What is the Pareto Principle?
Have you ever heard of the Pareto Principle or the 80/20 Rule? It’s a concept introduced by an Italian philosopher and economist, Vilfredo Pareto, which states that 80% of results come from just 20% of action or input. For example, 20% of clients generate 80% of income, 20% of the sales reps generate 80% of total sales, 20% of effort we put into a task generates 80% results. On a more personal note, a good example is that we wear 20% of our clothes for 80% of time. So there are many different applications of the concept, but the main idea behind it is the imbalance of inputs and outputs. The Pareto Principle can be extremely helpful in many areas of life and business and it’s worth to keep it in mind when analysing business results and managing projects.
How can you use this rule in business and project management?
Prioritize your tasks
Effective time management is crucial for maximizing your productivity and for this to be possible, you need to handle your priorities skilfully. Take into account your business goals and expected results, decide which tasks are the most important from this point of view and then allocate more time to them. It’s not easy to decide which 20% will contribute to 80% of your success, but it’s definitely going to help you make efficient progress.
You can use a handy productivity tool to help you organize the tasks you want to focus on. Try HeySpace, a two-in-one tool which offers a kanban-based task management feature and a chat. It will help you get full control of your schedule and prioritize your tasks in an efficient way.
Choose your projects
While you probably have a lot of ideas for interesting projects for your business, you can’t really do all of them, as none will be done well. What you need to do is think which of them will bring you the most revenue, the biggest number of new customers and which will give you the greatest chances for progress. Remember, 20% of all your projects can contribute to 80% of your success. But you don’t need to resign from the rest altogether. Instead, you might consider scheduling them for later or allocating fewer resources to them.
Focus on the most critical errors and problems
Another area which the Pareto Principle applies to are errors and issues. It might be the case that most of your problems arise from a few key issues or errors. Try to identify them and their sources and then go on to fixing them. Even if they are not easy and quick to solve, it might be worth devoting 80% of your time and energy to 20% most critical errors and issues in order to avoid potential problems that could come up in the future.
Limit the team
We all know that too many cooks spoil the broth, so a big team doesn’t necessarily mean better and quicker project delivery. That’s why, instead of having a big team working on a project, you should rather limit the team to the people who add the most value to it. Select the 20% who will produce 80% of the results. Choose the team members that are particularly suitable for a given project and have the expertise that is necessary for the project success.
Don’t only focus on 20% of your team
Although the Pareto Principle is perfectly applicable to managing human resources, it also needs to be applied with caution. That’s because you shouldn’t only focus on the 20% of top performers in your team at the expense of the remaining 80%. As a manager or a business owner, you should do your best to make sure the whole team can improve their performance and give them a chance to do so. Focusing only on the top performers won’t be beneficial for your project. The thing to bear in mind is not to hire too many employees but to make sure those you have good conditions to make progress.
Automate tasks which have less impact
Among all your daily tasks, you can probably identify some that you can’t really eliminate but which don’t really produce impressive results. What you can do is try and automate them. Doing it will let you focus on the 20% of your most important tasks which will definitely give better results than the less impactful ones. For most of them you can probably find suitable software or tool that will save you time and contribute to increased productivity.
How do you make use of the Pareto Principle for business and project management?