Main source of information:

The 80/20 Principle and  80/20 Revolution,

Richard Koch


2 Basic Business Growth Strategies



80/20 Principle of the Firm Employee Empowerment Customer Retention Venture Management (MBS e-course) Ten3 Business e-Coach: why, what, and how 80/20 Principle 80/20 Law of the Firm / 80/20 Theory of the Firm




80/20 Principle and Your Business

The key theme of the 80/20 Principle applied to business is how to create the greatest stakeholder value and generate most money with the least expenditure of assets and efforts. Any individual business can gain immensely through practical application of this Principle.

Business Success: Yin-Yang Strategies



The most important use of the 80/20 Principle is "to isolate where you are really making the profits and, just as important, where you are loosing money. Every business person thinks they know this already, and nearly all are wrong. If they had the right picture, their whole business would be transformed".  >>>

The game is to spot the few places in your business model where you are making great surpluses be that a product, a market, a customer type, a technology, a distribution channel, a department, a country, a type of transaction, an employee, or a team and to maximize them; and to identify the places where you are loosing and get out.  >>>



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 great business.



A small percentage of quality characteristics contributes a highest percentage of the quality loss. If you remedy the most critical 20% of your quality gaps, you will realize 80% of benefits. 80% of customer complaints can be eliminated by correcting only 20% of the causes... More


Cost Reduction

"All effective techniques to reduce cost use three 80/20 insights: simplification, through elimination of unprofitable activity; focus, on a few key drivers of improvement; and comparison of performance."

Cost reduction is an expensive business concentrate 80% of your effort at the areas (20% of the whole business) that have the greatest cost-reduction potential.  >>>



Marketing should focus on providing a stunning service in 20% of the existing products/services that generate 80% of fully costed profits. It should devote extraordinary endeavor towards retaining 20% of customers  who provide 80% of the firm's profits.



"The key to superior sales performance is to stop thinking averages and start thinking 80/20".

Hang on to the high-performing salespersons, get everyone to adopt the methods that have the highest input-output ratio.

Focus every salesperson's effort on the 20% of products that generate 80% of sales, and on the 20% or customers who generate 80% of sales and 80% of profits.



The return on investment usually follows the 80/20 rule: 80% of the benefits will be found in the simplest 20% of the system. Most software spends 80% of its time executing only 20% of the available instructions.


Decision Taking
& Analysis

To make smart & fast decisions, gather 80% of the data and perform 80% of the relevant analyses in the first 20% of time available. Make quick cost-benefit analysis of new ideas >>>



Around 80% of stock only accounts for 20% of volume or revenues.



80% of the value of any project will come from 20% of its activities   >>>



In negotiations,20% or fewer of the points at issue will comprise over 80% of the value of the disputed territory; 80% of the concessions will occur in the last 20% of time available.