The Pareto Principal
If you are female and reading this, I have two questions for you:
1. How many pairs of shoes do you own?
This isn’t a personal fetish, it will be OK…
What is your answer? My wife (who states she doesn’t have as many as most women) lays claim to 17 pairs. When I ask this question more widely I often get the answer “I don’t know, about 50”. I think it is fair to say your answer is going to be somewhere between “plenty” and “lots“.
Here is my second question:
2. How many pairs do you wear regularly?
Now I guess the answer is going to be something like “Well my brown ankle boots are comfortable” or “I look good in my blue wedges”. Maybe I misjudge your personal tastes, however, I am prepared to bet my mortgage that the answer is not “all of them”.
And that is the Pareto Principle or 80:20 rule. 20% of shoes get 80% of the wear.
Not all things are created equal
Whatever the situation, somethings are always more important than others.
This is possibly the most important thing you will read on this site . (Sorry about the highlighter, just grabbing you attention.)
Why? Well because:
- 80% of customer complaints are about 20% of the issues
- 80% of your revenues come from 20% of your customers
- 80% of hospital waiting time is caused by 20% of injuries
- 80% of customer calls come from 20% of your adverts
- 80% of system down time is caused by 20% of defects
If you want to improve at anything
Working out what the 80:20 split is, is a fundamental first step.
Otherwise you will find you spend all your time polishing the wrong pair of shoes.
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A really good observation. One pitfall I’ve discovered is that people seem to misunderstand the 80:20 observation and try to eliminate the “wasted” 80%, like the jam company that cut its 80% of “unpopular” flavours, rather than using it as a tool to work out where to spend your time and effort. A bit like our current government trying to get all school pupil’s performance “above the the national average” – let’s see how that works out for you…
Very well put Bernie. If I tried to throw out some “under utilised footwear” I can’t help but think it would go badly for me
Hi James,
As an economist I love when general economic principles are applied to wider life. Originally, Pareto came up with the principle with regards to income distribution. Over time that has shown to change depending on the circumstances. This is also true of other situations and we should be careful not to assume that this is a fixed rule. However, it is a great insight and a place to start when understanding and fixing the issues that we face in life and business.
Adrian
Thanks for the point Adrian.
All rules can be a problem if you follow them slavishly, the trick is to understand the principle. I think their is a post in their somewhere. Don’t be too surprised if it shows its head shortly. I’ll endeavour to credit you.
James
Merely wanna comment on few general things,
The website layout is perfect, the written content is really wonderful :
D.
Thank you, glad you liked it