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How To Increase Efficiency In 2023 With the Pareto Principle?

project management, agile project management, productivity, scrum 2020

Considering the ever-increasing competitiveness in the world, we are always trying to do things quicker and better. It’s as if we are in a race, constantly trying to take that winning spot for ourselves.

While vying for that spot, we tried different tips and tricks to increase efficiency and become more productive. 

There are tons of internet tools, YouTube gurus, etc. trying to forge for you a shortcut to success. While a vast majority of these techniques end up being capitalist hoaxes, there are some that deliver value.

Pareto principle is one such observation the right use of which can turn things around for the better. 

In this post, we will divulge all the information on the principle and guide you how on you can employ the same in your work to increase your efficiency in 2023.   

What is the Pareto Principle? 

Pareto Principle, or 80-20 principle, specifies the unequal relationship between input and output wherein 20 percent of input resources and/or efforts are responsible for 80 percent of output produced. The principle elucidates uneven distribution in various facets of life. For example: 

  • 80 percent of the world’s wealth is distributed among 20 percent of the population 
  • 20 percent of employees produce 80 percent of the results obtained 
  • 20 percent of sales staff make for 80 percent of revenue made 

In such a way, 20 percent of things are vital for producing 80 percent of results.   

It is important to note that the principle is not a law but an observation. It does not hold true in all cases. Similarly, the imbalance will not always be 80 to 20, it may be less or more. The main point the principle indicates is unevenness and imbalance. 

The 80-20 principle applies to several areas such as manufacturing, quality control, management, human resources, time management, etc.     

Pareto Principle – A Flashback: 

The principle is named after the economist Vilfredo Pareto who observed the unequal distribution of wealth in Italy in the early 1900s. From his observation, he found that 80 percent of Italy’s land was owned by 20 percent of the population.

He surveyed other areas and countries and found the same results. 

Joseph M. Juran further developed the idea in the 1940s in the context of quality management. Juran’s contribution to the principle helped businesses improve their productivity.

He observed that 80 percent of operational defects stemmed from 20 percent of production problems. 

By optimizing the smaller percentage of the equation, Juran observed that significant changes could be analyzed in the operations. With Juran’s “the vital few and trivial many”, the observation formally changed into the Pareto Principle or 80/20 rule. 

What Is the Importance of the Principle? 

In an organization or business, there are millions of things to focus on. However, one cannot accord the same attention to all the operations. Some actions are more important than others since their impact is more powerful. 

The 80-20 rule helps you determine the vital areas, areas that need your attention, and areas that have the most crucial role to play in business processes. With the rule in place, you can determine the resources most important for the success of a project.  

In addition, you can use the principle to identify the most important tasks and concentrate your attention on them. The success and timely completion of these tasks will make the journey much smoother and more fun. 

You can make a marginal difference by focusing on the 20 percent that matter the most. The 20 percent will have the most impact and make up for 80 percent of the results. 

How To Use The 80-20 Principle to Increase Efficiency in Different Areas? 

Here’s how you can use the 80-20 rule to increase your efficiency in different areas: 

Time Management: 

Using 80-20 principle for time management is a common practice. Oftentimes projects span over weeks and months and with the work spread out without any prioritization, keeping up with the schedule becomes a headache. 

With the 80-20 principle, however, you can identify the tasks that are the most important and dedicate your time to the completion of these tasks first. The principle helps you narrow down your focus on the most important tasks and once these tasks are accomplished, you can move on to tasks of lesser importance. 

The satisfaction of having completed the most important tasks, however, will calm your nerves and help you stay on track. It will also have an impact on your productivity and make you significantly more efficient. 

Resource Management: 

Although all individuals in a team have something to add to the work, there are a select few individuals whose contribution to projects matters the most. Wither these individuals are the most experienced, have sufficient knowledge, or are quick and adaptive. Their contribution is vital for the successful accomplishment of goals. 

In this area, the 80-20 principle once again comes in handy. By identifying the individuals whose efforts make the most difference, you can make the most of their skills and experience. You can assign them tasks that are the most important and get work done faster.  

With their expertise, they will surely be able to complete the given tasks quickly and with acute efficiency.  

Goal Setting: 

At any given time, one can have more than one goal in mind. However, to be able to accomplish these goals successfully you have to focus your attention on the goals that make the most impact on your business.  

To use the principle for goal setting: 

  • Create a list of all the goals you wish to achieve 
  • Identify the goals that have the most impact on your life 
  • Assign a priority status to all goals 
  • Identify the goals the incompletion of which will have a negative impact on you 
  • Prioritize goals accordingly 

Once you have identified the goals that matter the most to you and have the greatest impact on results, start working on the goals that are at the top of your list. Once you accomplish those goals, you can move on to the ones below. 

Relationships: 

Well, the 80 20 principle’s impact is not limited to the business world but also extends to personal relationships. Whether the relationships are personal or professional, the principle can help you build a good relationship with your colleagues or loved ones. 

Every day we meet tens of people, and among these people, there are only a select few that influence our life one way or another. Whether their influence is positive or negative, is something you must identify.  

From all the people you interact with daily, identify the few that have a positive impact on your well-being and whose company is helpful for your growth. If you dedicate 80 percent of your efforts and time to these people, your relationship with them will improve to a great extent. 

Similarly, if you are facing any obstacles or problems in your relationship, you can use the mentioned principle to identify the root cause of the problem. Once you have an understanding of the root cause, you can expend your efforts to fix that problem and improve your relationship. 

Problem Solving: 

Problem-solving is another area where the principle comes in handy. Here’s a step-by-step guide on how you can use the principle for problem-solving: 

  • Create a list of all the problems you are facing and trying to find a solution to. 
  • Determine the root causes of all these problems. 
  • Categorize these problems by grouping similar problems together. Problems with a common or similar root cause can be grouped into the same category.  
  • Assign a value from 1 to 10 to all the problems in the list. The value can be based on anything of your choice for example the most time-demanding problems, problems that require more resources, etc.  
  • Add the scores of all the problems in different groups and identify the group with the highest impact value. This is your most important, most crucial problem. 
  • Start developing strategies that will help you solve the top 20 percent of problems that produce an 80 percent impact on results.  

Concentrate your efforts on the top 20 percent, once you have dealt with and solved these problems, you can move on to the less important ones and make sure your projects run smoothly.  

Freelancing: 

If you are a freelancer and work with different clients, then the 80-20 principle is yet again an efficient rule that can help you straighten your priorities. Among all the clients you work with, there must be a few that bring the most business to you or order frequently. Instead of going after new clients, you can focus your efforts on maintaining and strengthening your relationship with these clients first. 

These clients can eventually become your repeat buyers and contribute the most to your finances. The establishment of long-term relationships with the top 20 percent of clients will help make sure that you have a steady flow of orders and are making money around the clock. 

Now that you have a basic understanding of how the 80-20 principle can be used in different areas, let us take a look at the advantages and disadvantages of the principle. 

Advantages Of Using The 80-20 Principle: 

There are tons of gains in using the principle. It can help you identify the 20 of anything that impacts you the most. Once you have identified this 20 percent, you can concentrate your efforts to make the best of the situation and make sure the 80 percent results it produces are positive. 

Following are some of the advantages you can get by using the principle in your professional and personal life: 

  • Better productivity and efficiency 
  • Improve problem-solving capabilities 
  • Better decision-making skills 
  • Clarity of goals and priorities 
  • Focused attention 
  • Better results 

Whichever area you choose to apply the principle to, you will find that it produces better results. Not only does it improve your work productivity, but also has a positive impact on your physical and mental well-being. 

Disadvantages Or Using The 80-20 Principle: 

As we mentioned earlier, the principle is not a law, it is an observation, as such, it comes with a few disadvantages as well. For example, the biggest point of concern is that the unevenness may not be an even 80 to 20 ratio. The figures can be different for different projects or activities.  

Similarly, 80 20 does not mean that to achieve 80 percent of the results, you can spend only 20 percent on your efforts. Rather, what it means is that the 20 percent need your 100 percent keen attention and effort. 

Also, the remaining 80 percent are not to be ignored or left unfinished. The idea is to complete 20 percent of the most important ones first and then move on to the rest 80 percent. The remaining 80 percent are not to be left undone, only after the completion of 100 percent of your tasks will the project be complete.  

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