the vital few. What are the most important priorities that will make the biggest impact? Can you identify the 20 percent of inputs that are driving 80 percent of you client dissatisfaction? Can you identify the 20 percent of actions that will drive 80 percent of your revenue growth? Three simple steps can assist you in using this rule:

  1. Stop. Take time to stop and think about what you are doing before you jump into a work effort or project.
  2. Analyze. Identify what data is available. Can you identify the top drivers of the process? If data is unavailable can you do a quick survey or poll? Can you gather a small team to make a collective guestimate?
  3. Prioritize. Select the project that will make the biggest impact and focus your effort there. Focused energy on one driver will have a greater effect than small amounts of energy spread across numerous items.

To leverage Pareto’s rule for the greatest potential, you must actively analyze where you invest your time, energy and resources, and you must continuously prioritize your efforts so you impact the vital few. Knowing the Pareto rule is not the secret to being more effective. The secret is in continuously using the rule, so that you are always impacting the 20 percent that will provide you with the greatest results.

And remember, stop, analyze and prioritize.

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