The Rule of 80 20
Many of you have probably heard the rule of 80 20. That is 20% of your effort accounts for 80% of your results. The Pareto Principle is based off of Vilfredo Pareto, who observed in 1906 that 80% of the land in Italy was owned by 20% of the population; he developed the principle by observing that 20% of the pea pods in his garden contained 80% of the peas.
As simple as this sounds (even silly in some cases), you may be surprised at how fundamentally true this principle really is.
Think about it, you can easily place yourself in a plethora of situations where the 80 20 rule applies. I’ve been in sales all my life and I know beyond a shadow of the doubt that 20% of my clients account for 80% of the total revenue made. In other words, for every 100 people…. only 20 of them are producing 80% of the results!
Pretty crazy if you ask me!
Now let’s look into the 80 20 rule a bit further… Let’s say you have a list 10 friends. Is it safe to say that 2-3 of them are your best and closest friends whereas the other 7-8 are more “buddies”? Interesting, isn’t it?
Take a look at your website statistics. 20% of your traffic are going to spend 80% of the time reading your articles. The other 80% are going to spend 20% of their time.
Now think about this… 20% of the people in this world are accounting for 80% of the results and effects on this world. Who do you want to be?
I like to use this example because I enjoy breaking down numbers when it comes to the 80 20 rule:
Let’s say you have 100 people who are making $50,000 to $1,000,000 a year. By using Pareto’s principle, it’s safe to assume that 20 of those people are making 80% of the total income than the other 80 people. But wait, there’s more!
Now out of those 20 people… 20% of those people are making 80% of the total income. What’s that you say? You want one more break down?! YOU GOT IT!
Still applying the 80 20 rule… there are 4 total people. (20% of the 20 from above) Out of those 4 people… 1 person is making 80% of the income out of the 4 people. Pretty crazy huh? Granted, the principle isn’t perfect and you can find some inconsistencies, but the principle still stands.
So why is Pareto’s principle of 80 20 such an important topic that I felt I needed to write about?
Let me expand on that. By applying the 80 20 rule, only 20% of your time accounts for 80% of your results. Unfortunately, most people are doing it backwards! 80% of their time is producing 20% of their results. Now, I want to applaud my readers for coming to this site and reading the information I have here. Why? Because you are doing what 80% of the population IS NOT DOING; being serious about making changes to your life.
I love this principle because you can break it down to the bare essentials and apply it to bettering your life. Where is 80% of your time going? Where is 80% of your money going? Where is 80% of your focus going? What if you could change it? What if you could shift priorities and focus? Pareto’s principle of 80 20 is a formula that is not only easy to understand, but a fantastic reference for yourself and how you prioritize.