Average between 20 and 80. Where can Pareto's law be used? Applying the Pareto Principle to Planning - A Practical Exercise

From the discussion in previous posts.

Pareto law (Pareto principle), or the 80/20 rule is one of the most common ways to measure the effectiveness of any activity.
Its essence lies in the fact that 20% of the efforts give 80% of the result, and the remaining 80% of the efforts are realized only by 20%.
Thus, it can be understood that by choosing those optimal resources that give the greatest effect, you can achieve high results at low costs. At the same time, subsequent efforts will be unnecessary and ineffective.

The traditional worldview mistakenly believes that all factors in our life have approximately the same effect on change. general position... People for whom the Pareto rule is not a priority in decision-making believe that all clients bring approximately the same profit, that all hired employees perform their duties with the same efficiency. They think that all friends and acquaintances are equally important, and that all days of the week bear equal fruit. Choosing a university, such people believe that the acquired knowledge and skills in each of them are the same.

The 80/20 percentage was discovered in the late 19th century by the economist Wilfredo Pareto while researching the distribution of wealth among different segments of the population in England at that time. The scientist came to a stunning discovery when he discovered the following imbalance: 20% of the population of England owned 80% of the country's wealth. And the fact that the minority owns most of the resources was confirmed in a deeper analysis. As it turned out, 10% of the population owns 65% of the wealth, 5% - 50% of material resources. Most interestingly, the figures obtained were not accidental. Examining the distribution of wealth between the population of England and other countries in different historical periods, Pareto came to similar results.

This is how the 80/20 law was laid, which, unfortunately, the scientist himself could not correctly explain. Because of this, it was left unattended until 1949, when George C. Zipf, a professor at Harvard University, drew attention to the following pattern. He came to the conclusion that about 20-30% of the effort yields an effectiveness of 70-80% of the maximum that can be obtained from them. Thus, Zipf rediscovered the Pareto principle, showing the foundations of the self-organization of all resources.

Around the same time, Joseph Juran, examining the statistics of the distribution of scrap in production, once again confirmed the 80/20 principle, and published a book in which he formed the law of "the few that are decisive." The scientist in his manuscript called for the massive implementation of this principle in various areas production in order to eradicate defects and improve the quality of manufactured goods.

Juran argued that the principle of uneven Pareto distribution can be extended not only to the sphere of production, but also as a statistical approach in the study of the distribution of crimes, accidents and other processes.

Unfortunately, US businessmen refused to accept Juran's ideas. Then the scientist found grateful listeners in Japan. As a result, in 1953, after giving a series of lectures in the country rising sun Joseph Juran stayed there and began to cooperate with several large Japanese corporations. It was only in the 1970s that he returned to his homeland, when industrialists were "ripe" to implement his ideas, since Japanese production began to pose a serious competitive threat to the United States. In both countries, Juran made a real industrial revolution, based on the Pareto principle.

Linking Pareto Law to Trade and Marketing

The well-known IT giant IBM was the first to actively apply the Pareto law in marketing. In 1963, IBM specialists noticed that about 80% of their time was spent on 20% of operations. It was immediately decided to find the 20% of tasks that are used the most and make them as convenient and functional as possible for the user. As a result of the changes, the specialists managed to create machines that were faster than similar devices of competitors.

The Pareto Principle in trade implies that incredibly huge business resources are wasted on maintaining inefficient goods in terms of profit and paying unnecessary employees. Too much focus is on customers who generate only a small percentage of the revenue. Thus, a logical conclusion arises that if you focus on the most effective areas, you can increase the company's profits significantly.

In order to optimize your business, it is enough to remake it for effective work the most productive employees who will sell the most popular products or services.

If we talk about clients, then you don't want to lose a single one. The Pareto rule says that only 20% of buyers give you 80% of the profit, while the rest often waste your staff's time, while not generating much income. In order to do everything right, it is necessary to direct maximum efforts to work with high-potential clients, and unify contacts with the remaining 80%, shorten them in time and make them not particularly costly for the company. This way you can optimize the performance of your business. This is the role of the leader in the management of the company.

It may seem rather complicated at first. Many managers and owners of large manufacturing facilities find it difficult to give up 80% of their activities in one day. Nonetheless, radical changes will bring incredible growth in profit and production efficiency.

In general, we can conclude that it does not always make sense to strive for a result of 100%. The forces and resources spent on achieving it overshadow the possible benefits. In most cases, it is enough to limit yourself to 80%, while spending insignificant funds to get the result.

You can draw a parallel with the method of painting paintings by famous artists who, without drawing out all the details of their masterpieces, emphasize some of the elements that attract the most attention of the audience.

As you can imagine, the 80/20 Pareto rule applies to all spheres of society, so it can be applied everywhere.

Time management. The Pareto principle in time management is quite simple. You analyze all the cases for the day, and choose from them those that led to the final result. Useless activity is simply crossed off from the to-do list. The first working day planned according to this method will surprise you with its ease and productivity.

Self-development. Remember that you will be most successful in the area that works best for you. It is often not worth wasting your time mastering skills that are acquired “with a scratch”. Focus on your strengths... If you have developed communication skills, continue to develop them, and choose activities related to communication. If you are not attracted to contact with people, teleworking will become great alternative For you.

Finance. Decide from what sources you get 80% of the money coming into your pocket. Concentrate on them as they play key role in shaping your budget. Ignore the rest of the options, because they only take time and effort. An exception may be passive sources of earnings (deposits, passive investments), since labor costs for their implementation tend to zero.

Productivity. Given that each person is tuned to their own biological rhythm, you will have to calculate your own. Determine when you are working most efficiently. This will be the period when you need to pay maximum attention to your work. The rest of the time, all your efforts will be ineffective.

Reading of books. The 80/20 Pareto Principle applies to the literature you choose. About 80% of the books you have read have brought you nothing but wasted time and damaged eyesight. Choose those books that can enrich you spiritually. If there are works, familiarity with which has had a serious impact on you, then it makes sense to re-read them periodically. The Pareto rule means you shouldn't score free time"Light" uninteresting literature.

Unnecessary things. You have probably noticed that you have things stored in your apartment or car that you hardly ever use. They constantly interfere, take up a lot of space. The practice of space exploration Feng Shui calls such things energy blockages. By getting rid of them, you will feel a surge of inspiration and freedom from unnecessary junk.

Relationships. When we meet new people, we may not realize which of them is really playing. important role in our life. Analyze for yourself and make sure that only 20% of the people with whom you communicate emotionally fill you and bring something new into your consciousness. These are the people that need to be given the most attention. Short communication with close friends is much more important than hourly correspondence in social networks with virtual acquaintances.

The 80/20 Law (Pareto Rule) is one of the most famous methods for measuring performance. Using it, you can increase the effectiveness of your work. Consider next how the 80/20 rule works.

Pareto principle: general information

If you establish which resources will provide the maximum return, then with minimum costs you can achieve greatest effect... The Pareto rule means a specific asset allocation scheme. It is believed that all factors have the same influence on what is happening. However, this is a misconception. The ratio of efforts and results corresponds to the Pareto rule. Many people, when making deals, think that they bring about the same benefits. In doing so, they also believe that all employees work for the good of the company equally effectively. These people, moreover, work daily with the same diligence. Some of those who do not know the Pareto 20/80 rule, choosing a university, do not see the difference in usefulness educational programs... However, by carefully studying the causes and consequences of certain life circumstances, one can come to completely different conclusions. As mentioned above, the Pareto rule represents the relationship between effort and results. A relatively small proportion of actions are decisive and have an impact on the outcome. All the rest of the energy will be almost wasted. According to the Pareto rule, only 20% of the effort will give 80% of the result. Whereas the remaining eighty percent of the energy will only lead to twenty. Using the Pareto rule, many investors and businessmen have achieved business success. Understanding and applying this position allows you to transform the life of both the person himself and the people around him.

History of origin

The Pareto Rule 20/80 was discovered at the end of the 19th century. It bears the name of an economist who at that time was engaged in the study of the distribution of material wealth between various strata of people in England. In accordance with the action of the Pareto rule, people receive wealth in different shares. As a result of research, certain numbers have been established. Pareto found that only 20% of the population owns 80% of the goods. After an in-depth analysis, an even greater imbalance emerged. So, 10% of people accumulated up to 65% of goods in their hands, and 5% - only 50%. Subsequently, it turned out that these indicators are not accidental. A little later, Pareto investigated the order of distribution of benefits in other states in different historical eras. The same pattern was found in all countries. However, the economist was then unable to substantiate the indicators, and his theory was forgotten for a long time.

New research

In 1949, Harvard professor Zipf found a similar relationship. He found that about 20-30% of the energy brings about 70-80% of the maximum possible outcomes... The revival of the theory to life made it possible to show the foundations of self-organization of the available resources. At the same time, another scientist, Juran, studied the statistics of the distribution of production defects. He found the same ratio. The scientist described his discovery in a book. Juran urged to use his "Law of a Few" at enterprises involved in various industries. Thus, he intended to eliminate the production of defective products and improve their quality. Juran believed that uneven distribution does not take place only in the industrial sphere. He also believed that the rule applies to the statistical description of accidents, offenses and other incidents and facts. In the US, however, entrepreneurs did not take Juran's theory seriously. The scientist turned to businessmen in Japan. In 1953, he visited the country and gave several lectures there. After that, Juran signed several contracts with large corporations and remained in Japan. In 1970, the country's enterprises became serious competitors in the market. Juran returned to the United States. The scientist carried out the industrial revolution in both countries using the Pareto rule.

Business development

How does the Pareto rule manifest itself in business? An example is IBM. This firm is considered one of the IT leaders. She actively uses the Pareto rule in her work. The theory in question was derived in 1963. Experts have found that computers spend 80% of the time processing 20% ​​of the data. In this regard, the company's management put new target... It was necessary to identify 20% of those tasks that are solved more often than others. Next, it was necessary to refine the functionality and bring it into full compliance with the requirements of consumers. After that, a technique was created that was several times superior to similar machines of competitors. Analyzing the commercial environment, experts say that most of the company's resources are spent on promoting low-profit products and paying salaries to excess employees, sellers spend too much time on a client that brings little profit. It would be logical to assume that in this case it is necessary to focus on the most profitable areas of business in order to obtain the maximum result.

Optimization

The Pareto rule presupposes the restructuring of the enterprise for the most productive specialists. These employees must sell the company's most lucrative services and products. If we talk about clients, then, of course, the firm does not want to miss out on any of them. But, as the Pareto rule states, only a small fraction of buyers generate the bulk of the income. The rest of the customers are wasting employees' time. For maximum results, efforts should be directed towards working with those who are of greatest interest to the company. Serving the remaining 80%, which brings only 20% of the profit, can be unified, making it as economical and fast as possible for the company. In this way, the company's management can improve efficiency and optimize the operation of the enterprise.

An important point

It should be noted that not in all cases it is worth striving for a 100% result. Sometimes the money, effort and time spent on restructuring a business completely exclude obtaining possible profit... Most companies need only stop at the 80% border. Achieving this result will require few resources. This business methodology has been compared by some experts to the work of famous artists. The master does not spend a lot of time drawing all the details of the picture. Instead, he focuses his efforts on only a few elements - those that should get the most attention.

Analysis

The Japanese Union of Engineers and Scientists has included the Pareto chart as a quality control methodology. The purpose of charting is to identify problems that need to be addressed first. The curve allows you to display the difficulties, to determine the main factors with which to start. The diagram shows how you need to allocate efforts in order to effectively solve problems. There are two types of curves:

Rules for constructing a Pareto chart

The action plan will be as follows:

1. Identifying the problem to be solved.
2. Taking into account all the signs and factors that relate to the task at hand.
3. Identifying the root causes that create the greatest difficulties, collecting data on them.
4. Building a diagram.
5. Analysis.

First of all, it is necessary to determine the purpose for which the construction of the curve will be carried out. It is necessary to study the causes of the problems and the difficulties themselves, determine what information needs to be collected and how to classify it. Next, you need to develop forms for fixing the initial data. For example, it could be a checklist. Then you should collect data, fill out the forms and calculate the results for the studied indicators, signs, factors separately. To depict the curve, you need to prepare a blank table. It should provide for the columns of totals for each checked factor separately, the accumulated sum of the number of manifestations of the corresponding sign, percentage relative to the total result and accumulated interest. Fill in the table with factors in descending order of their importance.

Progress

To build a curve, 2 vertical and 1 horizontal axes are drawn. The left one is scaled from 0 to overall indicator the number of identified factors, on the right - a scale with intervals from zero to one hundred. It will reflect the percentage of the factor. The abscissa axis is divided according to the number of features under study or relative frequency. Next, a bar chart is built. The height of the column (it is plotted on the left scale) will be equal to the number of manifestations of the factor. Columns should be arranged in descending order (decreasing the significance of the feature). In the latter, "other", insignificant factors are recorded. Its height may be greater than the neighboring ones. The next step is to draw a curve. The line should connect the points of the resulting sums (percent or quantitative indicator of factors). Each mark is placed above the corresponding column of the diagram, focusing on right side... Further, the necessary inscriptions and designations are applied to the curve.

Additionally

After analyzing the chart, you should not strive to improve performance in all directions at once. It is more expedient to achieve results for a start on some of them. At the same time, you need to concentrate on those resources that can bring the greatest income. You should not increase the efficiency of all of them at once. For each area of ​​importance, it is necessary to establish what 20% of the effort can bring 80% of the result. You need to try to make the most of those moments when there is an opportunity to achieve the greatest effect. Many cite the lack of time. However, as practice shows, this is just a myth. In fact, a person has enough time. People really only use 20% of their day effectively.

Pros and cons of the method

The advantages include simplicity and clarity. This allows the Pareto chart to be applied by those who do not have special training... Comparison of the curves created before and after the measures to improve the described situation makes it possible to obtain a quantitative indicator of the gain. The disadvantages of the method include the fact that when constructing complex and not always structured diagrams, incorrect conclusions can be formulated.

Applications

The Pareto rule can be used in various fields, for example:

• Self-development. People can pursue greatest success in those things that they do best. Most of the skills that are acquired through hard work are completely unnecessary. Using the Pareto rule, one should focus on their own merits... For example, for sociable people, work related to direct contact with clients is most suitable. If communication skills are poorly developed, then you can do remote work.
• Financial condition. Evaluating it, you should establish which sources bring the greatest profit - 80%. These will form the basis of your budget and are the ones to focus on. Other ways to get money can be completely ignored, as they will only take up time and energy. At the same time, this rule does not apply to the receipt of passive profit from a deposit in a bank or investment.

If you have not heard anything about the Pareto principle, then you should definitely answer the following question - would you like to achieve maximum efficiency in any business and show high results, while applying minimal amount effort? Not only various businessmen and entrepreneurs are trying to solve this dilemma, but many quite ordinary people... How to get new professional level, increase the productivity of your enterprise or achieve any other achievements in life?

It takes a lot of time to solve these and similar problems, but you shouldn't try to reinvent the wheel. Indeed, for a long time, many successful people have developed and tested a method of increasing efficiency, known as the Pareto principle or the 20/80 rule. You can be sure that following this law will allow you to focus on only 20% of your actions and consistently achieve 80% of the result. To learn more about this, read on.

As you already understood, the essence of the Pareto law is that only a small part of all your actions, namely only 20%, leads to the greatest results, that is, 80% of success in any business. Conversely, most of your efforts (the other 80%) lead to very modest achievements (20% of the results).

Of course, these are somewhat arbitrary indicators. In practice, it may turn out that the values ​​of 20 to 80 may fluctuate somewhat in one direction or the other. For example, if you attribute the Pareto principle to yours, then most of the results can be generated by 35 or even 10% of all efforts expended. However, whatever these indicators are, the very essence of the law is always preserved. That is, you need to choose the most favorable conditions, select the necessary resources and decide on specific ways of achieving, which bring most of the success in any business.

Many people mistakenly believe that absolutely all actions in our life have the same effect on changing or maintaining the current situation. But now you understand that this is far from the case. Those who have no idea about the Pareto principle, or simply do not use it, give the same attention to all clients, even if some of them are simply taking their time. They believe that all their acquaintances and friends are equally important, and even when choosing educational institution it is believed that the knowledge gained there will be the same as in other similar universities.

But if we conduct a careful analysis of the cause-and-effect relationships of our actions, it turns out that only a smaller part of the concrete efforts led us to the expected result. At the same time, much of the time was simply wasted. But before moving on to more detailed examples and practical recommendations, let's look at the history of the origin of the Pareto principle.

History of origin

Similar method productivity analysis was invented at the very end of the 19th century by the famous Italian economist of the time, Vilfredo Pareto. Most of its professional activity this person was engaged in research and search for certain patterns, following which wealth is distributed in different classes society of England.

After conducting a lot of surveys and experiments, Pareto found that most Money the whole country (80%) is concentrated in the hands of only 20% of the population, while the remaining 80% of people are content with only the rest of this money (20%). However, one should not assume that these proportions refer to the UK alone. Later, a number of large-scale studies were carried out, which showed that the Pareto principle is observed in many other states.

However, the economist was never able to fully explain the reason for this distribution. material goods among the oppression, and his law was forgotten until 1949. At this time, Professor George C. Zipf, who works at Harvard University, noticed a curious pattern according to which only 20-30% of all our efforts bring 70-80% of the results of the attainable maximum. Thus, Zipf rediscovered Pareto's law, establishing that its principles apply to many other areas of life.

About six months later, the economist Joseph Juran, while analyzing the statistics of production defects, again confirmed the already well-known Pareto 20/80 principle. Soon, this rule began to be actively applied in management, first by many Japanese, and then by American industrialists.

A little later, a book by the Englishman Richard Koch was published entitled “Law 20/80. Secrets of Achieving Great Results with Minimal Effort ", which has already significantly expanded its influence known rule on the economic, financial and social spheres of life.

The very same phrase "Pareto principle" was introduced into circulation only in 1941 by Joseph Juran.

Specific examples

So, let's get down to considering the above rule on specific life situations.

If you think about it carefully, the most valuable resource in our life is time. And it is worth understanding that we often use only 20% of all our time resources most effectively. Of course, hardly anyone can work 24 hours a day, seven days a week. Therefore, it is important to set priorities for yourself according to the Pareto principle, be it career, leisure, family, etc. Then, identify those actions that maximize the development of areas of life that are important to you. And concentrate all your attention on them. Mark all other things as secondary and unproductive.

Self-development

It is best to cultivate in yourself those character traits that as much as possible contribute to the achievement of your goals and are best given to you. And at the same time, exclude those of them that you do not like. It is important to understand that it is almost impossible to achieve peak development in absolutely all aspects of personality development. Therefore, choose only the most useful ones.

Biological rhythms

If you carefully analyze your emotional and the physical state during the day, you will find that in different time your activity rises and falls. The fact is that each individual person has their own individual biological rhythms, which are characterized by different productivity at a particular time. All you need to do is determine for yourself the hours when you are most ready for action and use this time to the maximum.

Pareto principle and self-education

If you often take any trainings, courses or attend seminars, then, most likely, you have noticed that only a small part of them really significantly affect your life. The same applies to reading literature, visiting any information portals in the Internet. That is, you need to concentrate on the information products of those authors, thanks to whom your life has really changed for the better. Read only developmental, business literature and do not waste your time on materials that are not of practical use.

Finance

At the beginning of the article, I already gave an example with several clients, some of whom bring you money, while others simply take time. But in a similar way, you can define for yourself those work affairs, on which, in fact, your success in professional activity depends. Agree that empty talk or browser games only take away work time, which can be spent on really important tasks or on improving your competence as a specialist. But the Pareto principle also applies to other areas of life.

clothing

Surprisingly, most people most often wear only 20% of 80% of the garments they buy. As a rule, these are the most convenient and practical things. Most likely, your home has enough furniture, household appliances and other items that often interfere more than really benefit. In Feng Shui practice, this is even called "energy blockages". In this case, it is better to get rid of the extra interior for the acquisition of really necessary items.

Relationship

Successful people understand well the importance of the right environment. That is, you need to pay more attention to communicating with those people who have some kind of impact on your life. positive influence, and get rid of the acquaintances causing more negative emotions than positive.

Conclusion

As you can see, the application of the Pareto principle really helps to achieve impressive results in absolutely any area of ​​life, while applying the minimum necessary effort. One has only to understand that it is necessary not only to work less, expecting great success, but to focus all your attention only on the most important thing, discarding all secondary tasks. That is, this law proposes not only to be lazy more, but only to redirect the expended efforts in a more constructive direction. Moreover, it is especially important to first determine the most effective actions that lead to your goal, and then focus all your attention on them. Good luck!

Many are faced with a chronic lack of time, various things appear and people are literally torn to pieces in order to get everything done, but often because of the information house we miss really important minutes and we are not even talking about missed deals or part-time jobs, but about time for the family. close friends.

The Pareto principle: 20% of the effort brings 80% of the result. This rule of thumb was named after the economist Vilfredo Pareto, who established that Italian society can be divided into 2 parts:

Part 1: small but rich... This is 20% of the population, which owns 80% of the wealth.

Part 2: large and not rich... This is 80% of the population, which owns only 20% of the wealth.

Further research has shown that it is the rule applies to almost anyone economic process and means: “20% of efforts give 80% of the result. And vice versa, 80% of the efforts give only 20% of the result. "

Why do you need to know the Pareto principle?

For the correct prioritization, because if you miss tasks by 20% of your strength, then you miss 80% of the result. Understanding this principle makes it easier and more correct to prioritize throughout the day in order to get maximum results.

Application of the Pareto principle:

If you have worked in sales, you may have noticed that 20% of customers generate 80% of the profit;

In life: a small part of actions (20%) greatly changes your life, by 80%;

In time management: a small part of the cases will be the most productive.

How to apply the Pareto Principle in planning:

Step 1 - Write a to-do list for today or tomorrow. Include in this list:

Activities that you always do, for example, cooking food, cleaning the house, buying groceries at the store near your house, etc. in general, everything that you do on a regular basis;

Complement the list with irregular tasks that you can do today, such as preparing for a date, preparing a presentation for work, or simply telling a friend an important news.

Supplement with things from the far box, that is, with what needs to be done, but you are putting off from day to day. Maybe you will never get to the doctor with your illness. Or your hanger broke down a few months ago, you can't take it up in any way, or maybe you want to buy a food processor, but can't make time for a purchase, etc. In general, everything that you put off.

Step 2. Prioritization. Let's say we got the following list:

Call the client to clarify the time of payment;

Supervise the execution of several projects at work;

Prepare a commercial offer;

Fix the chair;

Cook roast;

Clean up the house.

Now let's put down points from 0 to 10 for each case, where 10 is the most important case, and 0 is not at all important. Since each person's priorities may be different, for our example, consider a man who leads business image life and wants to achieve success in a career.

Now we clearly see which cases will bring us 80% of the result with 20% of the effort. That is, you need to start work with the 2 most important points: and continue with the rest of the less important things.

If both cases are of the same degree of importance or do not differ greatly in importance from each other, then you should start with the task that can be done faster or be done earlier by a certain deadline. Evaluation of the list of tasks helps to better and more clearly understand the importance of each and it is easier to choose the most priority ones, because if you analyze in your mind, then you can simply forget something. Therefore, applying the Pareto principle, it is advisable to evaluate the to-do list not in your mind, but on a piece of paper or in an organizer.

Applying the Pareto law in life and at work, you will always get 80% of the result from the first 20% of your efforts, which, you will agree, is a good help.

You may ask: “Why is the ratio 80/20? Why not a 75/25 example ”?

The numbers 20 and 80 are more arbitrary and are an average, in your case the ratio may be 30 to 70, 10 and 90, or completely different. The ratio of 20 to 80 is only a conditional indicator that is convenient for perception and memorization, and also quite well conveys the current order of affairs in life in many areas of life.

Does it make sense to spend the remaining 80% of your efforts if you have already done the main part, that is, 20%? Can it be enough to do only the most important thing and stop there?

For example, in an offline electronics store, 80% of income comes from 20% of products. It turns out that the remaining 80% of goods that bring only 20% of income are not needed? After all, they take up space in the window? But it turns out that it is thanks to these 80% of the goods of effort that you get the opportunity to earn an additional 80% of the profit. And now to practice, let's say you have removed these 80% of less profitable goods from the store, the choice in the store has decreased 5 times.

When the buyer does not see large selection, then the probability of buying is sharply reduced. We are so arranged that we know everything in comparison, so no matter how good product we did not hold it in our hands, if we have nothing to compare it with, then we do not see its advantages, we do not feel attractive emotions. Thoughts come, what could be better, we begin to feel uncertainty about the correctness of the choice and, most likely, we will go to another store, where there will be these 80% of goods that will allow us to compare and choose the best. That is, 80% of poorly purchased goods are needed for the buyer to be convinced of the benefits of the remaining 20%.

This is also the case with the application of the Pareto principle in planning. If we stop doing 80% of cases that bring only 20% of the result, then important cases that bring maximum results will disappear.

80% of the efforts for which we get only 20% of the result hone our skills and keep us in good shape, which allows us to get 80% of the result from 20% of the efforts as a kind of reward for work. If in life you stop fulfilling small work commitments, promises made, small requests from colleagues, then a person's value will begin to fall, people will not want to cooperate with such a person, and the number of important tasks may fall to zero, as in the example with sales, when the range of goods was reduced.

Summarize:

To start, you need to complete the most important tasks that bring 80% of the result, but after that you must move on to less significant ones, bringing only 20% of the effort and do the rest, since the little things are also important. If there is not enough time for everything, then we give preference to the important. But we change the next day so that, in addition to the important, we can keep up with the secondary ones, since important things appear due to secondary tasks.

P.S. If you have any difficulties or questions about the article you have read, as well as on the topics: Psychology (bad habits, experiences, etc.), sales, business, time management, etc. ask me, I will try to help. Consultation via skype is also possible.

P.P.S. You can also take an online training "How to get 1 hour of extra time". Write comments, your additions;)

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The Pareto principle can be applied to many aspects of life, especially in business management (in management). Pareto's 20:80 Law can multiply the profitability and efficiency of any organization or individual.

In 1906, the Italian economist Vilfredo Pareto noticed that 80% of the land in Italy was owned by 20% of the people, 80% of Italy's wealth belonged to only 20% of the population. Further research convinced Pareto that most things in life are not evenly distributed, that there is a certain unequal ratio that occurs in almost all aspects of human activity.

This ratio later became known as the Pareto principle 20:80 or Pareto's Law, some call it the Pareto rule.

Pareto principle in management

The key value of the Pareto principle for a top manager, businessman or entrepreneur is that it reminds you to focus on 20% of the most important actions that matter, especially in the face of constant deadlines.

- Do you have a lot of tasks during the day that require immediate solution?

Of all the activities on your daily schedule, only 20 percent affect the bottom line of the company as a whole. It is necessary to identify them and first of all focus on their implementation. And these 20% of the most important things, which ultimately give 80% of your results, but they also consume 80% of your time and resources.

- Do you produce a wide range of goods?

See how much of your profit comes from each product. According to the Pareto principle - 20% of the products of the entire assortment bring 80% of the company's profits.
Obviously, first of all it is worth concentrating on the "stars".

- Do you sell goods or services?

Calculate, most likely, 80% of your sales come from 20% of your customers, respectively, there are those 20% of customers who bring 80% of the profit. These are the clients who make large purchases and regular (loyal) customers.
Protect and encourage your 20% of customers!

- Do you manage the sales department?

See how each sales person makes a profit. According to the Pareto principle, 80% of sales come from 20% of employees. Make sure your Sales Champions are regularly rewarded.
Your task is to save this 20% best managers on sales in your company.

Analyze all marketing channels, which is the most effective, which advertising accounts for the largest percentage of sales? Then identify the few channels of promotion and advertising that really bring the target audience, which brings income. Concentrate on these promotion and advertising channels, develop marketing texts for a specific target audience.
Budgets are not limitless, allocate your budget as efficiently as possible.

Wikipedia: Pareto's Law, or the Pareto Principle, or the 20/80 Principle is a rule of thumb named after the economist and sociologist Vilfredo Pareto, in the most general view is formulated as "20% of the efforts give 80% of the result, and the remaining 80% of the efforts - only 20% of the result." It can be used as a basic setting in the analysis of efficiency factors of any activity and optimization of its results: by correctly choosing the minimum of the most important actions, you can quickly get a significant part of the planned full result, while further improvements are ineffective and may be unjustified (according to the Pareto curve).

The Pareto Principle in Sales:

The Pareto principle (Pareto's law) is well known and has been used in sales for a long time.

“Remember?

20% of product names give 80% of revenue,

20% of buyers bring 80% of the revenue,

20% of the company's employees bring 80% of the value, and so on.

Isn't it tempting to give up 80% of product names or focus all your efforts on 20% of buyers ...

One entrepreneur actually reduced the assortment in his store, removed the slow-moving goods. At first, the return on each ruble invested increased due to inertia. But subsequently, the revenue in the store as a whole fell, the return on each ruble invested became even lower.

The Pareto law (80/20 principle) holds in any case, whether you have 100 items of goods or 100,000 items of goods.

Please do not repeat other people's mistakes. Pareto's law (80/20 principle) is not needed for cutting and cutting, but for the skillful distribution of efforts.

For the above situations, the Pareto Principle is used as follows:

80% of the warehouse stock in monetary terms is 20% of the items of goods, these 20% of items need special control,

20% of efforts should be directed to finding new buyers, 80% to maintaining and developing relationships with existing buyers,

80% of the effort on 20% of the main buyers (giving 80% of the revenue),

80% of the time and attention for 20% of the most effective and efficient employees.

How to use the Pareto Law (80/20 principle) to improve the efficiency of the company as a whole? What is the connection between the Pareto Principle, work and staff motivation, for example?

In my experience as a former store manager, there is real example when the efforts of the sellers allowed to increase the revenue in the store by 20% within a month. But the change in the assortment according to the Pareto Law (80/20 principle) increased the revenue next month by 70% at once (the figures take into account the seasonal adjustment).

Selfless work of personnel can increase the efficiency of the organization, but changes in the product, promotion, changes in the organization of work give a much greater effect.

If you really want to improve your efficiency, create a more efficient business system, teach people to work in this business system.

Over 100 recent years human body progressed significantly. This can be judged even by sporting achievements. People have trained to run faster, higher and jump further ...

But the most ordinary person is able to move between Moscow and St. Petersburg in eight hours. Although 100 years ago, this took much longer.

Over the past 100 years, 20% of changes are human development, 80% are technical progress.

Something similar happens in business. Business seminars and trainings can increase business efficiency by 20% through personnel development, the remaining 80% will be provided by business technologies. The Pareto principle works here as well.

Lay out your "football business field", arrange the players, i.e. distribute work optimally between employees. Work out the rules of the game, i.e. write down the Rules of interaction. Define rules for rewards and punishments, i.e. develop a clear remuneration system. Do this all for at least 80% of the cases, assign each player a task and let him complete it at least 80%.

Use Pareto's Law (80/20 Principle) in other situations as well. The results will not be long in coming.

Pareto principle (Pareto law), examples

How to understand whether you or your employees have done their job well? Do you really need to do the job "excellently"?

I am reminded of a story from practice. One company had a great salesperson. He served customers perfectly, one might say "lick" them, did all the work "for five plus". The buyers were very pleased. But it so happened that this employee quit, and instead of him another, also a good seller, began to do the work. But the other salesman did his job at five-minus. How do you think the customers have reacted? The buyers were dissatisfied.

If 8 out of 10 buyers were satisfied with the work of your company, this is enough, the work was done "for a solid four". Getting 100% satisfied customers is impossible "by definition." You can always find something to find fault with, especially if you got up on the wrong foot in the morning ...

What if you have planned 10 things for yourself per day, but have done only 8? This is a pretty decent result and satisfactory performance.

How to determine if a subordinate has performed your task well enough? It is clear that no one will do the job better than you. But is this a sufficient reason to do the work yourself instead of a subordinate?

Take your own performance of the assignment as a benchmark. If the subordinate has completed the task at 80% of the standard, this is a satisfactory performance. But now you have the opportunity to use the freed up time for the satisfactory execution of the task that your supervisor has entrusted to you.

Remember that there are limitations to using the Pareto Law (80/20 Principle). If a subordinate submitted a report to the manager 20 minutes later than the designated deadline, then there may be two options.

First option. If the delay did not entail any serious consequences, then the performance can be considered satisfactory.

Second option. If the meeting began at 15:00, and the report for the meeting is submitted at 15:20, then such a performance, of course, is unsatisfactory. V this case we are talking about the fact that it is impossible to jump over the abyss by 80% ... "(Vladimir Zyuzko)

Pareto's law online sales and promotion

Pareto's law also works in online sales.

Check the conversion of your site: 20% of all the goods and services of the company displayed on the website account for 80% of all profits.

Having identified these materials, which account for the lion's share of traffic, why not make them more selling, improve, put competently internal links to others at least interesting articles and reviews? Think about how to improve behavioral factors or increase sales of other products.

It's the same with website promotion, look at what keywords visitors come to your site. Which keywords bring you the most traffic?
You will see that not a large number of keywords (around 20%) give you the lion's share of your traffic.
Increase the visibility of your site for keywords that bring more visitors and more sales.

The Pareto principle and personal effectiveness

We used to think

What about all the papers or phone calls must be treated with equal care.

That education received at one university has the same value as education received at another.

That all problems stem from a variety of reasons, so you shouldn't even try to look among them for a few key ones.

That all possibilities are equally valuable, so it doesn't matter which one we choose.

So why do we need the 80/20 Principle? Whether you realize it or not, it leaves an imprint on your life, on the world in which you live, on your work.

Understanding the 80/20 Principle gives you a sober view of what is really happening in the world around you.

80% of your efforts will bring you 20% of the results, and 20% of your efforts will bring you 80% of the results.

What does it mean? And this means that of all large and small things during the day, only 20% are really effective, which bring 80% of the result, while most of your energy and time is spent on various little things that can be delegated to subordinates or others. people who will do it better.

It is necessary to analyze and from the mass of everyday affairs to single out the main, more important ones, those that, in the near future, will bring 80% of the result or income, and begin to perform these very tasks in the first place, because our human resources (time, health) are also not unlimited.

The Pareto principle in life. Examples of

In personal, private life, you can also find many examples in which we can observe the ratio 20/80 (Pareto efficiency principle).

For example, you might agree that:

80% of your salary goes to 20% of things (possibly mortgages, groceries),

80% of your time you spend with the same specific circle of people,

80% of stress, troubles, irritation you get from 20% of people in your environment,

You wear 20% of your wardrobe 80% of the time,

We spend 80% of our time on 20% of our friends and family.

... and this list can be continued for quite a long time.

conclusions

Overall, the Pareto principle is more of an observation (not a law) that most things in life are not evenly distributed.

Some things, actions, deeds contribute more than others.

The 80/20 ratio is more often a rounded, approximate calculation of typical distributions, since it is more accurate, the final ratio in each case may be different, for example, 68/32, 90/10, 95/5, even 99/1.

For example, in enterprise management, You are not a machine, you cannot fully concentrate on only 20% of your affairs, which will bring 80% of the profit, you will have to deal with current affairs, meet with visitors, regulate various minor issues with your employees, make decisions, answer urgent calls, including personal, etc. etc.

Or take another popular example:

20% of your employees generate 80% of your profits.

This does not mean that we urgently need to get rid of the remaining 80%, perhaps some of them will be able to grow new “Sales Champions”, and some, who seem completely hopeless, may show their abilities in other departments.

Remember the law of synergy?

When the result 1 + 1 can be 3 or more. Sometimes a combination of things, cooperation of people, knowledge, experience, characters can significantly increase or affect the final result.

As, for example, 80% of the painting "Mona Lisa" was painted in the first 20% of the time, but this painting would not have become a masterpiece, without all the subsequent touches and details.

The 80/20 Pareto Principle should serve as a daily reminder to focus on doing a larger percentage of the most important things, in other words, "work smart at the right thing."

Do not constantly engage in mouse fuss, try to concentrate on the things that bring the greatest result, effect, income, which improve the quality of your life and lead to the realization of your goals or dreams!