Vilfredo Pareto’s Principle / 80-20 Rule
80% of your results are produced from 20% of your efforts
Vilfredo Pareto’s Principle, or The “Pareto Principle,” is more commonly known as the 80-20 rule. It suggests that a ratio of approximately 20% to 80% can be found as an effective measure for most things in life. Whether revenues generated per customer or value for hours worked, it usually can be found that 80% of all of our results in business and in life come from only 20% of our efforts!
As importantly, the 80-20 ratio seems to hold true for many input/outputs, causes/consequences, or efforts/results. It also holds true across the spectrum of relationships, business, finances, time— whatever the case may be.
Richard Koch, author of The 80/20 Principle, suggests that the key to earning more and working less is to pick the right thing to do and only those things that add the highest value. Contrary to public belief, “be intelligent and lazy” is NOT an oxymoron— in fact, it’s an important theme of this book! Discarding low value activities in all areas of your life, the true essence of the Pareto Principle, will create the time and freedom for you to enjoy a more richly endowed lifestyle.
Apply This Concept
Look for the evidence of Pareto's Principle in all areas of your life. As best you can, determine where 20% of your energies, resources, time, and talents should be invested for maximum benefit (The 80-20 Rule). Then do it.Laws of Wealth
