The 80/20 rule, also known as the Pareto principle, states that 80% of outcomes typically arise from 20% of causes. It was first observed by Italian economist Vilfredo Pareto, who noted that 20% of pea pods in his garden produced 80% of the peas. The principle suggests focusing efforts on the 20% of activities that result in 80% of outcomes. When applied to business, it means prioritizing the 20% of tasks, customers, or products that drive the majority of results. The benefits are clear priorities, increased productivity, and a more focused strategy.

1. Pareto Principle
(80-20 Rule)
WHAT IT IS? HOW IT WORKS?

3. 80-20 Rule Background:
The 80-20 rule is also known as the Pareto principle and is applied
in Pareto Analysis. It was first used in macroeconomics to describe the
distribution of wealth in Italy in the early 20th century. It was introduced in
1906 by Italian economist Vilfredo Pareto, who is best known for the
concepts of Pareto efficiency.
“Pareto noticed that 20% of the pea pods in his garden were responsible
for 80% of the peas. Pareto expanded this principle
to macroeconomics by showing that 80% of the wealth in Italy was
owned by 20% of the population.”

4. What Does the 80-20 Rule Mean?
At its heart, the 80-20 rule simply underscores the importance of exerting your
energy on those aspects of your business—or life, sports activity, musical
performance, blog, etc.—that get you the best results.
However, it does not mean people should then ignore the areas that are less
successful. It's about prioritizing focus and tasks, and then solving problems
that reveal themselves due to that focus.

5. Understanding the Pareto principle (The 80/20 Rule)

6. How you can use the 80/20 Rule?
While the 80/20 rule applies to almost every industry, the Pareto principle
is commonly used in business and economics. This is because the 80/20
rule is helpful in determining where you can focus your efforts to
maximize your output.
The basis of the Pareto principle states that 80% of results come from
20% of actions. If you have any kind of work that can be segmented into
smaller portions, the Pareto principle can help you identify what part of
that work is the most influential.

7. Benefits of using the Pareto principle:
The biggest advantage of using the Pareto principle is that you can
create the maximum amount of impact with the least amount of work.
This can allow your team to work more efficiently and stay focused on
specific initiatives.
Clear and Concise Benefits:
• Clear priorities both for you and your team
• Increased daily productivity
• Ability to portion your work into manageable segments
• More focused strategy

8. Disadvantages of using the 80/20 Rule:
Another downside of the 80/20 rule is that sometimes team members can
get too focused and lose sight on other tasks. If you only focus on the
important tasks and put aside the less important tasks, like email and
other correspondence, things can get lost. The challenge is finding the
right balance of using the 80/20 rule, and getting through the rest of your
tasks—even if they don't result in 80% of results. To combat this, you can
use techniques like ”TIMEBOXING” or the GETTING THINGS DONE
(GTD) method.

9. The End
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