What is 80/20 rule?

Pareto Principle explained

If you have studied business or economics, you must have been familiar with the power of the 80/20 rule, commonly known as the Pareto Principle.

The Man Behind The Concept:

The man behind the entire concept of the 80/20 principle or Pareto Principle was born in 1848 in Italy. With the aim of becoming an economist and a philosopher, he noticed that 20 percent of the pea plants in his garden generated 80 percent of the healthy pea pods. This forced him to pay attention to the uneven distribution. It was revealed through his own studies that 80 percent of the land in Italy was owned by just 30 percent of the people. Upon investigating other industries he found out that 80 percent of the production typically came from just 20 percent of the companies. This gave him the idea that 80 percent of the outcomes happen just because of 20 percent of the action.

Want a Free Website

What is the 80/20 Rule?

Thus now the imbalance between inputs and outputs is known as the Pareto Principle or the 80/20 rule. This imbalance is often seen in business cases such as:

  • Almost 20 percent of the sales reps generate 80 percent of the total sale
  • Almost 20 percent of the customers account for 80 percent of the profit
  • Around 20 percent of the software bugs cause 80 percent of the crashes
  • And 20 percent of the patients account for 80 percent of the spending in healthcare

The 80/20 rule is one of the greatest secrets of highly successful people as well as organizations. Among businesses, it is of more importance because 20 percent of the customers generate 80 percent of the actual revenue. This principle shows how you can achieve more with less effort, time, and resources. You only need to identify and focus on 20 percent of the work that actually matters.

The benefits of the 80/20 rule – Pareto Principle:

The unspoken value of the 80/20 rule is that little of what you spend your time on actually matters the most. By concentrating on those things, you can unlock the enormous potential of the magic 20 percent. It will help you to transform the effectiveness in your job, your career, your business, and your personal life.

In order to effectively apply the 80/20 rule in your life if you are an executive, you need to understand the projects that are important. It is because as an executive, you are surely faced with the constant challenge of limited resources. You need to maximize your time as well as the time of your entire team. With the Pareto approach, you will understand which projects are most important. What are the goals that value the most? And which specific tasks you need to focus on in order to align with your goals. Delegate all the ones that are important and drop the rest.

If you are a freelancer then it is important to know who your best clients are. Focus on the professional relationships that are a good source to earn money and focus on strengthening them. Otherwise, you will suffer from burnout and will lose the motivation to keep up with the quality of work.

Being an entrepreneur, you are constantly tempted to try new and exciting things. There is nothing wrong with that but you need to focus your energy on the real goals. With an 80/20 mindset, you will stay focused on your goals and will spend less time chasing new endless opportunities.

Dreaming big is not a problem but when you do that, creatively abandon the activities that take most of your time. Instead, focus on your inward energies and it will give you an incredible sense of power and confidence. By focusing on things that you love to do in a few areas, you will be able to make a real difference in your life and will begin to think in terms of possibilities rather than impossibilities.


It is very important to spend time in research, getting things right before actively starting that particular work. By spending 80% of the time getting things right, you will enjoy 80% of results by only exerting 20% of the effort in a long run.

Want a Free Website