The phenomenal discovery of the famous Italian sociologist and economist Wilfredo Pareto was made as a result of an analysis of the distribution of wealth in Italy, during which Pareto found that in the country 80% of all wealth belongs to 20% of the population. It is interesting that at about the same time, the American employee, the future “father of the theory of quality management” Joseph Juran, also came to the conclusion that this relationship has a certain regularity, he only formulated his conclusion on the basis of observation of the pea crop, where 20% of the bushes gave 80% of the crop. Actually, the term “Pareto principle” itself belongs to him; he gave this name in honor of Wilfredo Pareto.
The Italian scientist has extended this principle to other areas of activity, but he gained his main importance as the Pareto principle in management, which consists in the fact that people spend only 20% of their time on productive activities. Thanks to this numerical expression, the Pareto principle is also referred to as the “80/20 rule”. In a philosophical sense, this means that causal efficiency is distributed as follows: 20% of the causes give the very 80% of the result of the activity, and vice versa, 80% of the reasons, only 20% of the result. At first glance, this ratio looks paradoxical, it is hard to imagine that 80% of working time, for example, is spent practically without any result. However, the subsequent statistical analysis of the proportion showed its high reliability. Due to the fact that such a principle could be applied to assess the quality of work, it reflected the Pareto principle , the effectiveness of various orders in a fairly wide range of areas of activity.
The analysis of the proportion allows you to determine the main areas where it can manifest itself most effectively. There are two such directions.
Firstly, the Pareto principle encourages the search for the very 20% of the reasons that give 80% success.
Secondly, the 80/20 rule motivates the search for reasons why the majority of the time spent does not give a result.
However, to use this principle in practice should be rather cautious, since it is necessary to selectively select the object of study. Otherwise, such a straightforward abuse of the principle may lead to incorrect conclusions. The rational application of the principle provides for its inclusion in any analytical system, which allows a comprehensive assessment of the necessary objects and phenomena. For example, if you work in a place where your salary is determined by management once and for all, or for any long period, then you just make up the very 80% that give only 20% of efficiency. The reason here is that no matter how you work, your productivity will not be stimulated by wage growth.
Applying the Pareto principle is very useful in modern management. The rationale for this conclusion is that we use only 20% of the working time for significant, the remaining 80% is spent on activities that do not benefit either the company or the employee himself. Moreover, in many cases, this “useless time” is laid down in various kinds of production procedures (bureaucracy, incorrect clerical logistics, violation of relations with partners, etc.). The meaning of using the principle and the conclusion that naturally follows from this application is that it is necessary to focus the entire potential of the company on those 20%, which form 80% of the effective result.
The 80/20 principle can also be successfully used in business, for which it is necessary to critically examine its structure, partnerships and, if necessary, develop a new strategic development model. Approximately the same way you can approach the application of the rule in marketing, services, investment activities.
It should be borne in mind that in the study of any activity, the manifestations of this proportion can be seen almost everywhere, up to family and domestic relations. Therefore, the most important thing when deciding whether or not to use the Pareto rule is to decide what is the most important and the most important for you.