Pareto Rule 80/20 (FD20082020-7)

Pareto Rule 80/20

This is an extremely interesting concept which was discover by Vilfredo Pareto in 1906 when he was measuring the unequal distribution of wealth in his country. He found out that 20% of the people own 80% of the wealth and thus the Pareto rule 80/20 theory is born. It was later that pareto rule was found similar in other circumstances where people would find this rule useful such as in “vital few, trivial many” and “less for more” theory.

So how does this theory actually benefit a business or a person individual life? In business there are many staticstics that show that 80% of the business profit generated from 20% key staff. By identifying what is the 20% that can help to increase 80% of the profit had help many companies in the past to earn a lot. And the same thing can be apply in a person life . “What is the thing if you do now it will create a positive impact in your life a lot? “ . For a salesman , it may mean getting a new prospect while for others it may mean keeping close relationship with its existing customer.

As a conclusion, 80/20 pareto rule helps one to identify what is the 20% if concentrate your effort on will lead to 80% output and it can be also use on the other way such as identify what is the 80% problem in your business can be found in 20% in your business .

One important note in applying in business is that one person should concentrate on increasing the 20% that will yield 80% of the output. However, one should also do something of the remaining 80% that yield 20% output only so that their output will increase to a better level.