#94 - Prioritise the correct actions
Originally, the Pareto Principle referred to the observation that 80% of Italy’s wealth belonged to only 20% of the population. This observation holds true in other areas of life such as …
20% of the workers produce 80% of the result
20% of the customers create 80% of the revenue
80% of sales come from 20% of your clients
80% of your complaints come from 20% of your customers
80 percent of road traffic accidents are caused by 20 percent of drivers
80 percent of a restaurant's turnover comes from 20 percent of its menu
So Why Is This Useful?
The Pareto Principle helps you realize that most results in life come from a minority of inputs. Knowing this, if…
20% of workers contribute 80% of results: Focus on rewarding these employees.
20% of customers contribute 80% of revenue: Focus on satisfying these customers.
The examples go on. The point is to realize that you can often focus your effort on the 20% that makes a difference, instead of the 80% that doesn’t add much. The Pareto Principle is an observation, not a law of nature. The point of the Pareto principle is to recognize that most things in life are not distributed evenly. Make decisions on allocating time, resources and effort based on this.
“Learn how to separate the majors and the minors. A lot of people don’t do well simply because they major in minor things “