Pareto Principle: The Power to Gain More Time
Whether you’re in charge of a multi-national company, or a small-business owner playing the role of accountant, administrator and marketeer – time is an invaluable asset. In both work and life, it’s important that we use time effectively and efficiently – and although in principle this may sound easy to just ‘do,’ when it comes to the reality, it is much harder to strike the balance, and not simply feel overwhelmed.
That’s where the 80/20 rule comes in. Be prepared to transform the way you work…
What is the Pareto Principle (otherwise known as the 80/20 rule)?
In a bizarre (but beautiful) trail of thought, it was the Italian Economist Vilfredo Pareto, who noticed that of his pea plants (yes pea plants!), 20% were generating 80% of the peas. He then went on to notice that this could be applied to more areas of life (not just vegetable growing!), and noticed the trend in both land ownership and wealth distribution in Italy – just 20% of the population owned 80% of the land and enjoyed 80% of the wealth!
Over time, the theory was applied to all walks of life, and eventually weaselled its way into business, and it was soon realised that ‘separating the vital few from the trivial many’ was a phrase well worth remembering. Although 80/20 are figures that can have some leniency, generally there is always some form of imbalance between your efforts (what you put in) and results (what you get out) and it’s recognising this that is the first step to success.
It’s therefore in your best interests to focus a greater amount of your time on the smaller percentage that achieves almost all of the results!
Applying 80/20 to save time in the workplace
It doesn’t matter what type of business you may have, or even your department, the Pareto Principle can help you use your time more efficiently. Here are just some examples…
If you’re an entrepreneur, use the 80/20 rule to set your tasks
You can use the 80/20 rule when deciding what tasks to undertake for the day, week, month, or even year. Which project will bring you the most rewards? Or which tasks within that project will bring you the most benefit? For instance, when you write your to-do list at the beginning of the day, ask yourself which will have the most positive impact on your life. On average, there will be 20% (perhaps 2 lines on a list of 10) that will help you more than the remaining 80%. Depending on where you stand in the business – delegate these, or drop them!
Sadly, a lot of us choose to spend time on the less valuable tasks that don’t equate to much. Once you’ve decided on your top 20% task, remember to use SMART Goals criteria to ensure you have a clear plan to see the task through. Using both these tools, you will ensure you are committing to a continuous improvement of excellence in your chosen field.
If you’re the Operations Manager, use the 80/20 rule to identify where the problems lie in your processes.
It was Dr. Joseph M. Juran, who was the man behind the quotation ‘separating the vital few from the trivial many,’ and that stands true for almost every type of organisation and/or business. Using the original principle as set out by Vilfredo Pareto, he noticed that it was a small number of defected processes and parts that led to issues with quality.
By identifying the ‘trivial few,’ you can save yourself some time by focusing purely on these. You can even create a Pareto Chart, which will clearly show where the problems lie to all employees, saving time on having to explain and justify to each employee – who may think they know better!
If you lead a sales team, use the 80/20 rule to identify the top Sales Managers in your team
The 80/20 rule can also be applied to the productivity of the people within your team. When you delve deeper into sales figures and productivity of each team member, you may be in for a shock. There will be around 20% who account for the majority of sales.
It is important to consider that this may be for a number of reasons however, the area they work in, maybe they just have some tricky customers, or maybe they need some extra training. Either way, it’s worth an investigation – to ensure that your business is putting its time into the right avenues.
If you’re a freelancer, identify your highest-paying clients
When looking closer at your profits, you will find that there will be a small number of clients contributing to the large proportion of your profits. This tells you two things.
- If you’re equally dividing your time between the lowest 80% and the top 20%, your focus is much better directed to the 20%. Depending on your business, it may even be better for you to try and pass on the clients or customers. Free up time for the clients and customers who do bring profit.
- You now know who you’re marketing too. Rather than doing endless hours of Market Research – the answer is there right in front of you!
If you’re any of the above, use the 80/20 rule to promote higher levels of engagement and less stress for yourself
This is about changing your mindset and adopting the 80/20 rule across the board. Whoever you are, if you have a level of ambition – there may be the temptation to branch out in all directions, on the hunt for something new and exciting. Ambition is great – but you must consider your goals, and whether the time you are spending on them is worth it.
An 80/20 mindset can help you to say focused on your strategic plan for your business. Remember, that having too much on your plate (which can easily happen) can lead to burnout and higher levels of stress. And if you aren’t gaining results from your efforts, your engagement WILL begin to drop. Ultimately, both lead to loss of valuable time.
Embrace the 80/20 rule
Clearly, whatever type of business you are running, or in whichever department, the 80/20 rule can be applied to save ounces of time. It is therefore important to adopt the Pareto Principle as a business mindset. But where to begin? If you can apply it to almost anywhere in an organisation, this can seem a daunting task.
It needn’t be – but it is crucial you set off on the right track. Go ahead and track your time – see what are your weekly activities and how long you spend on each of them. This will give you a crystal-clear idea of where the time-wasting activities may lie.
Ensure you embrace automation – this is the number one streamline of activities. If there is an easier and more efficient way to achieve something – do it!
And finally, explore the flipside! Remember, it doesn’t matter who you are, there is still only a certain number of hours in the day, week, month, year – and it is up to you to make them all COUNT. So, if that means getting rid of something that’s taking 80% of your time, but only producing 20% of results – is it worth it?