Two Ways to Use the 80/20 Principle
80/20 Analysis: precise;
quantitative; requires investigation; provides facts
80/20 Thinking: fuzzy;
qualitative; requires thought; provides insight
How To Get More from Less
80% of your resources are producing only 20% of value
– this ratio always creates arbitrage opportunities for genuine
It helps also
evaluate ideas quickly.
Focus on exceptional productivity, rather than raise average efforts.
Make the most of
your creativity peaks.
Only do things you are best at doing.
Delegate or outsource the rest.
Exercise control with the least possible effort...
Identify where 20% of
efforts gives 80% of returns...
Unless you have used the 80/20 Principle to look carefully at the
different chunks of your business and to redirect your strategy, it is
almost inevitable that you are doing too many things for too many
people. The principle is of enormous value in identifying the next leaps
forward for your business...
What is 80/20 Principle?
The 80/20 Principle asserts that there is an
inbuilt imbalance between inputs and outputs, causes and consequences, and
effort and result. It states that a minority of causes, inputs or effort
usually lead to a majority of the result, outputs or rewards. A few things
are important; most are not...
80/20 Thinking, applied to
your daily life, can
help you change behavior and to concentrate on the most important 20%.
Action resulting from 80/20 Thinking should lead you to achieve much more
with much less. To engage in 80/20 Thinking, you must constantly ask
yourself: what is the 20% that is leading to 80%? Never assume that you
automatically know what the answer is, but take some time to
2 think creatively
about it. "For every ounce of insight generated quantitatively, there must
be many pounds of insight arrived at intuitively and impressionistically."
Applying 80/20 Principle
80/20 Principle is inherently optimistic because
it reveals a state of affairs that is seriously below what it should be and
shows the direction towards a better state. To achieve progress and multiply
your output, you must give power to the 20% of resources that really matter
in terms of achievement, and get the remaining 80% up to a reasonable level.
"Progress takes you to a new and much higher level. But, even at this level,
there will still typically be an 80/20 distribution of outputs/inputs. So
you can progress again to a much higher level."
Simple is Beautiful
To succeed in
and transforming your
organization or business by applying the
80/20 Theory of the Firm, you need to
demonstrate that simple is beautiful and why. Unless you understand this,
you will never be willing to give up underperforming 80% of your current
business and overheads...
80/20 Analysis examines the relationships
between two sets of comparable data and can be used to change the
relationships it describes...
critical to future
. With creative use of the 80/20 Principle innovation can be
both easier and more effective if you consider the following ideas...
Don't apply 80/20 analysis and
strategies in a linear way.
"Like any simple and effective tool, 80/20 Analysis can be misunderstood,
misapplied and, instead of being the means to an unusual insight, serve as
the justification for conventional thuggery. 80/20 Analysis, applied
inappropriately and in linear way, can also lead to the innocent astray –
you need constantly to be vigilant against false logic".