Michael J. Kerrigan

80/20 Rule

For many years I have studied the Pareto Principle**, the commonly quoted management rule, which states that 80% of the work is done by 20% of the people. The hypothesis is that 80 per cent of results flow from 20 per cent of causes, and sometimes from a much smaller proportion of powerful forces.

The 80/20 Principle asserts that a minority of causes, inputs or effort usually led to a majority of the results, outputs or rewards. Taken literally, this means that, for example, 80 per cent of what you achieve comes from 20 per cent of the time spent. Thus for all practical purposes, four- fifths of the effort—a dominant part of it—is largely irrelevant.

The reason that the 80/20 Principle is so valuable is that it is counterintuitive. We tend to expect that all causes will have roughly the same significance and that all customers are equally valuable.… Continue reading

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