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How Useful Is the Pareto Principle?

How Useful Is the Pareto Principle?

The Pareto Principle states that 80% of the results from any series of actions are caused by 20% of the actions themselves. In other words, most of the results we get are because of a small minority of our actions. The rest are either wasted or produce little of value. This sounds like a useful observation. However, before you decide the Pareto Principle is true and can be used to guide your actions, I want to ask two important questions.

  1. Can you identify which actions make up the useful 20%? And can you do so in advance?
  2. Does this useful 20% always contain more or less the same actions?

Let’s take the first question. It’s easy to feel intuitively that most results arise from a small group of actions. The Pareto Principle feels immediately valid. It also feels like a practical tool. Identify the “magic 20%” of actions and you can more or less dispense with the other 80% without much impact on your results. What a marvelous saving of time and effort.

Of course, this only works if you can reliably distinguish the 20% of actions (or people, or events) that produce that disproportionate amount of benefits. It also assumes every result comes from a single, identifiable action — or at least a small, obviously linked group of them.

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But is this true? Don’t some results rely on the interaction of large numbers of events, choices, actions and decisions? Can we know which count and which don’t? What if we dropped some, only to find later they were essential in some way? Maybe they only produce good results in combination? Cutting seemingly unnecessary actions because they don’t obviously fit into the “magic 20%” might turn out to be a poor idea.

The Pareto Principle is perhaps most often applied to sales. Suppose you could reliably identify the 20% of sales calls that produced 80% of the orders you took this week. How much might the success of those calls rely on the market intelligence, knowledge and simple practice you gained by making the other 80%? Could you miss out all the rest, or even a significant number of them? That would include new customers being encouraged to place larger orders, prospects and old customers who might be won back from a competitor.

My second concern is this: is it always the same 20%?

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Let’s stick with the sales calls. This week, 20% of your calls produce 80% of your sales. Pareto rules! Next week, you need to sell just as much. Will you visit the same 20% of customers and receive the same orders?
Surely that’s unlikely. They only just placed an order. Most, maybe all, need to use up that order before buying again. Fine. You just need to find another 20%. But how? Everyone else was in the “unproductive” 80% last week? But if Pareto works, at the end of the next week you’ll once again find 80% of orders came from a new 20% of calls.

What’s going on? My guess is the Pareto Principle distinguishes groups you can only find after the event, once you can see what worked and what didn’t. The membership of the “magic 20%” of people or actions shifts each time. Wait long enough and every one will sometime be part of that 20% group.

If that’s so, the Principle is almost worthless as a guide to future action, which is how it’s most often used. There may be some actions or people (20% again? Who knows?) that figure so rarely in the “magic group” they could be removed without loss. There may be some regular members of that group that could be identified and given more focus and investment. Either way, what’s needed is time, careful observation and recording over many occasions, good records and much patience and reflection. None of these are actions or qualities much associated with today’s frenetic organizational pace.

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I’m not saying Pareto is wrong. I don’t know. I’m not sure anyone has ever done the lengthy and extensive research needed to find out. I’m merely suggesting it’s neither the universally applicable principle, nor the simple measure, nor the practical guide to decisions we’ve been asked to believe it is for so long.

To sum up:

I think the Pareto Principle has great intuitive attractiveness — which says nothing about whether or not it works, nor how it works (if it does). However, these questions remain unresolved:

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  1. How do you know which 20% is producing the results? Can you even find out at a time when the knowledge might be useful? I suspect you can usually only find the answer — if there is one — after the event. And if that’s so, it leads me to a second question.
  2. Is it always the same 20%? If it’s not (and I suspect it isn’t), over time maybe the whole 100% will be in that magic 20% group sometime. And if that’s true, the Principle applies only to a specific occasion (if it applies at all).

If any of my concerns is valid, the whole idea becomes worthless as a guide to future action or allocating resources (which is how people try to use it).

Adrian Savage is an Englishman and a retired business executive who lives in Tucson, Arizona. You can read his thoughts most days at The Coyote Within and Slow Leadership, the site for anyone who wants to bring back the fun and satisfaction to management work.

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Published on July 15, 2019

10 Simple Strategies to Make Your Life Better Starting Today

10 Simple Strategies to Make Your Life Better Starting Today

Habits are an important part of the direction you take your life, and — as I’ll share with you shortly — there are certain daily habits you can adopt right away that are guaranteed to improve your life.

Think back to when you were just six or seven years old…

At that age you probably didn’t have many habits. But, as the years went by, you picked up more and more good and bad habits.

You may not have thought about it before, but habit forming never really stops.

That’s why it’s never too late to change your habits and transform your life.

So, if you feel burdened by your bad habits, start kicking them into shape by replacing them with these 10 positive, life-changing strategies:

1. Go to Bed a Little Earlier and Wake up Earlier 

Starting tonight, get yourself to bed 30 minutes earlier than usual. And, then make sure you get up tomorrow morning 30 minutes earlier, too. This small change can have a BIG impact on your day. 

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Instead of furiously rushing in the morning to get ready for work, the extra time will give you a golden opportunity to start your day off on the right note. You can drink a smoothie while sitting on your porch, spend 10 minutes exercising and stretching, and still have time to read a few pages of an inspiring book.

2. Be Grateful for the Good Things in Your Life 

Setbacks and obstacles are inevitable in life. But, with a positive mindset, you’ll be able to overcome most of these. And, when you do, you’ll boost your self-confidence. 

This is something you can definitely be grateful for. 

However, if worst-case scenarios are playing out in your life, then sometimes, to stay strong, you’ll need to keep your mind on the good things that are happening to you. For example, your relationship with your partner might be crumbling, but your career is continuously getting stronger. It’d be easy to feel downtrodden and miserable about your relationship problems —  but, it would be much healthier to keep your mind and gratitude on these things that are going well, such as your career.

3. Drink Water All Day Every Day 

I’m sure you’ve heard the advice of drinking at least eight glasses of water a day, but are you following that advice? If not, you’re robbing your body and mind of essential hydration. 

With the right amount of water intake a day, you’ll be amazed how good you feel — and how good you look!

4. Take 15 Minutes to Set Goals for the Day, and Then Tackle Them One by One 

This strategy will put your life into a new stratosphere! And, it’s very simple to do. 

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Simply spend 15 minutes in the morning (either at home or at work) planning what you need and want to achieve during the rest of the day. Once you’ve listed your tasks, the next step is to put them into order of priority. 

For instance, you have three things to do: catch up with your emails, write a project update, and prepare a briefing for your CEO. It’s best if you put these in order of importance. In this example, your emails can probably wait until you’ve created your CEO brief and updated your project documentation.

5. Turn Off Your Cell Phone (or Put it on Airplane Mode) When You’re Focusing 

A 2012 study found that even looking at a cell phone or feeling it vibrate in your pocket can significantly distract focus and reduce your ability to complete complex tasks.[1]

It’s no surprise really, as our thoughts are subconsciously drawn towards checking our phones when they’re switched on. It’s a bad habit — but one that most of us have. However, when you need 100% focus (like I do when writing my articles), then switching your phone off, or at least putting it into airplane mode, will free your mind and supercharge your focus. Try it and see!

6. Walk as Much as You Can 

Have you noticed that most people’s lives are sedentary? They drive to work, sit in front of a screen all day, then drive home and binge on the latest Netflix series. It’s no wonder there’s a growing epidemic of obesity and mental health issues. 

Our bodies are made to move — so we should move them! This can be as simple as walking up the stairs to your office instead of taking the elevator, and going out for a walk around the block at lunchtime. In the evening, instead of arriving home and crashing on the sofa; spend 20 to 30 minutes walking around your block.

When you make these things a habit, you’ll be amazed by how much better you feel. You’ll have less stress — and more energy.

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7. Be Mindful of Your Surroundings

How often do you stop, think and appreciate the “here and now”? I’m guessing not very often. But, I understand why. Modern life is demanding and fast-paced. There’s precious little time to appreciate the small things. 

But, if you want to live a healthy and happy life, you must break out of this trap. You can do this by allocating 15 to 30 minutes each day for mindful meditation. This could be in a park, in your garden, or even in your lounge. The trick is to focus 100% on your surroundings. 

For example, if you’re outside, watch how the leaves on the trees blow around in the wind. By keeping your focus on this movement, you’ll clear your mind from your usual stresses and strains. This will give you brain a much-needed break. And, as well as improving your mental health; you’ll find your creativity gets a boost, too.

8. Ask for Help When You Need It 

No one can know or do everything. Which is why you shouldn’t be embarrassed to delegate tasks to others when needed, ask questions when you don’t have the answers, and work with partners and colleagues to clarify intentions. 

When I first set up Lifehack, I tried to do everything myself: blog writing, website creation, marketing, financial planning, etc. However, I quickly learned that it was much better to hire some help. Not only did this inject some fresh ideas and inspiration into Lifehack — it also made the whole operation way more enjoyable!

9. Practice Self Care 

Are you looking after yourself as well as you should? If not, then take steps to improve your diet, exercise more, and to speak to yourself with encouraging words and thoughts. 

The latter suggestion is often overlooked. But how you speak to yourself determines how you feel, what you believe, and what you achieve.

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10. Embrace Learning 

You cannot transform your life without learning something new. That’s because the process of change forces you to adapt. But, many people stop learning as they get older, as they find the learning process boring and bothersome. However, it doesn’t have to be this way. It can be fun and rewarding. 

Whether you decide to learn to play guitar or study the basics of accounting — embrace learning, and begin changing your world for the better.

I’m sure you’ll agree that these 10 strategies are simple enough for you to start putting them into action in your life. (I suggest you begin today!) 

Nevertheless, you’ll probably need to use some extra willpower for the first 30 days or so, as this is the typical length of time it takes to create a new habit. After that, these strategies will be part of your day-to-day life, and you won’t need to think about having to do them. In other words, they’ll have become habitual actions.

If you need any further encouragement to get started with the 10 strategies, then consider this:

Even just adopting one of the strategies can turn the tide in your favor. But, when you implement all 10, you’ll create an unstoppable trend towards success, health and happiness.

So start making your life better — today!

Featured photo credit: Javier Garcia via unsplash.com

Reference

[1] Deborah R. Tindell and Robert W. Bohlander, Wilkes University: The Use and Abuse of Cell Phones and Text Messaging in the Classroom: A Survey of College Students

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