The 80-20 Rule

Vocabulary

Vilfredo Pareto

The 80-20 Rule is one of the most useful concepts in business and time management. It is also called the Pareto Principle after its founder, the Italian economist Vilfredo Pareto.

Pareto had originally studied engineering at university and worked in the railway and iron industries. But he became interested in economics and sociology, especially in his mid-forties.

The Discovery

In 1906 he wrote a paper which claimed that 20% of Italians owned 80% of the land in Italy (he had got this idea by noticing that about 20% of all the pea pods in his garden contained 80% of the total pea seeds).

He then carried out surveys in other countries, and to his surprise, found similar distributions.

Pareto concluded that people in society seemed to divide naturally into what he called the “vital few” (the top 20% in terms of money and power), and the “trivial many,” the bottom 80%.

In Business

He later discovered that most economic activities followed this pattern as well.

For example, in a store, 20% of its products generate 80% of all sales, while 80% of the products generate the remaining 20%. Twenty percent of the customers account for 80% of all purchases, while 80% of the customers account for the rest. 20% of the customers complain and give you 80% of your problems and vice versa.

The 80-20 Rule has become an effective tool in running and organizing business and personal life.

  

Questions

1% The 80/20 Rule is a scientific concept that only applies to physics and chemistry. True or false?

3% Did Vilfredo Pareto studu economics at university?

10% Did he seriously study economics and sociology right after he graduated? What did he do in the beginning?

20% What did he observe in his country?

25% Was this unique to Italy?

33.3% Where did he get this idea or concept?

50% The Pareto Principle applies only to economics and sociology. Is this right or wrong?
 
 
 
66.6% I have heard of the 80-20 Rule or Pareto Principle. Yes or no?

75% How would the 80-20 Rule apply to the following? Give examples.

1) vocabulary
2) education
3) people
4) jobs, occupations; employees
5) devices, gadgets, widgets, electronics
6) languages
7) TV channels, websites
8) foods, crops
9) business, companies
 
 
 
 

90% How could the Pareto Principle be used to improve the efficiency and productivity of your company or organization?
a) products or services
b) clients, prospects, customers, target groups
c) vendors, suppliers
d) employees
e) time, money, investments, resources

99.9% Do you have tasks and activities that fall into the 80-20 Rule? What are they? Knowing this, what should you do?

110% How could it be used to improve people’s lives?