The Pareto Principle is a simple analytical tool that has been used to solve problems in manufacturing, project management, and other professional realms for years. Commonly known as the 80 / 20 Rule, the Pareto Principle explains that the world is not fairly distributed and a few factors often have an over-sized influence on results. This rule is useful to spot areas where a small amount of work creates a big payoff.
A few examples:
- 20% of customers contribute to 80% of sales.
- On average 20% of software defects are critical enough to cause 80% of site crashes.
- 80% of a project’s benefit is likely based on 20% of the effort put into the project.
Spot the Pattern
You’ve likely heard the term ‘One bad apple spoils the bunch,’ that’s Pareto. One apple affects the outcome of many others. We intuitively know the 80/20 Rule to be true but not many know it can be useful. Using the Pareto Principle to make decisions and solve problems may have been formalized in the professional world, but can and should be used in our own daily lives.
The trick is in spotting the pattern. You can use this model to solve problems quickly and make good personal decisions faster once you train your brain to look for the vital few (~20%) causes that can lead to the largest desired outcome. Adopting this mental model elevates how you see life and solve problems by simplifying what at first can seem complex.
The Pareto Principle: An analytical tool formalized by Dr. Joseph Juran in the 1950s observing that on average, 20% of action/activity will account for 80% of related results. This tool gives us the ability to focus on actions that are most likely to make a difference to the outcome.
Let’s observe some common opportunities to use this skill as a life level-up:
‘I Never Have Enough Time To Get Everything Done.’
It’s tempting with a long task list to spread yourself too thin. You can stay busy all day and still find you have not much progress to show for it by the end of the night.
Now apply the 80/20 rule to your to-do list and attempt to spot the pattern. Look for the group of items on the list that will significantly move your goals forward today. Of those, which are simplest to accomplish? Push those to the top. In product design, this is how you begin to ‘stack rank your backlog,’ business buzzwords for ‘do the simple/important things first to get value back quickly.’
Avoid the busy trap.
Focus on that critical 20% of tasks first (cause) to gain a larger amount of reward (effect) back to your day.
We all have triggers that can tempt us away from what we want to accomplish during a day. A Pareto Analysis is particularly useful for focused problem solving like ‘how do I improve my concentration?’
I challenge you to run a simple experiment over the next 24–72 hours. Note where you get distracted during each day. What is the root of your attention pulls? Are there common groupings you can make? You may find that a large percentage of your issue comes from a small percentage of possible temptations. For some of us, it’s our smartphone. Others get hung up by email. I feel like I get wildly distracted by Instant Messenger pop-ups (it’s just a quick question!) that break my concentration (although my own analysis below reveals a different root cause).
You can ‘score’ your distractions relative to one another if you’d like to give more weight to the factors that have more effect on you. Once you know what is most likely to shift your attention, you can focus on solving that. Make quick adjustments then get back to what matters in your day.
Make Good Decisions Faster
The 80/20 Rule is especially good for complex decisions and goals — should I take this new job? How can I save more in my retirement in the next ten years? There are so many factors that could be in play in these scenarios that it’s easy to wind up in ‘analysis paralysis’ where little to nothing gets decided.
You can’t solve everything all at once. If you’ve ever tried you know that that method ends up fixing the wrong thing or — worse — nothing at all. What you can do is understand your objective (what are you trying to solve?) and make one good decision at a time. Then, when the next steps aren’t obvious, tools like a Pareto Analysis are fantastic to bring in to help move away from indecision and to a point where you are ready to take action.
- Group pain points to find the greatest root cause of the issue. Like in the distraction example above, this allows you to focus on the points most likely to solve the problem at hand. Consider factors like how often a pain point repeats (frequency) and how much relative pain each group causes.
- With a narrower set of options to choose from, choose a path forward with confidence that if the first action doesn’t solve the problem, likely the next will. Now get to work. This is good, fast decision making in action.
- Once you’ve taken 1–3 meaningful steps, pause and assess. Have I solved my intended issue? If not, consider going back to step one and looking at your other pain point groups to see what you may have missed that could give you greater benefit.
In your personal life, as in business, there are complex problems to solve and we all want to make good decisions faster. The Pareto Principle is a tool that anyone can use to understand what actions to focus on to get to the best possible outcome.
Save this tool to your personal decision making tool chest. You’ll be surprised how often it will come in handy for you.
About the author: Hi! My name is Jess Anderson, I am a technologist based in Louisville, Ky. I lead corporate technology product and project teams and am a freelance small business consultant. Two school-aged kids call me mom, of which I am proudest of all. I am in passionate pursuit of a well-balanced life and invite you to come along for the ride. Also find me writing on Medium.