in Business

Let the 80/20 rule save you money & give you more time

productivity-is-actionDo you know of the 80/20 rule?

There was this Italian scientist (somewhere in the 1800′s)’, Pareto, who noticed that 20 percent of the population of Italy owned 80 percent of the land. Well, nothing scientific about that, surely, but more importantly, the Pareto law states that roughly 80% of the effects come from 20% of the causes i.e. only 20 percent or so of a given system producing 80 percent of the output. (For more detailed info on Pareto and his efficiency and laws, check out this Wikiepedia entry)

Well, how is this 80/20 law connected to you and your business? Quite directly in fact.

Let us consdier two extreme examples, both true. First, consider Microsoft. They applied this 80/20 law to figure out that by removing 20 percent of the bugs in any system, they were able to reduce the system crashes by 80 percent. (Well, OK, this is coming off as a bad example :) … scratch that, let’s just jump to the second example.

I noticed, a few months back, that I spent a large amount of time on enterprises that were giving the least amount of returns. Which of course meant, that I was spending very little time focusing on my most profitable enterprises. 20 percent of my efforts were producing 80 percent of my income. By stopping to work on those enterprises, ideas and developments – I immediately had more time than I’ve ever had to do anything I ever wanted which of course was to work on enterprises, ideas and developments – so it was more of a not-so-vicious cycle for me. I was already doing what I really enjoyed (Alhumdulillah :) ), so the application of the 80/20 principle did not have that dramatic an effect on my lifestyle. But it always helps me get some perspective on my business operations as well. A lot of ‘operations’ that my employees carry out may not be as productive as they first appear (like distributing brochures in areas where we already have reached a certain saturation point or maintaining record of things that really do not need a record)

But the thing is, have you yourself tried it out? On a personal as well as business level? If you already are not attuned to thinking like this, perhaps you can have a bigger difference to report?

Are you in?

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  1. Thanks very much for this post, I have read about this rule in one of Brian Tracy’s books but I never applied it, now that you’ve mention it this post I will change some things in my business and hope to get more free time…