The Pareto Principle: The One Rule For Optimal Productivity
Do you want to become more productive? Well, of course you do. Who would turn down the chance to become more effective? The real question though is – how do you become more productive? While there is an avalanche of tools, mental models, frameworks, paid and free courses online that promise legendary results, you need to do one simple thing to boost your productivity and make the most of your time. And no, it’s not new and you won’t have to mortgage your house to get it.
In 1896, Italian economist Vilfredo Pareto noticed something really strange. A disturbing pattern in the distribution of wealth that was later called the 80/20 rule. Pareto pointed out that approximately 80% of the land in Italy was owned by 20% of the population.1
But he didn’t stop there.
After this profound discovery, he looked around, in other areas of his interest, and he saw that most things in life are not evenly distributed. Everywhere he looked, the 80/20 rule seemed to apply.
20% of our time produces 80% of the results
20% of the people will make 80% of the profits.
20% of the people will make 80% of the decisions.
Finally, he concluded that the correlation between input and results is approximately 20 to 80. Or in other words, 20% of the input creates 80% of the result.
What Is The Pareto Principle?
In the perfect world, if you create something with a value of 1, you’d expect this to bring results that are at least equal or higher to 1.
However, in reality, things rarely go as expected.
A lot of time we create 1 and we get 0.1 returns. Other times, to our amazement, we create 1 and we get 10X returns.
Thankfully, we have the 80/20 rule to understand this obscure behavior.
Mainly, the Pareto principle is used to describe the relationship between effort and results. It’s not a physical law. It’s more of an observation on how things in the world are distributed.
When you observe a situation, a boring financial document, a book, a sports game even, you’ll spot things like:
20% of the players are responsible for 80% of the results.
20% of the book’s content contains 80 % of the important information.
20% of the products provide 80% of the revenue.
However, don’t clinch on the exact proportion 80/20. Sometimes it can be 90/10 or 70/30. The main idea here is to understand that some things, efforts, tools, ideas, are more important than others. And once you point out these essential tasks, you can focus 80% of your time on them.
Why The Pareto Principle is Important?
I don’t have to know you personally to tell you that you’re busy.
We all are.
There are so many things sitting on our to-do list, collecting dust, that it’s hard for us to distinguish the important stuff from the things we can go without.
We often feel panicked that we don’t have enough time which leads to burnout and other modern problems.
The reason for this is simple: There are so many things we want to do. So many books to read. So many podcasts to listen to. So many new markets we can conquer. But unfortunately, limited time.
The proportion between available time and things we can/must do is uneven. Thus, the state of emotional collapse.
Multitasking and life-hacking your tasks is a temporary solution. If we want to advance while keeping our sanity, we need something more solid.
That’s when the Pareto principle comes to the rescue.
Once we realize that some things are more important than others, and we focus our time and resources on them, we’ll achieve more in less time.
How The Pareto Principle Actually Helps?
Called also the law of the vital few, the Pareto principle can help in various ways.
You can be a business owner, a student, a clerk, a mommy blogger and still benefit from this productivity tool and spot the relationship between inputs and outputs in different situations. Basically, the 80/20 rule allows you to distill the essential information from the fluff.
Here are a few examples:
If you are a business owner, spot your best-selling products – which, as the principle suggests, should be around 20% of your current portfolio. Once you know them, focus the majority of your time (80%) on marketing and improving them.
If you’re a blogger, you can find which posts bring most of the traffic to your site and concentrate on producing similar posts.
If you want to gain muscle, you can track how different exercises affect your body and focus the majority of your time in the gym on the ones that have the most impact on your body.
Or in other words, by dedicating the majority of your time and resources on the things that give you the best returns, you will achieve better results in less time.
How To Apply The Pareto Principle?
Though considered mainly an economic principle, the 80/20 rule can be applied everywhere in your life.
The steps to effectively use the Pareto principle are as follows:
Observe: The first step is really simple. Simply sit down, grab a notebook and start investigating the thing you want to improve. If you have your own business, go through the financial reports, portfolios, etc. Write down everything you do related to your business. Write down all of your current products, spendings, the daily tasks related to your business.
Highlight: Once you’re done with step one, you should distinguish the important things from the ones that only consume your time. Ask yourself: Which type of customers generated most of the revenue? Which products sell best? Which employees contribute most? Write down your best-selling products and see what your top customers have in common.
Allocate: OK, by now we should know what’s important. Now it’s time to allocate our time and resources appropriately. As the 80/20 rule suggests, we should dedicate 80% of our time, money, resources in general, towards the things that work best – the important 20% we previously noted. If you still don’t know what’s most important, ask yourself the following question: What task I can do that will get me the most return on my time?
Execute: Actually spend 80% of your time doing 20% of the things you wrote down. A lot of times people note what’s important but go back to their old behavior.
Innovate: If we continue with the business example from above, you’ll probably ask yourself: What about the other 80% of the products, customers, etc.? If we strictly follow the Pareto principle we should use the remaining 20% of our time on what’s left. However, in some cases, we should simply ditch the things that don’t work and use the free time to innovate. Since the only certain thing in life is change, we should give ourselves some time to try new ideas. Retire some products and simplify your portfolio. This will clear your head and also give you some space for future improvements.
Repeat: The 80/20 rules gives you a good strategy on how to spend your resources. In some cases, it can serve you for a couple of months, even years. Still, you should regularly revisit this rule and sift through the things you on your to-do list. This will help you ditch tasks that are no longer working so you can have enough time for the essentials.
Some Closing Thoughts
Life isn’t fair and things aren’t distributed evenly.
As Vilfredo Pareto originally noted, 20% of the population holds 80% of the wealth. This percentage is even scarier these days – 10% of the world’s population controls 90% of the world’s wealth.2
But don’t get upset about this. Rather, embrace it and use it to your advantage.
Once you adopt the 80/20 rule in your life, you’ll start seeing things differently. Literally in every situation, organization, event, book, document, there are some things that are more important than others. By seeing them, you’ll be able to utilize your resources (time, money, etc.) more efficiently. Thus, get better results in less time and therefore become a more productive person in general.
Who knows, probably one day you’ll be part of the lucky 10% percent. If you get there, don’t forget to give back to those who don’t have enough.
At this moment, the 80/20 rule, also called the law of the vital few, was born. Published in 1896, Vilfredo Pareto’s first work was called: Cours d’économie politique. Source: LINK