What Is The 80 20 Rule? How To Succeed In Business And Life?

There are a plethora of self-help techniques and time management theories out there. You could even say we’re bombarded by them. The 80/20 principle, often known as the “Pareto Principle” by its lesser-known title, is one of the most influential.

So what does 80 20 mean? Is it worth applying to your business? You’ll find out in this post! 

what is the 80 20 rule

The Fundamental Definition of The 80 20 Rule 

Simply put, the 80/20 principle states that 20% of the causes for a given event produce 80% of the effects. This concept has been applied to a multitude of fields in business.

For example, 80% of an organization’s income comes from 20% of its clients. When used correctly, the 80/20 principle can be a precious tool. It can help direct resources on the areas that yield the best outcomes.

Related Reading: Types of Blogs that Make Money – Check Them out Here

The Origins of The 80 20 Rule 

During his time, Dr. Joseph Juran, a well-known quality management specialist, invented the phrase “Pareto Principle” in the mid-1940s. It’s named after Italian economist Vilfredo Pareto, who devised an intriguing formula in 1906. 

Surprisingly, it wasn’t facts that motivated Pareto, but rather his garden. Because an analytical mind can’t stop analyzing, Pareto discovered that 20% of his pea pods generated 80% of his peas.

This piqued Pareto’s interest. Was this theory applicable to other fields, such as economics?

It sure did! Pareto observed that 20% of the population held 80% of the land in Italy. This observation prompted him to develop a hypothesis based on “the vital few and the trivial many.” 

While Pareto’s words may appear unpleasant today, the basic concept became recognized as the 80/20 principle.

Juran then used Pareto’s theory to improve quality management in an intelligent way. He discovered that for most items, 20% of flaws create 80% of the difficulties. The outcomes were considerably improved by having QA teams focus their work on the most critical issues. These issues usually involved 20% of their operations. 

How Can The 80 20 Rule Boost Your Business? 

The explanation is straightforward. The 80/20 rule, when correctly implemented, allows a company and its employees to focus on what matters most.

Multitasking has been proven in studies to be ineffective. The 80/20 rule encourages businesses to quit attempting to do everything all at once. 

Instead, they should focus their time, energy, and resources on the tasks that produce the highest and best returns. In other words, the more focused the resources, the better the outcomes.

Knowing to let go is the vital concept here.

However, this isn’t to suggest that the other 80% of the revenue is ignored. You can’t disregard “less profitable” customers. Ceasing the development of your sales reps isn’t a good idea either.  

Effective allocation of time and resources on areas that provide the highest results are what the 80/20 principle advocates.

Application Of The 80 20 Rule

So when it came to fixing defects in its software, Microsoft famously used the 80/20 rule. They discovered that focusing on the 20% of issues that had the most significant impact allowed their teams to prevent 80% of system faults and crashes.

As a content creator, 20% of your blogs are responsible for 80% of your views. 20% of your employees account for 80% of lost, sick days in human resources. As a business owner, 80% of your resources yield 20% of your output. 

Are you starting to catch on? The list of applications is endless. Concentrate on what promotes efficiency and productivity where it counts the most.

Applying the 80/20 rule to expansion is a game-changer for B2B and B2C businesses alike.

Businesses frequently place a high priority on getting new leads to expand. This is where they devote a significant amount of their time, energy, and resources. This is frequently erroneous, as acquiring leads and converting them into clients takes much time and money.

On the other hand, let’s say that 20% of the company’s existing customers provide 80% of its income. Then realigning the business plan to focus on this 20% could have a more significant impact at a lower cost.

You can’t give everything equal attention all of the time as a business owner, department boss, or C-suite executive. That’s the formula for boredom and squandered effort. 

Instead, you can better utilize the resources you have to create the outcomes.

Of course, you can do so by learning more about the 80/20 principle and applying it to your daily operations. That includes marketing, sales, and various departments in your company. 

A Small Caveat 

A Small Caveat 

The 80-20 rule is a guiding principle rather than a hard-and-fast mathematical rule. It’s a coincidence that 80% and 20% equal 100% in the rule. Inputs and outputs are merely different units, so the percentages do not need to be equal to 100%.

The 80-20 rule is frequently misunderstood. Sometimes the mistake stems from a logical fallacy. For example, there’s the assumption that 20% of inputs are the most essential. 

That doesn’t mean that the remaining 80% must be unimportant. In most instances, the perplexity is caused by the coincidental 100% amount.

The 80 20 Rule Applied To Blogging 

Let me illustrate the 80 20 rule in a real-world application. Carla, a Harvard graduate student, was working on a digital communications assignment for her class. The goal of the project was to construct a blog and track its progress over a semester. 

Carla was in charge of the site’s design, development, and launch. The professor assessed the blogs at the halfway point of the semester. 

Carla’s site, despite its popularity, received the least amount of traffic compared to her classmates’ blogs.

Carla came upon an article about the 80-20 rule on the web. She began to consider how she could use the 80-20 rule in her blog project.  

She reasoned, “I put a lot of effort, technical aptitude, and writing expertise into creating this site.  Despite all of my efforts, I am receiving very little traffic to the site. What am I doing wrong?” 

She understood that even if a piece of information is fantastic, it is worthless if no one reads it. Carla reasoned that the site’s promotion might be a more significant issue than the blog itself.

Carla chose to implement the 80-20 rule by allocating her “80%” to everything that produced the blog. That meant including its content and her “20%” to the readers. 

Carla gained a better understanding of her audience and targeted her top 20% of readers more effectively.  Based on what she learned, she restructured the blog’s structure and content. The result? The traffic to her site increased by more than 220%.

Related Reading: Best Online Course Platforms – Check Them out Here

Final Thoughts

It’s crucial to realize that there are only so many hours in a day, no matter your circumstance.

It’s best to use the Pareto Principle to help you see why this is a good thing. Otherwise, you’ll never get away from a never-ending to-do list without really optimizing your time. 

Disclosure:  this article might contain links to the resources discussed.
Some of the links are affiliate links, meaning that I will make a small commission if you purchase a product or service by using the link. You get the same price whether you use our special link or not, and sometimes I’m able to get you an even better deal through my relationships!  More info in my privacy policy.

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Brooks Conkle

Brooks is an Entrepreneur, Sponge, Father, Husband, & Follower of the Golden Rule. He has over 15 years of experience as an entrepreneur after graduating with a BSBA in Finance from Auburn University. He’s addicted to growing new business ideas and any food that includes chocolate and peanut butter. Brooks is a firm believer in creating multiple streams of income and creates content here on BrooksConkle.com to help other hustlers in the areas of marketing, online business, personal finance, and real estate. 

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