Pareto’s Principle or The 80/20 Rule

An Italian nobleman and economist Vilfredo Pareto (1848-1923) was the first person to postulate on the universal interdependency of economic events. Apart from being required reading for the economists and academics of the time, his book on the subject was not a riveting best seller. However, he did come up with a rule which over time has become loosely known as the Pareto Principle, or the 80/20 rule.

And what does it mean when you strip away all of the economic waffle?  In short, there’s an inverse relationship between the cause and the effect, and Pareto postulated that it was in the order of 80/20.

This interdependent relationship between cause and effect tends to apply at home, in your social life, and at work.

Ever had to organise a social event? About 20% of those involved will do 80% of the work.  Ever been a member of a service club? About 20% will do 80% of the work.  Ever played sport? About 20% will score 80% of the points.

My pet beef on the home scene is that 80% of the time the toothpaste tube is only 20% full!

To be sure, the 80/20 rule is an inexact science, and some of the following business examples may not apply to you. But my hunch is that at least 80% will… and 20% of them will have an amazing impact on your business.

But, let’s cut to the chase.

This special action report is an exercise in helping you to recognise the problems and/or to spot the opportunities which exist in your business or division.

And, having recognised the problem or opportunity, you’re 50% of the way towards arriving at a satisfactory and profitable solution.

The other 50%, however, is the critical part. It’s the doing part…the part where you work out a course of action to rectify the problem, or seize the opportunity. It requires you to act.

Remember this: Vital and timely information that is not acted upon is as useless as yesterday’s newspaper.

Welcome to the 80/20 audit on your business.

Click to download the PDF template.Performing an 8020 Audit on Your Business