Pareto Principle / 80 20 Rule Case Study Example
The Pareto Principle / 80 20 Rule. Simple. Powerful. It can have a profound impact your life. Here’s a “Practical” Case Study Guide on how you can apply it.
There is an extract below, but you can find the full blog post "How To Excel Daily" here: https://www.frontfootconsultancy.com/...
The Pareto Principle - Key Knowledge and Summary Points For Success:
The Pareto Principle, otherwise known as the 80 20 Rule is a general “Rule of Thumb”. It’s a rule of thumb because depending upon the situation, the principle could be 90 10 or 70 30 i.e. it’s a guide and an exact mathematical formula is not necessary for its magic to have an impact on your life.
The 80 20 rule is based on power law probability distribution which demonstrates that there is almost always an unequal relationship between inputs and outputs.
It began in 1896, when the Italian economist Vilfredo Pareto showed that approximately 80% of the land in Italy was owned by only 20% of the population (the first evidence of the unequal relationship phenomenon). To his astonishment, he found the same principle held true in other European countries too and the 80 20 Rule was born.
Other than political and moral implications – so what? Why should the Pareto Principle apply you?
Despite its statistical foundations, the power of the Pareto Principle is its simplicity and its ability to shape all our lives, every day - for the better.
Since its original identification, there have been many natural occurrences where similar laws of distribution have been shown to hold true and this is where you come in!
Here are a few examples to highlight how relevant the Pareto Principle is in your every day life:
Health & Safety: 20% of hazards will account for 80% of injuries
Computing: 20% of bugs will account for 80% of errors and crashes
And here is the big Pareto Principle for you personally – 20% of your work and contributions will generate 80% of your value and success.
So why are you wasting so much time and effort on things that deliver very little???
The 80 20 Rule is a simple and beautiful rule of thumb and it's so important that you should think about it and use it every day of your life! i.e. to help you think about what’s most important and therefore where to focus your efforts.
A Tangible Example of the 80 20 rule in a real life setting:
You have a job and most of the responsibilities that you have, have been inherited from the member of the team that came before you.
You are ticking over and you like your team-mates. However, you have niggling doubt that you are not as efficient as you could be and you also think that you could be enjoying your work life more too...
Could the Pareto Principle help you?
Absolutely the 80 20 rule can help you! Watch this real life case study before we start you on your personal journey:
You can see from this case study example that the real changes took place because of:
• A focus on where the real value was for the client (the management team) and stopping non value adding activities (20% of the report was generating 80% of their requirements).
• A focus on the 20% super powers (Researching and scanning the environment and the Innovation of the reporting solution).
Now that you understand the Pareto Principle, let’s support you to apply it in your every day life.
Use this 80 20 Rule mind map analysis template to help you think this through for this example.
1. Firstly, what are you spending most of your time on?
Use these headlines as your starting point and then add more that are particularly relevant to you.
2. Then think about - where you add most value?
Where is your 20% super power within the 80 20 rule?
Look through these three lenses help you:
I. Financially. If you have an hourly cost (or equivalent) of say £50, could you be charging £100 per some hours rather than a flat rate for everything?
II. What do your colleagues rely on you most for? What do they love you for and where would they be totally lost if you didn’t support them?
III. What elements do you enjoy the most, that you could happily do all day long?
There is often a correlation – the high value 20% elements are often financially valuable to your organisation, valuable to your colleagues and you also really enjoy too. Can you identify your sweet spots?
3. Your next step is to understand which elements of the much less valuable 80% you can stop
(so that you can do more of you high value add work and do less unpaid overtime!)
...