The Art of Achieving More with Less

The Pareto PrincipleYou were probably taught at school, or learned from experience about the law of averages. That is, if you flip a coin 100 times you are likely to get, more or less, an equal occurrence of heads and tails, or a 50/50 outcome.

And if you draw a card from a perfectly shuffled deck, the chances of pulling a spade is one in four (13 out of 52).

This is based on simple probability – the measure of how likely an event will occur.

It is easy therefore to think that this linear relationship applies pretty generally to most aspects of our lives, but when we actually look around us nature can produce some pretty odd results. For example, if you look at the carpet in the main room of your home or office, you will notice that, broadly speaking, 20% of the carpet has 80% of the wear.

Or look inside your wardrobe. You will find that by and large, you wear 20% of the clothes you own about 80% of the time.

Take a look at your personal finances. In most cases, 20% of your monthly bills account for 80% of your total monthly outgoings.

Or look at your last phone bill. Were 80% of the charges, or  80% of the time  you used, made up of 20% of  all the numbers you called?

This pattern can be found again and again in the world around us, and it highlights that far from being nicely linear as we might have imagined, nature and the universe are decidedly wonky!

This phenomenon is often referred to as the Pareto Principle, named after the person who first observed its effects, but it is also known as the 80/20 principle, due to the uneven distribution found between causes and effects.

What the principle basically states is that in any given process or activity, the minority of causes (or inputs, or effort) will lead to a majority of the effects (or outputs, or results).

This effect has long been understood in business, where for example:

  • 80% of profits come from 20% of customers.
  • 80% of complaints come from 20% of customers.
  • 80% of Sales come from 20% of Sales staff.
  • 20% of stock takes up 80% of warehouse space.

Knowing this is important as it allows a company to deploy its resources in the most effective manner to maximise its results – for example to devote 80% of its Sales Force to the top 20% of its customers, in value terms.

This concept is picked up on in Tim Ferriss’s The 4 Hour Work Week, where he advocates focusing attention on those 20% of customers who contribute 80% of the income, and even “firing”, or refusing to do business with those customers who contribute the least, yet take up the majority of your business time and cause the most trouble.

But what does all this mean to us personally and individually?

Well simply that if we desire to have more of something in our lives – better health, more money, a better job, more meaningful relationships and so on – then we simply need to identify those 20% of things we do in those areas which give us 80% of our desired results.

For instance, if we look closely at all the things we do each day we will find that they can be divided into the vital few, and the trivial many.

The vital few are the 20% of actions we take, people we speak to, decisions we take and so on, which give us the 80% of our successful outcomes for that day. The other 80% of things we do during the day – the trivial many, contribute very little to our overall outcomes.

So in terms of using the Pareto Principle as a time management tool in our lives, it is not really a technique that we apply or a system that we follow, but more of a mind-set and an underlying principle that we approach our lives with.

If we are not getting the results we desire in any area of our lives – ie the effects – we can stop to examine whether this is actually because we are not focusing on the right inputs – the causes. To get more of the effects, we simply need to apply more of the causes…

 

 

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