Self-Optimization

The pareto principle explained

Are you spending too much time on the wrong things? We explain the Pareto principle and show you how to organize your time better.

The Pareto principle, named after Vilfredo Pareto , is also known as 80/20 rule, which we regularly encounter in everyday life. It states that 80% (the majority) of the results are achieved with 20% of the total effort. The remaining 20% of the results need 80% of the time.

Pareto came to this conclusion when he found out that 80% of Italian lands belong to just 20% of the population.

Of course, it’s not always exactly 80 and 20 percent, but that’s not the point. The basic idea of the Pareto effect is rather the statistical phenomenon that often a small number (a minority) is responsible for a disproportionately large result, while the majority contributes only a small part.

 

Examples for the Pareto effect

The best known example of the Pareto Principle or the 80/20 rule concerns the distribution of money . It’s well known that around 20% of the world’s population owns about 80% of the total assets in circulation. The remaining 20% of the money is distributed over the remaining 80% of the world’s population.

Another example is often found in the distribution of sales to the customers of a company. Here, it can be observed that the majority of sales is often generated by a few (big) clients, while the rest of the clients only provide a marginal share of sales.

Similarly, in companies, a small percentage of workers usually spend the majority of sick days, while most workers have few sick days.

In private life you can also find an example, which you certainly know. Mostly we only wear a few of the garments that we own regularly. The majority of the garments are rarely or not worn by us for years.

On the Internet, a small percentage of very well-known web pages generate the most data traffic, while most of the web pages is responsible for a very small portion of traffic.

Use the Pareto principle for yourself

Reflecting on your everyday life, this knowledge can serve you well once you have internalized it. After all, we also like to waste 80% of our time on relatively unimportant things, while our biggest results during the day often do not take much time.

The famous Frank Bettger, for example, an independent salesman, once wrote in one of his books: “I found out that I spent 80% of my appointments with clients who then accounted for just 20% of my sales.” Following this realization, he made sure not to give too much time to this clientele and instead focused on the interesting ones among them.

Sure, 20% is also a part of the success, but the problem is that the time we spend on it can be better used.

If you have the choice to earn 20 $ or 50 $ per hour, you will probably opt for 50 $. And yet you often give away the chance for more because you are dealing with less important things.

Critical consideration of Pareto principle

For a long time, the Pareto principle was generally valid for all topics of time management. That’s certainly not the case. There are also jobs and activities where the small part is just as important as the big one, even if it does not produce such great results.

But what you can now ask yourself more often with the knowledge of the Pareto principle is whether there may be time-wasters in your life that, strictly speaking, produce few results.:

  • As a perfectionist, if you have done the actual task quickly, but then spend twice as long to perfect it again (without receiving more)
  • As a self-employed salesman, if you spend most of your time organizing yourself and only using the little time left to sell and make money.

In a nutshell

Figure out which activities will bring you closer to your goal (whether professional, business or physical). Face the activities that are time consuming, but that will take you little or no distance (except in private life, of course).

Check if you spend most of your time with these important things right now. If that isn’t the case, think about whether you want to give the unimportant things less time in the future.

You’ll soon realize how this change in focus will help you on your way to success.

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