Pareto at Play: How Can We Get More Out of Life

- August 15, 2019

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As life events happen around us, Nature seems to be busy churning numbers. It’s almost like one giant data science machine that’s working on the predictability of situations - dropping hints for course correction.

Consider these examples from the new age world:

1. 80% of wealth in the world is owned by 20% people (and vice versa)

2. 90% of Warren Buffet's wealth is from just ten most paying investments

3. In a business, roughly 20% of the customers bring in 80% of the revenue

4. In sales, typically 80% of the deals are closed by 20% of the sales staff

5. Financial gurus suggest 20% allocation of income towards financial goals, and the remaining 80% for everything else

6. 80% of the total healthcare expenditure happens in the last 20% of a person’s life

7. 80% of road traffic accidents happen due to 20% of the most common reasons

8. 80% employees reach late to the office due to 20% of the most common reasons

9. In marital/relationship disputes, 80% of all reasons for dispute are caused by just 20% of the problems

“In most situations roughly 80% of effects come from 20% of the causes”

“ 80% of the output or results will come from 20% of the input or action”

Nearly a century back, Vilfredo Pareto, in Italy propounded this concept when he observed that 80% of the land was owned by 20% of the people. This was also supported by Juran in his The Quality Control Handbook, calling it “The Law of the Vital Few.” Over the years, Richard Koch, has authored several books on the Pareto Principle (80/20 rule) highlighting the predictable unbalanced realities.

Putting Pareto to Work

Though not a rigid dictum to live by, Pareto Principle can be applied mindfully to improve the quality of our life through better choices.

Ask yourself:

1. Which 20% of the clothes/household items you wear/use 80% of the time?

This helps in decluttering.

Moreover, it draws attention to better uses of your money.

2. Which television shows/video games/websites account for 80% of your screen entertainment, but offer you just 20% of fulfillment?

Evaluating this will help you better manage your time and attention for meaningful actions, eventually bypassing distractions.

3. Who are the 20% of people who make you the happiest?

On realization, you can avoid wasting time with people who don’t make you feel happy.

This will enhance the quality of your social life.

4. What are the 20% of your behaviors that cause 80% of the problems in your relationships?

Identifying these may help balance your emotional life and relationships well.

You don’t have to change yourself completely, just identify and get rid of the 20% habits that annoy your partner.

When minority issues are solved, majority relationship woes take care of themselves.

How to Get More Done at Work

Pareto Principle is a popular business management tool used to increase effectiveness and multiply profitability.

1. Businesses identify repetitive tasks which consume 80% of the time bringing in just 20% of the returns. They, then apply modern automation tools like Artificial Intelligence (AI)/Robotic Process Automation (RPA) for increased efficiency.

2. Employees can identify 20% of the tasks from their to-do list which have an 80% impact on the work progress. They can tackle these tasks sooner.

It’s irrelevant whether it’s actually 76/24 or 83/17, Pareto Principle is applicable to almost every human endeavor, from software development to investing to healthcare and even understanding causes of human contentment (and discontentment). It makes the point that selective and focused efforts yield better outcomes. Therefore, when Pareto Principle is at play, it’s best to play along!