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Pareto Principle

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updated 08 Feb 2023

The 80/20 rule, also known as the Pareto principle, is a principle named after Italian economist Vilfredo Pareto. The principle states that 80% of the effects come from 20% of the causes. In other words, a small number of factors are responsible for the majority of the outcomes.

The 80/20 rule can be applied in many different areas, such as business, economics, and personal development. For example, in business, the rule states that 80% of a company's sales come from 20% of its customers. This means that a small number of customers are responsible for the majority of a company's revenue. In economics, the rule states that 80% of a country's wealth is held by 20% of its population.

The 80/20 rule is not a strict mathematical formula, but rather a general guideline to help individuals and organizations identify areas of focus. By recognizing the areas that are responsible for the majority of results, individuals and organizations can focus their efforts and resources on the most impactful areas.

For example, in personal development, the 80/20 rule can be applied by focusing on the 20% of activities that are responsible for 80% of one's happiness and well-being. By focusing on these activities, individuals can maximize their impact and achieve a better quality of life.

It's important to note that the 80/20 rule is not a hard and fast rule and the actual ratios can vary in different situations. The key takeaway is that a small number of factors often have a disproportionate impact on outcomes, and focusing on these factors can lead to significant improvement.

Resources

80/20 Rule | Do More By Doing Less