Eighty percent of the output comes from twenty percent of the input. That is basically a summary of the Pareto Principle, or as it is more commonly known, the 80/20 Rule. The rule comes from Vilfredo Pareto, an Italian economist who noticed that 80% of Italy’s wealth was in the hands of 20% of the population.
The 80/20 Rule points out the imbalance of effects. Just as one person might have several times the wealth as another, one hour spent on a critical project might be worth $10,000 while another might only be worth $20. The goal when using the 80/20 Rule is to maximize the small and powerful twenty percent and reduce the wasteful eighty percent.
Despite the popularity of the rule, few people seem to understand it. I’ve seen hundreds of misapplications and confusions spouted throughout the web and in print. Some of these errors are due to not understanding what the rule means. Others are just my opinion of unfair attacks on an otherwise useful principle.
Here are the worst attempts at using the 80/20 Rule:
1) 80 + 20 = 100
I’ve seen a few times where people try to create a diagram explaining the 80/20 rule with a pie chart. One fifth of the pie chart is labeled 20% and the rest is labeled 80%. While those of us with basic math skills can see how this adds up to 100%, the calculation undermines what the rule is about.
The 80/20 rule argues that 20% of the input creates 80% of the output. Inputs and outputs aren’t the same thing, and therefore can’t be made into the same pie chart. The 80/20 Rule could just as easily been called The 55/3 Rule, if 55% of the results were created by 3% of the inputs.
Don’t get caught up on the numbers. Both 80 and 20 are just examples of one type of uneven balances. The fact that they add up to 100 is a coincidence.
2) 80/20 Applied Recursively
One argument I’ve heard against the 80/20 rule goes like this, “If you keep applying the 80/20 rule, eliminating the wasteful 80%, eventually you’ll end up with nothing.” I suppose the people who argued this point felt they were being clever by using a literal, mathematical interpretation of the rule.
Once again, the numbers here aren’t that important. The actual applications are less mathematical. When you have a limited amount of time, you won’t be able to perform every task possible. The 80/20 Rule suggests you look through all the tasks you normally could perform. Pick the top 20% that create the most results and focus on them. Whatever time you have left can be spent on the less productive 80%.
3) 80/20 to Perfection
Another way I’ve seen the rule misapplied is when building skills. It might take 2 years to become 80% proficient. But in order to get that last 20% of skill you need to invest another 8 years. While this is a fair use of the rule, the advice with skills often goes against the 80/20 Rule. Instead of eliminating the need for that last 20%, you invest most your time to master the last 20%.
The point of the 80/20 Rule is that you should downplay or minimize the inefficient 80% of inputs. There are times, of course, when this rule doesn’t apply. Mastering a skill can be one of those areas where the 80/20 advice is faulty.
However, by recommending the opposite of the 80/20 rule, you can’t really claim the 80/20 rule is in practice here. That would be like saying, “haste makes waste,” is the same advice as, “he who hesitates is lost.”
4) “But I still have to do it…”
An argument I’ve heard against the 80/20 rule frequently goes like this, “Sure some tasks are less valuable than others, but that doesn’t mean they don’t need to get done.” Answering e-mails, making phone calls or having meetings may appear wasteful, but they still need to get finished, right?
This argument has an element of truth, but it conceals a bigger lie. The truth is that, yes, there are things that need to get done even though they aren’t wildly important. If I stopped answering e-mails I might miss opportunities, have my network degrade or lose important messages.
The bigger lie is that you have no control in adjusting where time gets spent. If e-mail isn’t that important, your goal should be to reduce the time you spend on it. If meetings aren’t contributing, you should have shorter meetings. If your hands are really tied an you have no control over how your time is spent, what’s the point of reading productivity blogs like this anyways?
How to Really Use the 80/20 Rule
- Pick an area of your life where you feel there is an imbalance of effects. This won’t be true of all areas, but many situations are out of balance (money, time, health and possibly even relationships).
- Try to identify the key 10, 20 or 40 percent of inputs that are creating most your results. This could be the 10% of time that creates the most returns. It could be the 40% of relationships that create the most happiness for you.
- Find ways to emphasize the key percentage. Spend more time in those activities. Place them first in your schedule. Meet up with your key friends more often. Invest more of your money in the best expenses.
- Find ways to downplay or eliminate the rest. Get rid of activities that don’t have a high payoff. Stop spending time in relationships that don’t create enough value. Stop wasting money on investments that aren’t giving you a greater quality of life.