What is the 8 80 Rule? For example, you might agree that. Pareto principle: general information

02.04.2019

Pareto's Law? What is this? Many of you have heard this phrase, but are unlikely to know exactly what it is about. Most of us encounter this rule in our work or studies. His statements will be useful to many, because it teaches you to achieve maximum results with a minimum of effort. Pareto's law is widely used in practice in the field of economics, marketing, logistics, as well as in other specialized industries.

A little history

The law or Pareto rule was first introduced into practice in 1941 by the American theorist Joseph Juran (1904-2008). He named it in honor of Vilfredo Pareto (Italian economist 1848-1923). Since it was this scientist back in 1897 who noticed a pattern, which was later named after him. Studying the division of agricultural land in Italy, Pareto found that about 80 percent of all land was owned by 20 percent of the population. It was the 80/20 ratio that subsequently became the main one in this rule. The spread of the influence of Pareto's law to various phenomena in the social and economic sciences occurred thanks to the English scientist Richard Koch and his book “The 20/80 Principle: The Secrets of Greater Achievements with Less Effort.”

Today it is generally accepted that a person has three resources: time, money and mobility. A person who has all the listed resources in his arsenal can be called successful, and the work performed can be called highly effective. But not everyone understands the principles of this law.
Each of us uses Pareto's law every day in school, at work, in Everyday life, and without even suspecting it. Becoming more knowledgeable about using the 80/20 rule will greatly increase your chances of success.
The 80/20 ratio, by the way, is quite arbitrary and often, depending on the area of use, fluctuates in one direction or another. If in some industries this ratio is 90% to 10%, then in others it is 75 to 25 or even 70/30.
In this article we will try to figure out exactly where Pareto’s law can, and sometimes even needs to be used in practice.

Self-development

A relatively small number of people can consider themselves professionals in several industries at once. After all, in reality, only 20% of skills bring results. Although you can be quite successful if you take Pareto’s law as your guide and make every effort in the direction that best suits you. We strongly do not recommend that you waste time on mastering skills that are given through “I can’t.”
Focus on your strengths. If you have well-developed communication, why sit over a mountain? paperwork, which does not bring any pleasure? It is better to develop communication skills and choose an area where they can be useful.
Don't like communication? Perhaps working as a freelancer will become an excellent alternative for your new career.

Pareto Principle: Learning

In all likelihood, you have often noticed that you can remember no more than 20 percent of the material you studied at school or university. Many may appeal to the low quality of education in our country. But, most likely, our “forgetfulness” will be a manifestation of this all-encompassing principle, which is very difficult to overcome.
Managers often use the Pareto principle in training. They are taught to select only 20% of tasks, the completion of which will achieve the majority of the maximum result of work.

The Pareto principle is also an inseparable part of the methods for training people who want to successfully manage their time. Using the 80/20 principle in education would help high school and college students improve the quality of their learning and significantly reduce the time it takes to learn educational material. Therefore, these categories would do well to become more familiar with the classic formulations of the Pareto Rule - 20% of efforts can bring 80% of the results. As a result, the sooner you begin to determine the main thing during training, the best results you will achieve. The main thing is to allocate a fifth of the items or material on which you need to spend more time. Using this approach will allow you to become a more successful specialist in your field in the future.

Video on the topic:

Computer and Pareto

Many users have a lot of software installed and countless files downloaded. For those who use a PC as a work tool, such cluttering of the workspace can become real problem. Although, if you analyze the contents of your hard drive in detail, it actually turns out that only 20 percent of programs are actually used for daily activities on a computer or laptop. The same goes for a lot of photos, various music and documents, the maintenance of which is increasingly difficult for most “users”. It’s better to take your time and put your programs and files in order.

Transferring only a small part of them to disks or flash drives or even complete removal will not only make your computer “more spacious”, but also increase its performance. This will also allow you to additionally free up several gigabytes of useful memory.

Time management

“There’s so much to do, I don’t have enough time,” “I don’t have time, I’ll have to take work home.”

Similar thoughts often “walk” in many heads.

Sometimes the thought even appears: 24 hours in a day are not enough to do all the things that need to be done. This is primarily due to the fact that each of us has our own The biological clock. Some consider themselves a “lark”, others a “night owl”, and there are, of course, “pigeons”. Some work to the accompaniment of loud music, while others want complete silence so they can concentrate on doing their work. Each of us has periods during the day or day when we are most active. Try to calculate your intervals of business activity - carry out important tasks or those that require increased concentration during these periods.

If you evaluate your work day, you will notice that real activity, which produces results, takes about 20 percent of the time. The rest of the workday will most likely be ineffective.

The description also applies to scheduled meetings for each day. After analyzing all the scheduled tasks, you can choose those that will give the greatest result, while the rest should be postponed to other days or cancel meetings altogether, because this is a significant risk of wasting your invaluable time. In the future, you may even develop the habit of removing useless activities from your list of daily tasks. The very first day planned according to the Pareto rule will not only save time, but will also surprise you with its simplicity and productivity.

Pareto's Law in Business

Application of the Pareto rule in business allows you to concentrate on those activities that bring maximum profit. To do this, first of all, you need to organize your affairs. Try to highlight those groups of goods or services that bring a total of up to 80 percent of profit, and pay more attention to their development. The rest of the activity, most likely, will only take a colossal amount of effort and time, practically in vain.

An example is working as a freelancer, which, unlike the main business, takes more time and effort than it brings in money. The exception is passive income like a deposit, since in this case your work is close to zero.

Saving money

If you save always and everywhere, it will quickly turn you into a rather stingy person. But if you don’t go to extremes and take Pareto’s Law into account, you can significantly reduce your costs. Many financial problems arise when a person sees that he does not fully control his money. And here you can also take advantage of this universal law. After all, a significant part of the funds is spent on the same items in the budget. By analyzing and organizing your expenses, you can easily see where most of the money you earn goes. Try to allocate a fifth of the expenses that most likely receive the lion's share of the funds, and think about how to save on them. These include, for example, constantly updating your wardrobe.

"Friendship" Pareto

During our lives, each of us communicates with many different people. With some, communication brings a lot of pleasure, with others - disappointment and wasted time. When meeting and communicating, not everyone is able to immediately understand whether a new acquaintance will bring at least some benefit in life. If you refresh your memory of your relationships with friends and acquaintances and highlight those with whom spending time together brought positive emotions, and who will not hesitate to help Hard time, then it turns out that there are most likely not so many such people.

This also applies to several hundred “friends” on the Internet, in particular in in social networks. In fact, maintaining connections with your family and true friends will give you that dose positive emotions, which a thousand reposts or likes on a photo cannot compensate for.

Reading books with Pareto

So many life lessons You and I draw from books, because this is a huge experience accumulated over generations. Reading, perhaps, helps most in personal self-development. We don’t argue, there are books whose plot you want to quickly throw out of your head. Having analyzed the previously read literature, it turns out that, most likely, only a fifth of it actually brought benefit to readers. The rest did not add anything except wasted time and deterioration of vision.
Try to select literature that will really be useful to you and will allow you to gain new knowledge for general development or future profession. A detailed selection will allow you to be more enriched spiritually.

Applying the Pareto rule will help you understand which books are worth your attention and which ones are best put aside. Reading reviews, comments or reviews on thematic sites will make this choice easier. The application of the law applies not only to books, but also to posts on social networks, as well as various articles. It is also worth re-reading those books or articles whose acquaintance had a significant impact on your worldview.

Pareto "on a diet"

There are thousands of diets on the World Wide Web, ranging from recipes from Hollywood stars to exotic Himalayan techniques. Each of them was created to help a person change their eating style, appearance and even your own emotional condition. Using the Pareto Law in creating a diet will also help you achieve your goals. Many nutritionists around the world will agree with this; in the practice of creating nutritional regimens, they also use the 80/20 ratio. To summarize its application in dietetics, it consists of eliminating about 20% of foods from the diet, the absence of which will not worsen your well-being, but will allow you to normalize your weight and metabolism by 80 percent.

These results are caused by dietary restrictions in four food groups: flour, sugar, salt and alcohol. Not much, right? But at the same time it is very effective, because they daily absence on the table will improve your metabolism and bring your weight back to normal over time.

How Alternative option diets according to the Pareto rule, experts suggest abstaining from these four foods for four days, and on the fifth day eating everything your heart desires. That's right: all those goodies that you love - coffee, chocolate, your favorite pasta or even cakes - whatever. This will allow your body to receive nutrients, which he needs, and at the same time you will be able to maintain a normal weight.

Try limiting your consumption of these four food groups four days out of five - and you will see that Pareto's Law really works.

Pareto in everyday life

If you think carefully, you will see: in everyday life there are a lot of all sorts of unnecessary things that we keep at home in vain. In many homes there is more than what we actually need. Some things are a pity to throw away, while others are kept in case “they might come in handy someday.” Sometimes they constantly get in the way, taking up the right space. In Feng Shui practice there is even a name for this phenomenon - energy rubble.

But if you soberly evaluate what exactly you have stored and, most importantly, how often you use it, it turns out that only a small part of all the accumulated things is really needed in everyday life. Everything else takes up useful space not only at home, but also in the car or even in the wardrobe. Older brother's roller skates, which he grew out of twenty years ago, hats or shoes that have long gone out of fashion - all this actually only clutters up space in the closet and garage.

Understand the truth: those things that you have not used or worn over the past two years, with a high degree of probability, you will never need. Thus, the lion's share of things you don't need (and others really need) can be given to the nearest boarding schools or orphanages. This way you will not only clean the room, but also do a good deed. Just don't give away blatant trash. This is, at a minimum, neither beautiful nor correct. Only good things should be given away.

Having assessed the need for things, you can leave only the essentials. By the way, putting things in order quite often also puts things in order in your head.

Pareto “learns languages”

The vast majority of people believe that talent for learning languages only manifests itself in childhood. However, in fact, this is all fiction and each of us has the opportunity to learn several languages at any age and at any time. as soon as possible. You just need to change your approach to learning new words and grammar rules. Most of those who made attempts to learn a foreign language were completely disappointed in their abilities, simply not knowing where to start and how to actually learn words and grammar.

A new language means, first of all, new words. Lots of new words. A significant number of future polyglots give up this activity, motivating bad memory to process new vocabulary. In this case, it will be useful to know that you don’t need to know all the words of a new language, because you must admit that you haven’t mastered all the words in your native language?

Then again the Pareto law will come in handy. For learning foreign languages, it sounds like this: 20% of new words and grammar learned will allow you to understand up to 80% of what you hear or read.

An example is the most popular language that is studied by millions of people around the world - English. 65% in English will include only the 300 most common words. It is from these most commonly used words and phrases that frequency dictionaries are compiled, which significantly speed up the learning of a new language. But mastering such a dictionary of 2000 words will allow you to understand 75-80% of the information in the language you are learning.

PS

It is always difficult to adapt to something new, but if you approach the task correctly, then the solution will be quite simple. Pareto's law, which many became acquainted with in this article, comes into conflict with what we are all accustomed to taking for granted as correct and taken for granted. Its use in various fields knowledge has long been widespread in the world. The examples given here are only a small part of the potential that it contains. People often consider all the work we put into achieving a result to be equally important. But very often this is not the case at all. Many discoveries and achievements, careers of successful businessmen and famous people are based on Pareto's law.

The 80/20 law (Pareto rule) is one of the most famous methods for measuring efficiency. Using it, you can increase your work productivity. Let's look further at how the 80/20 rule works.

Pareto principle: general information

If you establish which resources will provide the maximum return, then with minimal costs you can achieve greatest effect. The Pareto rule means a certain pattern of asset allocation. It is believed that all factors have the same influence on what is happening. However, this is a misconception. The Pareto rule corresponds to the ratio of effort and result. Many people, when making transactions, think that they bring approximately the same benefit. At the same time, they also believe that all employees work equally effectively for the benefit of the company. These people, moreover, work every day with the same diligence. Some of those who do not know the Pareto 20/80 rule, when choosing a university, do not see the difference in utility 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 influence the outcome. All the rest of the energy will be spent practically in vain. According to the Pareto rule, only 20% of efforts will produce 80% of the results. While the remaining eighty percent of the energy will only lead to twenty. Using the Pareto rule, many investors and businessmen have achieved success in business. Understanding and applying this principle allows you to transform the life of both the person himself and the people around him.

History of origin

Pareto's 20/80 rule 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 distribution material wealth between different classes of people in England. According to the Pareto rule, people receive wealth in different shares. As a result of the research, certain numbers were established. Pareto found that only 20% of the population owns 80% of the goods. After in-depth analysis, an even greater imbalance was discovered. Thus, 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 random. A little later, Pareto examined the order of distribution of goods in other states in different historical eras. The same pattern was found in all countries. However, the economist was then unable to justify the indicators, and his theory was forgotten for a long time.

New research

In 1949, Harvard professor Zipf identified a similar relationship. He found out that about 20-30% of energy brings about 70-80% maximum possible results. The revival of theory made it possible to show the basics of self-organization of available resources. At the same time, another scientist Yuran studied the statistics of the distribution of production defects. They found the same ratio. The scientist described his discovery in a book. Yuran called for the use of his “Law of a Few” in enterprises involved in different industries. Thus, he intended to eliminate the production of defective products and improve their quality. Juran believed that uneven distribution occurs not only in the industrial sphere. He also believed that the rule also applies to the statistical description of accidents, offenses and other incidents and facts. In the United States, however, entrepreneurs did not take Juran's theory seriously. The scientist addressed Japanese businessmen. In 1953, he visited the country and gave several lectures there. After this, Yuran entered into several contracts with large corporations and remained in Japan. In 1970, the country's enterprises became serious competitors in the market. Yuran returned to the USA. The scientist led 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 company is considered one of the IT leaders. She actively uses the Pareto rule in her work. The theory in question was developed in 1963. Experts have found that computers spend 80% of their time processing 20% of the data. In this regard, the company management has set new goal. 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 consumer requirements. After this, technology was created that was several times superior to similar machines from 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 redundant employees; sellers spend too much time on a client who brings little profit. It would be logical to assume that in this case it is necessary to focus on the most profitable areas of the business in order to obtain maximum results.

Optimization

The Pareto rule involves restructuring the enterprise for the most productive specialists. These employees must sell the company's most profitable services and products. If we talk about clients, then, of course, the company does not want to lose any of them. But, as the Pareto rule states, only a small portion of buyers bring in the bulk of the income. Other clients waste employees' time. To obtain maximum results, efforts should be directed towards working with those who are of greatest interest to the company. Servicing 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, company management can increase efficiency and optimize the operation of the enterprise.

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 excludes receiving possible profit. For most companies, it is enough to stop at the border of 80%. To achieve this result, a small amount of resources will be required. Some experts compare this method of doing business with 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 attract the most attention.

Analysis

The Japanese Union of Engineers and Scientists has included the Pareto chart as a quality control method. The purpose of drawing up a diagram is to identify problems that need to be solved first. The curve allows you to display the complexities and determine the main factors from which to start. The diagram shows how efforts need to be distributed 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:

Defining the problem to be solved.
Taking into account all signs and factors that relate to the task at hand.
Identifying the root causes that create the greatest difficulties and collecting data on them.
Constructing a diagram.
Conducting analysis.

First of all, it is necessary to determine the purpose for which the curve will be plotted. The causes of problems and the difficulties themselves should be examined, what information needs to be collected and how to classify it. Next, you need to develop forms to record the initial data. For example, this could be a checklist. Then you should collect data, fill out forms and calculate the results for the studied indicators, characteristics, and factors separately. To depict the curve, you need to prepare a table form. It should contain columns for the totals for each factor being checked separately, the accumulated sum of the number of manifestations of the corresponding characteristic, the percentage relative to the overall result and the accumulated interest. The table should be filled in with factors in descending order of their importance.

Progress

To construct a curve, 2 vertical and 1 horizontal axes are drawn. On the left is a scale 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 x-axis is divided according to the number of characteristics studied or relative frequency. Next, a bar chart is constructed. The height of the column (it is laid out on the left scale) will be equal to the number of manifestations of the factor. Columns should be arranged in descending order (decreasing significance of the characteristic). The latter records “other”, insignificant factors. Its height may be greater than its neighbors. Next you need to draw a curve. The line should connect the points of the received amounts (percentages or quantitative indicators of factors). Each mark is placed above the corresponding column of the diagram, focusing on right side. Next, the necessary inscriptions and designations are applied to the curve.

Additionally

After analyzing the diagram, you should not strive to improve performance in all areas at once. It is more expedient to achieve results first on some of them. At the same time, you need to concentrate on those resources that can bring the greatest income. You shouldn't improve the efficiency of all of them at once. For each area that matters, it is necessary to determine which 20% of efforts can produce 80% of the results. You need to try to make the most of those moments when you have the opportunity to achieve the greatest effect. Many cite lack of time. However, as practice shows, this is just a myth. In fact, a person has enough time. People only use 20% of their day truly effectively.

Pros and cons of the method

The advantages include simplicity and clarity. This allows the Pareto chart to be used by those who do not have special training. Comparison of curves created before and after 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.

Areas of application

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

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

Many people face a chronic lack of time, various things come up and people are literally torn to pieces to get everything done, but often because of the information house we miss really important minutes and it’s not even about missed deals or part-time jobs, but about family time close friends.

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

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

Part 2: big and poor. This is 80% of the population who own only 20% of the wealth.

Further research showed that this the rule applies to almost anyone economic process and means: “20% of efforts give 80% of results. And vice versa, 80% of efforts produce only 20% of results.”

Why do you need to know the Pareto principle?

For correct prioritization, because if you miss tasks by 20% of your effort, then you will miss 80% of the result. Understanding this principle makes it easier and more correct to prioritize your 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 clients bring 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 tasks will be the most effective.

How to apply the Pareto Principle in planning:

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

Things that you always do, such as cooking, cleaning around the house, buying groceries at a store near your home, etc. in general, everything that you do regularly;

Complete the list with non-routine tasks that can be done today, such as getting ready for a date, preparing a presentation at work, or simply telling a friend important news.

Supplement with things from the back drawer, i.e. those that need to be done, but you put off from day to day. Maybe you can’t get to the doctor with your illness. Or your hanger broke a few months ago, you just can’t get around to making it, or maybe you want to buy a food processor, but you can’t find the time to buy it, etc. In general, everything you put off.

Step 2. Prioritization. Let's say we have a list like this:

Call the client to clarify the time of payment;

Monitor the execution of several projects at work;

Prepare a commercial proposal;

Repair the chair;

Prepare the roast;

Clean the house.

Now let's assign points from 0 to 10 for each case, where 10 is the most important case, and 0 is completely unimportant. Since each person’s priorities may be different, for our example, consider a man who is leading business image life and wants to achieve success in his career.

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

If both tasks have the same degree of importance or do not differ much in importance from each other, then you should start with the task that can be completed faster or meet a certain deadline earlier. Evaluating the list of tasks helps you better and more clearly understand the importance of each one and it is easier to choose the highest priorities, because if you do the analysis in your head, you can simply forget something. Therefore, when 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.

By applying Pareto's law in life and at work, you will always get 80% of the results from the first 20% of efforts, which, you agree, is a good help.

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

The numbers 20 and 80 are largely arbitrary and are averaging; in your case, the ratio could be 30 to 70, 10 and 90, or something 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.

Is there any point in spending the remaining 80% of the effort if you have already done the main part, i.e. 20%? Maybe it’s enough to do only the most important things and stop there?

For example, in an offline electronics store, 80% of the income comes from 20% of the 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 on the display case? But it turns out that it is precisely thanks to these 80% of effort products that you get the opportunity to earn an additional 80% of the profit. And now to practice, let’s say you removed these 80% of less profitable products from the store, the choice in the store decreased by 5 times.

When the buyer doesn't see large selection, then the probability of purchase decreases sharply. We are designed in such a way that we know everything by comparison, so no matter what good product We don’t hold it in our hands, if we have nothing to compare it with, we don’t see its advantages, we don’t feel attractive emotions. Thoughts come that it could be better, we begin to feel unsure about the correct choice and, most likely, we will go to another store where these 80% of goods will be available, which will allow us to compare and choose the best. That is, 80% of poorly selling goods are needed for the buyer to be convinced of the benefits of the remaining 20%.

The same applies to the application of the Pareto principle in planning. If we stop doing 80% of the things that bring only 20% of the results, then the important things that bring maximum results will disappear.

80% of the effort for which we get only 20% of the result sharpens our skills and keeps us on our toes, which allows us to get 80% of the result from 20% of the effort as a kind of reward for work. If in life you stop fulfilling small work obligations, given promises, small requests from colleagues, then the person’s value will begin to fall, people will not want to cooperate with such a person, and the number of important tasks may drop to zero, as in the example with sales, when the range of goods was reduced.

Summarize:

You need to start by completing the most important tasks, which bring 80% of the results, but then be sure to move on to less important ones, which bring only 20% of the effort, and do the rest, because the little things are also important. If there is not enough time for everything, then we give priority to the important. But we change the next day so that, in addition to the important, we can also manage the unimportant, because important things appear thanks to secondary tasks.

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

P.P.S. You can also take the online training “How to get 1 hour of extra time.” Write comments and your additions;)

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Observant people bring great benefit to the world when they share the insights they draw from their observations. Universal laws, which can be applied in all areas of life, help a person achieve better results in personal and public activities. One of these laws is Pareto's law.

Pareto principle, or the 20/80 principle

The Pareto rule is named after the Italian sociologist and economist Wilhelm Pareto. The scientist studied the flows of financial distribution in society and the activities of production. As a result, he derived general patterns, which were then reflected in the Pareto law, which was formulated after the scientist’s death by the American quality specialist Joseph Giurano in 1941.

Wilhelm Pareto's law is an effective formula of 20/80, where 20% is the effort expended in the chosen activity, giving 80% of the result. While 80% of efforts yield only 20%. Pareto's equilibrium was formed on the basis of his work on the “Theory of Elites” and was expressed in the principles he outlined:

Distribution of financial resources in society: 80% of all capital is concentrated among the ruling elite (elite), the remaining 20% is distributed in society.
Only 20% of enterprises, receiving 80% of the profits, are successful and productive.

Pareto principle - time management

A person’s success depends on many factors, but proper use of time is one of the key and important points. Pareto's law in time planning helps to achieve impressive results with less effort and take control of significant areas of life. Pareto optimality would look like this:

Only 20% of all completed tasks will give 80% of the result;
In order to select these most important tasks that will bring 80% of the “exhaust”, you need to make a list of to-dos and rank them in order of importance on a 10-point scale, where 10 indicates the priority of the task, and 0-1 shows a low degree of importance.
Start performing equivalent tasks with the one that requires less cost.

Pareto's Law in life

In everyday activities there are a lot of routine actions and only 20% of them really enrich the sphere of a person’s feelings, give practical experience and bring results. A conscious look at your life: connections with people, the space that surrounds you, things and phenomena - will help you review and isolate the unnecessary or reduce to a minimum everything that takes up energy and time. Pareto principle in life:

– spend most of your time developing those skills that bring 80% benefit.
Income - 20% of clients bring in a high, stable income, so it is advisable to pay attention to them and satisfy their needs.
Space at home - the Pareto effect is that a person uses only 20% of the things in the house, the rest gather dust in the closet, or every time they buy a lot of unnecessary things that clutter up the space. By planning their purchases, people spend less time maintaining these items.
Finance - control helps to calculate what 20% of things and products are spent on 80% of the funds and determine where you can save.
Relationships – among loved ones, acquaintances, and colleagues there are those 20% of people with whom more intense things happen.

Pareto principle in economics

Efficiency or Pareto Optimum in an economic system is one of the most important concepts of modern economics and contains the conclusion formulated by Pareto that the welfare of society is maximum in an economy where no one can improve his situation without worsening the welfare of others. Pareto - optimal equilibrium is achieved only if the necessary conditions are met:

Benefits are distributed among consumers according to maximum satisfaction their needs (within the solvency of citizens).
Resources are allocated between the production of goods in such a ratio that they are used as efficiently as possible.
The products manufactured by enterprises must make full use of the available resources.

Pareto principle in management

The Pareto distribution law also applies in the management sphere. IN big companies with numerous employees it is easier to create the appearance of activity than in small teams where everything is visible. Those 20% of employees who value their work and strive to make a career bring 80% of the income to production. HR specialists have long adopted the Pareto principle and cut unnecessary employees, saving company costs, but often this forced measure also applies to valuable employees when the company is experiencing a production crisis.

Pareto principle in sales

The Pareto rule in sales is one of the fundamental ones. Any businessman or top sales manager tries to identify the effective components of 20% of actions, conditions, partners, products that will allow transactions and sales to be completed at the maximum level. Successful entrepreneurs have identified the following Pareto patterns:

20% of time spent on business management – 80% of productive activities;
80% of sales are provided by only 20% of managers or salespeople;
Of the entire product range, only 20% bring a stable 80% income;
Regular clients or buyers are the 20% that bring 80% of the income to a company or production.

Pareto principle in logistics

The Pareto method in logistics has proven its effectiveness in different areas, but in general it can be postulated as: attention focused on 10% - 20% of significant assortment positions, suppliers and customers gives 80% of success with minimal costs. Aspects of logistics in which the Pareto principle is applied:

shipment, loading, transportation of goods;
tracking shipment volumes of the product range;
production optimization;
efficient placement of goods in trading floors or in warehouses;
clientele analysis.

What does a Pareto chart help determine?

Pareto theory can be expressed in 2 types of diagrams, which are applicable as a tool in economics, business, and manufacturing technologies:

Pareto chart based on performance – helps to identify the main problems and undesirable results of activities
Pareto diagram for reasons - identifying the main reasons why problems arose in the course of activity.

How to build a Pareto chart?

The Pareto chart is easy to use, but allows you to evaluate activities and make decisions to eliminate ineffective actions. The construction of the chart is based on the rules:

Selecting a problem to be thoroughly investigated.
Preparing a form for data registration
In descending order of importance, rank the obtained data on the problem being tested.
Preparing the axis for charting. On the left ordinate axis is the number of factors being studied (for example, from 1-10), where the upper limit of the scale corresponds to the number of problems. On the right ordinate axis there is a scale from 10 - 100% - an indicator of the percentage measure of problems or unfavorable signs. The abscissa axis is divided into intervals corresponding to the number of factors being studied.
Constructing a diagram. The height of the columns on the left scale is equal to the frequency of manifestations of control problems, and the columns are constructed in descending order of the importance of the factors.
The Pareto curve is built on the basis of a diagram - this is a broken line connecting the total points, which are placed above the corresponding column, focusing on its right side.
Designations are entered on the diagram.
Pareto chart analysis.

An example of a chart showing the Pareto imbalance and showing which products are more profitable:

80/20 - approximately this is the distribution of the percentage of those who think they understand what to do with the Pareto principle, and those who really understand it.

Let's try to correct this sad ratio a little.

The Pareto principle (law) or the “20/80 rule” in the most general view sounds like “20% of effort produces 80% of the result, and the remaining 80% of effort produces only 20% of the result.” You can often find this rule mentioned in a variety of contexts. A quick Google search yielded the following statements:

20% of customers (products) provide 80% of turnover or profit;
20% of errors cause 80% of losses;
20% of the initial products determine 80% of the cost of the finished product;
80% of results are achieved in 20% of the time spent;
80% of your visitors only look at 20% of the pages on your site;
80% of efforts are wasted;

One can argue about the accuracy of the numerical values, but the very fact that we often deal with this kind of unevenness is difficult to deny. In order to agree that this unevenness exists, simply life experience is enough.

And here lies the main trap of the Pareto principle - thanks to its clarity and scintillating beauty, it contributes to false conclusions.

I recently read an article by some graduate of a “business consulting course.” The novice guru blamed businessmen for not having yet figured out to give up 80% of goods that provide only 20% of the profit.

You can google other, no less sweeping tips.

Here it is appropriate to recall one of Murphy's laws that “complex problems always have simple, easy-to-understand wrong solutions.”

What's wrong?

It must be said right away that Vilfredo Pareto himself, an economist and sociologist who died in Switzerland in 1923, has a rather modest attitude towards the principle named after him. Pareto studied Italian households and found that 80% of income was concentrated in the hands of 20% of families.

The term "Pareto principle" was coined by Joseph Juran, a leading luminary in management consulting. Juran argued that in all human endeavors, most results are achieved by a lesser amount of effort. This principle is also called the “law of imbalance.”

By and large, the 80/20 ratio is just a mnemonic formula designed to show the existing imbalance of effort and result. For example, Pareto’s own data for Britain showed a different ratio of the population’s well-being - 70/30.

The formula was named after Pareto out of respect for the sociologist, who made a serious contribution to the theory of probability.

Conclusion 1

The 20/80 ratio is a mnemonic formula for visually demonstrating the imbalance between effort and result. It is not law and should not serve as a literal guide to action.

For example, retaining only 20% of employees during a layoff may be a bad idea. It is possible that more the right decision there will be a reduction of 93% of the staff. Or 2%.

The Paradox of the Pareto Principle

The Pareto principle works in many areas, but it often happens that it cannot be used. Any complex system is described not by one parameter, but by a set of them. Let's try to show what follows from this with examples.

20% of customers (products) provide 80% of turnover or profit.

From this ratio two conclusions can be drawn, correct and incorrect.

Correct. Give increased attention clients who provide the lion's share of income will be the right decision.

Wrong. Refuse 80% of clients giving 20% of turnover or profit - bad idea. After all, if the Pareto principle is objective, it should also apply to the remaining customers. And you will again find that 80% of the turnover or profit comes from only 20% of the remaining ones.

At the same time, a reduction in the number of clients expectedly reduces profits in “pure” figures.

Will you do another iteration for even better optimization? And so on until you discover that 100% of your remaining (you have greatly reduced it) turnover and your profit comes from one or two clients?

Working for several, and even more so for one large client, is a bad way for business. A VIP client will very quickly realize that you have no choice but to deal with him. The result of such dependence will not please you.

The same picture will turn out if we are talking not about clients, but about products and assortment optimization. If 20% of products produce 80% of the profit, then reducing the assortment by 80% may seem great idea. Profitability will increase, there will be less hassle.

But. After a series of cuts to outsider products, you will be left with a very narrow group of products (down to one) that gives 100% profit. And then the time will come update the product. And any failure with such an update will be fatal for you.

Sellers are well aware of this: if you leave only hot-selling goods on the shelves, buyers will start buying them from competitors who also have low-selling goods on their shelves - they also buy them, although less often.

When I go to the store for a slow-selling product, I buy several popular ones along the way. If I know that your store does not have a product that I need right now, I go to another store and make all my purchases there.

In other words, redundancy (clientele or assortment) is imaginary.

In reality, this is a reserve that makes it possible to respond in a timely manner to changes in external conditions. Of course, redundancy is a reserve, and not ballast, only in the case when excess resources are filtered taking into account their prospects, and the rate of redundancy is meaningful.

Here's an example of marketing agility based on a Pareto-like relationship:

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Here the assortment matrix was built based on observations and research. But blindly following the “20/80 rule” reduces the evolutionary flexibility of the enterprise.

It is not for nothing that serious consultants make many reservations in their recommendations for “reducing outsiders.” The essence of these reservations is that the process should be approached thoughtfully, carefully, taking into account the pros and cons. Unfortunately, no specific “weighted reduction” technologies are proposed. Apparently, this is the 20% part of the know-how that brings consultants 80% of the profit.

80% of your visitors only look at 20% of the pages on your site.

This fact does not mean that you can delete the remaining 80% of the pages on your site. For example, for online stores, the “Delivery and Payment” page is not the most visited, which does not in any way affect its importance.

But if the information on your site is out of date, starting the update from the most visited pages is the right decision.

20% of criminals are responsible for 80% of crimes.

Most crimes are petty and medium crimes. An apartment burglar can commit dozens of thefts. Pickpocket - hundreds.

But this does not mean that all police forces should be devoted to fighting only these crimes, to the detriment of the investigation of robberies and murders. Simply because arithmetic is inappropriate here.

Conclusion 2

Even if the Pareto Principle is true, it speaks of evaluation according to only one parameter. In reality there are always more parameters. For example, one group of products can provide 80% of the profit, and another - 80% of the turnover, the third group - provides the lion's share of customer traffic.

Some clients provide the main income, others are highly loyal, launch and support word of mouth, and bring in new clients from the first group.
20% of cold calls can get you 80% of clients. But the largest customers may be in the remaining 20%.

The examples can be continued, but the meaning is already clear: using the Pareto principle thoughtlessly is too risky. But as a technique - first paying attention and effort to the most important thing, to the leaders - yes, it works, and it works well.

The worst thing you can do with the Pareto principle is to blindly agree with the conclusion that follows from it: “Most efforts are wasted.”

Here, for example, the “magic of numbers” displaces common sense, relying on pseudoscientific manipulation of pretty numbers.

As we have already said, to describe any complex system a set of parameters is required. Each parameter is distributed unevenly throughout the system; the maximum is reached on some elements. But it does not happen that the maximum in all parameters is achieved on the same elements.

Let's imagine a movie about a group of saboteurs behind enemy lines. If the group is assembled correctly and the film is not based on comic books about universal superman soldiers, then the skills of the group members are heterogeneous.

Let's draw a table for convenience.

If you analyze any parameter separately (shooting, close combat, etc.) “according to Pareto,” you can see that the composition of the group is not optimal. And there are “extra people”. But if we look at the group as a whole, we see that the maximum is achieved for any parameter. And the maximums are achieved on different people.
To make it even clearer, let’s try to optimize “Pareto”, for example, the “Shooting” parameter. We remove two “outsiders”, Carl and Jim.

Now the group will be able to shoot well or hack the server. But it’s not a fact that it will fight off a crowd of angry system administrators.

It turns out that when Pareto said that uneven distribution of income is inevitable, he was smarter than his followers. The unevenness is a consequence of the fact that we are dealing with a complex system.

And it is unlikely that Vilfredo Pareto expected that his descendants would try to draw such far-reaching conclusions from his local observations about the distribution of income.

Do not do it this way.