The Pareto Principle: What it is and How it Can Help
Author: John Rampton Source: Entrepreneur
Whether you’re a seasoned vet or just launching your first business, I’m sure you’ve at least heard of the 80/20 Rule, aka the Pareto Principle. After all, it’s been found; the Pareto Principle can be applied to anything that you measure in both your business life and your personal life.
If you aren’t exactly sure what the 80/20 Rule is, or how it can be used to improve your time management — shortly you will understand this principle better. The Pareto Principle may be the answer.
How does the Pareto Principle apply to time management?
This principle is a concept developed by Italian economist Vilfredo Pareto back in 1895 after he noticed that 80 percent of the land was owned by just 20 percent of the population. This lead Pareto to the conclusion that all economic activity could be subject to this principle.
As Brian Tracy further explains, “This rule says that 20 percent of your activities will account for 80 percent of your results.” For example, “20 percent of your customers will account for 80 percent of your sales. Twenty percent of your products or services will account for 80 percent of your profits. Also, 20 percent of your tasks will account for 80 percent of the value of what you do, and so on.”
How does this apply to time management? Tracy states, “that if you have a list of ten items to do, two of those items will turn out to be worth as much or more than the other eight items put together.”
In other words, 80 percent of your output should come from 20 percent of your time. Don’t worry if the figures don’t come out to exactly 80 and 20 percent. The idea is that most things are not distributed evenly. Does this mean that you should work any less? Not necessarily. Instead, this concept is encouraging you to focus more on the things that matter most, primarily the tasks that help us reach our goals.
Considering that we entrepreneurs believe that we can do anything on our own, the Pareto Principle is arguably the best time management technique at our disposal. For example, as opposed to spending hours fixing a buggy website, repairing a leaky faucet, or handling customer service inquiries — we should have outsourced or delegated these tasks and focus on more important jobs that will help the business grow.
Hopefully, that explains what the Pareto Principle is and how it can be used to enhance your time management. But, how can you get started?
Related: 9 Powerful Ways to Use the Pareto Principle in Marketing
Rethink your to-do-lists.
With this principle in mind, this might be the time to change how you make your to-do lists. Typically, these lists consist of simple items that may not be the most important things you should be doing. Instead, your to-do lists should reflect your priorities but also take into account whether the effort necessary is worth doing.
In order to get the most out the Pareto Principle, which will help you better manage time, start by prioritizing what you need to do based on the amount of effort involved. Number these items from one to 10, with one requiring the least amount of effort. Then, consider the potential positive results from doing those things. Label those from one to 10, with 10 having the highest impact.
With these findings, the next step is to create a new ranking of the items on your to-do list. Divide the amount of effort by the potential results. This gives you the priority ranking you need to more effectively manage time and increase results. Those that deliver the greatest results with the least effort are complete first. Others that require more effort with little results can be postponed or removed from your to-do list.
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