The Pareto principle is a principle invented by the Italian mathematician Vilfredo Pareto in the early 1900’s. He came up with the principle when he noticed how unequally the wealth in his own country (Italy) was divided, 20 % of the population was controlling 80 % of the land, while the remaining 80 % of the population had to share the small amount of land that remained.
Pareto then experimented with many other things, and came to the conclusion that 80 % of the effects in most things in life, is caused by 20 % of the producers. This gave the Pareto principle it’s new name: the 80-20 principle.
In business, the Pareto principle manifests itself since in most companies, 80 % or more of the sales are generated by a small amount (20 %) of customers. Likewise, Microsoft has reported that by fixing 20 % of the bugs in it’s softwares, 80 % of the errors and crashes could be prevented. There are many other examples of how the 80-20 principle is true as well, but what we should focus on is of course on how to implement the Pareto principle in our own lives.
The main ideology behind the Pareto principle is that life is not fair, and that things in life are also not divided equally because of this. In any process there are a few key players or key items (20 %) that are vital, and the rest (80 % is trivial). What one needs to do in order to benefit from the Pareto principle is to identify the vital parts of any process. This will not give you 100 % results, but it is likely to give you 80 % of the results, which is good enough, considering what a small input you will put into the process.
This is why the goal of the Pareto principle is really to get maximum results with minimal inputs!
So in order to use the Pareto principle in your own life or business, what you really need to do is to identify the stuff that really matters. Once you do, focus on that, in order to get a very big part of the results you are after, with a very small amount of work.
Ways to do this may include:
Picking out best sellers, if you are selling something, and focusing more on them, than on other products.
Focusing on your most loyal customers, that buy the most.
Creating passive incomes, instead of working full time all your life. This could be worth it even if those passive incomes only reach 80 % of what you make now!
Fix big errors or problems immediately, but leave small minor details for later.
Once you have started applying the Pareto principle to one aspect of your life, it will be easier to do so with other things as well. So why not give it a try? It will give you more time and wealth on your hands!