Pareto Analysis states that 20% of the causes result in 80% of consequences. Through his observations, he concluded the existence of unequal distribution for the majority of things in life. Also known as the 80/20 rule, this principle shows imbalance between inputs and outputs.
Going further into this theory, it originates from an unfair distribution of wealth among social classes observed by its founder, the Italian economist Vilfredo Pareto back in 1985. Through his first observation, Pareto noticed that 80% of the land in Italy was owned by just 20% of the population. Then, he decided to carry out his research in other countries. Surprisingly, his subsequent surveys revealed the same conclusion too.
Another interesting fact is how viable this method is. Proof of that is its application in areas like agriculture, industry, time management, customers’ satisfaction and business. So, giving a further explanation about time management, 20% of your time at work generate 80% of output.
The Benefits of Pareto Analysis
Basically, Pareto analysis guides you towards what to needs to be fixed and what deserves a reward. Thus, it can be a time-saving and helpful optimization tool for your life. Suppose that 20% of your customers lead 80% of your sales. Considering this information, you can give special attention to your main customers, rewarding them for their loyalty. Now, imagine that you spend an hour writing an article for publishing, but you are unsure if the topic in question is necessary. In this context, you could spend 10 minutes writing down your ideas. And the 50 minutes left, you could write about your top idea.
Pareto Analysis Is Not An Absolute Rule
The 80/20 rule doesn’t have to equal 100 all the time. For example, 40% of the workforce can only finish 70% of the output. This indicates that 40 out of 100 workers are bringing results. It is absolutely clear that the remaining workers are not being effective, in which case is 60%. According to this analysis, there is no doubt that Pareto created a principle, not a law.
Pareto Analysis in Your Life
The 80/20 rule is a ratio. In reality, this proportion could be something like 90/10 or 95/5. However, what is fascinating about this structure is that it sparks your analytical mind. Applying it sensibly, you become able to redirect your focus on the right place. Once you are aware of what matters most – work, money, profit, wellness, health – you take control of your life and achieve your goals.
80/20 Rule In Your Day-To-Day Activities
For better understanding, below are some basic examples of things you can do to improve your routine:
- Your main focus: this means that you concentrate your attention on 20% of the goals that will achieve 80% of the results – time, money, energy,… – aiming at reaching the potential benefits
- Personal habits in your routine: 20% important power habits create 80% of value in life; in this case, it could be Yoga and physical activities
- Removing unnecessary or uwanted things: get rid of 20% of the things that take 80% of your space
- Household appliances: evaluate the appliances which are not useful and make you feel annoyed and impatient. Throw them away, donate them or collect them for recycling. Or else, you can either learn how to use them better or buy new ones that are more efficient.
- Household chores: depending on your situation, you can outsource 20% of daily chores that bring you 80% of the stress. Let’s take as an example a drying machine. This device could be the perfect solution if you don’t like hanging clothes.
- Digital files and applications: suppose that 20% of your files use up 80% of the space; or 20% of applications (in both computer and cellphone) 80% of the time. For effective use, you can sell the rest or give it proper destination.
- Email account: clean up 20% of the emails that take 80% of the space
- Luggage when Traveling: in most cases, you carry things which are not necessary. Therefore, 80% of what you carry is excess and 20% is indispensable.
Why Is Common Sense In The Use of Pareto’s Principle Key?
Although the 80/20 rule is easy to understand, it’s rather hard to practice. What happens is that some people lack dedication to follow it. Once they realize its true power in controlling and getting results, they will become more attentive to it.
For your business, you can save an incredible amount of money by setting production, workforce and tasks in order with the 80/20 rule.
Regarding your personal life, you can improve your wellness, financial situation, health, and physical space.
This is the blueprint you have for new paths and strategies. By making use of it, your life becomes light and stress-free.
By cutting useless things off your life, you free your mind, allowing energy to be more productive. As well as that, you open space which provides you with confidence and relaxation. And by managing your time properly your life becomes brighter and happier.
Take Charge Of Your Life With Pareto’s Principle
Life is not perfect, as we know it. However, sometimes we end up losing our grips on our lives. As a result, we become slaves, which damages our sense of pleasure.
Even with trials and tribulations, we are good enough to observe our own lives. But this involves looking at it from a different perspective and rearranging it the most appropriate way.
