Pareto law, or the Pareto principle as it is also known, is about focusing your energy. In simple terms, it states that 80% of outcomes come from just 20% of what you do.
It reminds us that concentrating our efforts on a smaller number of tasks can actually boost productivity.
In business, there is a temptation to be pulled in all directions, to chase every potential opportunity that comes our way. But this can make us ‘busy fools’.
While seeking new prospects is valid as we grow our business, it should not come at the expense of tasks that actually create income and profit.
Pareto Law Origins
It was Vilfredo Pareto, the Italian economist, who first introduced the concept, more than 100 years ago. However, it was only during the 1940s that the principle was popularised in business situations. Business theorist Joseph Juran was credited with increasing awareness in a corporate setting.
As a result, the 80/20 rule is most commonly associated with business practices. However, it can be applied to your personal life too. For example, managing your finances or learning new skills.
The 80/20 Rule
As business leaders, we constantly feel pulled in all directions. Everything demands our attention, including minor issues that bring nothing to our company.
Adopting the Pareto law, you understand that 80% of your outcomes result from 20% of your actions or work. Instead of trying to do ‘everything’, identify which inputs into your business are productive and focus your energy there.
Not only does this bring a better return on your time investment, but it also reduces your workload by giving you permission to ignore, or reprioritise, the less productive tasks you undertake.
Of course, some duties are necessary while not specifically growing your bottom line. This is where the art of delegation comes in. Do you really need to be expending your time and effort on a certain job, or could another team member handle it? Could your time be better spent elsewhere?
Adopting Pareto law, or the 80/20 principle, into your working life not only helps increase productivity, but also reduces that feeling of ‘never having the time’. By dispensing with the unhelpful tasks you do, you can fully focus your mind on the jobs that can grow your business.
Manage Your Time
When you realise that your outcomes are determined by what is a relatively small amount of what you actually do each day, the feeling is liberating.
Some of us seek validation by being seen to be constantly busy. But is what you are keeping busy with really benefitting you or your business? Are you wasting your time and energy on assignments that, deep down, you know are going nowhere or could be dealt with elsewhere in the organisation?
Appreciating the Pareto law releases us from the idea that being busy equates to success. You can achieve the same outcomes, possibly more, by focusing your efforts on a smaller percentage of tasks. That enhances productivity and, importantly for your wellbeing, gives you licence to have restorative downtime.
Running yourself into the ground with pointless ‘busy work’ just so that you are seen to be working hard does not benefit the business and is detrimental to you, personally.
When you have poured your heart and soul into creating and nurturing a business, it can be hard to admit that not everything you do matters equally. Believe me, it doesn’t. And when you try to do it all, you risk not truly focusing properly on anything, including the areas that demand and deserve your full attention.
Respect Pareto Law
You are probably aware of other business leaders, some quite well known, who seem to enjoy great success yet also have the time to live, not just work.
They are living Pareto law and the 80/20 principle. They have identified where their time and focus need to be to achieve better outcomes, allowing them to enjoy the rewards of their work.
Many high achievers reach this point not because they have less to do or more people to do the work for them, but because they understand the power of focus. They respect their time.
There are tasks, and people, who steal your time. They divert your concentration from what matters, to what matters to them. This was outlined in Gary Keller’s book on the Pareto principle. He wrote, ‘ The moon is reachable if you prioritise everything and put all of your energy into accomplishing the most important thing’.
Pareto law sounds easy on paper, but how do you know where to focus your concentration? How do you identify the 20% that will bring the 80%?
Purpose
The first step is to know your purpose. If you know your purpose, professionally or personally, it leads to better decision-making. I know my purpose, or vision as I call it, and have written about it on this site.
Without understanding your purpose, setting goals and taking action becomes challenging.
Before embarking on any task, ask yourself if it serves your purpose.
On a personal level, perhaps your purpose, or vision, is to ensure your family has material comfort, to spend more time with them, or to treat yourself to little luxuries. Professionally, it is about why you launched your business, what you wanted it to stand for and achieve.
Knowing your purpose lets you clearly understand your life and business goals and the outcomes you want in that 80% area.
Prioritise
With your vision, or purpose, clear in your mind, you can ask a challenging question. What is it that is holding you back from reaching your aims?
I like lists. I enjoy the clarity and focus that writing down my targets gives me. I suggest you begin by making a note of, perhaps, five things you could start doing today to achieve your purpose or remove the blockages that keep you from it.
Then prioritise that list. Which of these tasks will get you where you need to go fastest? You now have focused goals on achieving your purpose, showing you where to concentrate your efforts to maximise outcomes.
Act
It is not enough to have a list of priorities; you need a strategy to ensure they are actioned. You must be accountable for following through.
Your priority list gives you the 20 of the 80/20 principle, but now you need to do the work.
For each task you have identified, create a strategy that is specific and measurable, achievable and realistic. And set a time frame for completing the task.
Pareto Law Realised
Once you understand what you want from life, professionally and personally, you can identify the work you need to do to achieve that purpose. Once you have prioritised those tasks, you know where to focus your concentration, effort, and energy. Once you have a strategy to complete those tasks, you work smarter, not harder.
If you are one of the busy fools who delights in always having ‘something’ to do, because it makes you feel valid and look like a captain of industry, stop now. Give some thought to the Pareto principle and begin working on your 80/20 plan.
Results will improve, your work will become more rewarding, and you will spend your time better.
