Pareto Option 1 by Sleepy Valley
Vilfredo Pareto, an Italian economist, found a mathematical formula to describe the unequal distribution of wealth in his country. He said that twenty percent of the people owned eighty percent of the wealth. Dr. Joseph M. Juran attributed the 80/20 Rule as Pareto Rule, or Pareto Principle, or Pareto Law. Pareto Rule has proven to be a very effective business tool to help manage your company effectively.
80 20 Rule
After Pareto made his observation and created his formula, many others observed similar phenomena in their own areas of expertise. Dr. Joseph Juran, who is recognised as the Quality Management Pioneer, called the 80 20 Rule as “law of the vital few and trivial many”. Dr. Juran’s observation of “vital few and trivial many” principle said that 20 percent of efforts are always responsible for 80 percent of results which gradually known as Pareto’s Principle or 80/20 Rule.
Pareto Principle : Vital Few Trivial Many
The 80/20 Rule means that 20 percent few are vital and the 80 percent many are trivial. In Pareto’s case it meant 20 percent of the population owns 80 percent of the wealth.
Juran identified 20 percent of errors cause 80 percent of the problems. Project Managers know that 20 percent of the work requires 80 percent of your time and resources. You can apply 80/20 Rule in almost every aspect of life, from management to physical world.
Pareto Rule reveals that 20 percent of your materials fills 80 percent of your storage and that 80 percent of your stock comes from 20 percent of your suppliers. Also 80 percent of your sales come from 20 percent of your sales staff. 20 percent of your employees creates 80 percent of your problems, but another 20 percent of your employees creates 80 percent of your production or solution. It goes both ways.
The Benefits of Pareto Principle
Pareto Principle reminds the managers to focus on the 20 percent that are really matters and ignore 80 percent that are trivial. From all of the things that you do during the day, only 20 percent really matter. Those 20 percent of actions produce 80 percent of your results. Identify and focus on those things.
When you get up early in the morning to begin your day, remind yourself of the 20 percent that you need to focus on. If something in the plan is missed, if something simply cannot get done, make sure that it is not part of that vital 20 percent.
Pareto Efficiency
80 percent of your time should be spent to do what is really matter, the highest value activities that produce the best possible results. You should aim for constant and never ending improvement in all areas of life by focusing to get your highest value jobs really done. Apply the Pareto Principle wisely to achieve the best you can be.
Highest Value Activities
Pareto’s principle, 80/20 Rule, should serve as a daily reminder to focus 80 percent of your time and energy to 20 percent of your work which is really matter. You are not just “working smart”, but “Working Smart on the Right Things“.
