Originally, the idea came from the famous economist Vilfredo Pareto, who discovered that 20% of the pea pods in his garden contained 80% of the peas, an insight which led him to the discovery that the distribution of wealth often follows a similar pattern. People have applied the principle across myriad contexts, including business and time management experts who suggest that efficiency and effectiveness can be increased by
focusing one's time and resources on the most important 20% of tasks, or devoting more attention to the 20% of customers whose business is most vital to us.
Tonight I discussed this with my MBA students. They are running a business simulation that includes a lot of decisions, big and small, that support the execution of a strategy. They make coordinated decisions across marketing, R&D, finance, HR, and production, adjusting a host of variables to run their imaginary companies. Early on, students focus on learning the simulation environment and working in teams. Later on they run a graded simulation on their own. I introduce the 80-20 rule at this stage of the game (pun intended) to remind them to prioritize and make the most of the limited time they have.
Is the Pareto principle infallible? No way!
Choose the wrong 20% to focus on and all may be lost.
Yet in the face of too much work, too many choices, and a dynamically shifting environment, it offers a place to start in terms of deciding where to focus and that may be enough to get the ball rolling in a positive direction.