Mental Health

Pareto Principle – The 80/20 Rule Applied to Business and Life

Pareto Principle - The 8020 Rule Applied to Business and Life

Italian economist Vilfredo Federico Damaso Pareto recognized in 1906 that 80 percent of the property in Italy was owned by 20 percent of the residents. Afterwards, he recognized this outstanding ratio appeared to apply to alternative aspects of life, such as gardening: 80 percent of his peas were developed by 20 percent of the peapods. Over time, this notion has come to be regarded as the "Pareto Principle," "The 80/20 Rule," and even "The Vital Few and Trivial Many Rule." Surprisingly, another of Pareto's most remarkable and questionable hypotheses is that human beings are not, for the most part, inspired by logic and reason but instead by sentiment.

Understanding the Pareto Principle in Action

Here are some 80/20 rule applications:
20 percent of your sales force provide 80 percent of income.

20 percent of your products account for 80 percent of program sales.

80 percent of your guests see only 20 percent of your Web site pages.

80 percent of customer complaints arise from 20 percent of your products or services.

20 percent of those in you know in your life provide 80 percent of your true friends.

80 percent of your stressors in life are produced from 20 percent of your situations

And so on.

We seem to overlook these facts in practice. We often give the best sales agents the most troublesome accounts instead of aligning their skill in aspects where they may generate extraordinary volumes. The most exceptionally qualified staff are frequently given the trickiest work, although focusing their skills on trouble-free work would allow them to yield substantially more than less-skilled co workers. The most accomplished people are often assigned to the most challenging situations that, even when managed, in most cases donate little additional cash flow for the company.

Applying the Pareto Principle to Your Business and your Personal Life.

Here are three ways you can use the Pareto Principle in Business.

1. Find your best sellers

Find the "vital few" or "20 percent" and make these products or services easy for your customers to access..

Book bestseller lists, music top-40 charts, TV ratings, and Hollywood box-office receipts are not merely a barometer of popular culture. They're important marketing techniques.
A book that makes the New York Times's bestseller list, can proudly display "#1 New York Times Bestseller" on its book jacket. The publishers hope you will find yourself in a bookstore, see the book, and assume, "If everyone else is reading it and buying it, it must be good, and i will like it too." Think The Amazon.com 100 was designed for any other reason?

2. Optimize your business

20 percent of your sales force provides 80 percent of your sales. 20 percent of your poor employees provide 80 percent of your headaches. Eliminate the excess baggage. If only a website, use google analytics to see which pages drive 80 percent of the traffic and eliminate the 80 percent of your pages that only provide 20 percent of your traffic. There is a universal truth that by downsizing and removing problematic, or unproductive employees, overall production increases and becomes more relevant.

3. Fix or discontinue problematic products and services.

Stop squandering important resources on products and services that drain energy, time, and money. Regardless of what the issue costs you today, when you redirect your endeavors, the yield on investment will be much better. Without having pessimistic baggage, you will see substantial growth in efficiency, spirits, and returns.

Whichever products or services that you offer, there must be 20 percent that provides 80 percent of the profits. Eliminate from your products and services the remaining 80 percent that plainly make life more complicated. The 20 percent of the sales that are enjoyed by 80 percent of the products and services are not needed, if you focus on the 20 percent that raises 80 percent of the profit. Less is more,and more is less. This is the reason for the fall of the roman empire. They stretched their efforts and forces so thin, they fell. Had they focused their efforts in fortifying 20 percent of their most highly valued resources, they might still be the world leader today.

Here are three ways you can use the Pareto Principle in your life.

1. Find who your best friends are.

We all have many friends. Some good and important to you, and some not so important that drain you. Find out which of your friends give you 80 percent of the joy, help, counseling, or offer a shoulder to cry on. Transversely, try to eliminate from your life slowly, those who drain you, use you, lie to you, and those who provide drama in your life. Eliminate 80 percent of the friends who give you 20 percent of your support and joy, and focus on the 20 percent that give you 80 percent of your support and joy.

2. Optimize your lifestyle:

Those activities that occupy 80 percent of your lifestyle and only 20 percent of your joy, need to be eliminated. You should find the 20 percent of your enjoyment of life and focus on those activities that bring you the most joy. We all get bogged down with EVERYTHING we have to do. Eliminate the 80 percent of your life that causes 20 percent of the joy, and focus on the 20 percent that gives you 80 percent of the joy.

3. Fix or discontinue stressors:

Can 80% of your stress and resulting health challenges be caused by just a couple of problem areas in your life? If you consider the domino effect, it certainly could be true. A seemingly small trigger can launch a series of problems, one leading to the other in each getting bigger in turn. Perhaps reducing stress or even eliminating stress altogether begins with simply identifying the small problem areas that got the whole thing started. Find the 20 percent of your life stressors that provide 80 percent of your stress, ELIMINATE IT no matter what it is.

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