Archive for

Pareto Principle – Use of Pareto, As it Applies to Professional Business and Personal Achievement

In the business world, there are tons of tips and tricks that offer you increase in work efficiency and production among other promises. The same holds true to personal development strategies. The challenge comes on the decision to choose as to which approach could deliver your desired outcomes. You might think it is a difficult task, but you only need two numbers to start with. The 80/20 Principle is the perfect strategy you have been looking for to foster results!

The Pareto Principle, commonly named as the 80/20 Principle, has been a widely circulated theory with various applications. This tool has been proven to be effective in leveraging the potential of a company in order to generate positive yield. It is also used in effective decision making, conflict management, performance measures and planning. Its usefulness could be applied to every aspect of our lives and if used the right way, one can harvest its bountiful promises.

Generally, the Pareto Principle shows that 20% of input produces 80% of the output or 80% of productivity is the result of 20% of our efforts. In business, it could be that 80% of your profits are the result of 20% of the sales or 20% of the employees is responsible for 80% of the revenue. It could also be that 20% of the customers give 80% of the complaints. This cause-effect, input-output scenarios have been observed in different situations, from simple office events to horse racing.

So how exactly is the Pareto Principle applied to our daily routine? It starts with assessing yourself or your organization on which skills, activities or individuals you think could highly contribute in gaining fortune for the company. Which areas show the biggest sales turnout? What do customers mostly complain about? Could you identify 20% of your clients, programs, etc. that would help you generate 80% of short-term or long-term profits? Do you know the 80% of your system that is not working well?

Say, for example, you noticed that 10 of your customers are the ones buying in bigger quantity and in satisfactory frequency. Once you classify the better lot of the bunch, focus on them and nurture their potential for contributing for the success of your business. Improve your relationship to them; find out what made them tick to your offerings. With trouble-shooting concerns, once you recognize the main factors that cause delays and other problems, concentrate on them and find fast ways to find solutions.

Prioritizing the 20% of the best activities, thought processes, people or applications is an excellent form of investment which ensures a prosperous return for your venture. It is an intelligent way of delegating efforts and resources to foster results and achieve the greatest amount of achievement. Maintaining this principle could lead to a decrease in operating expenses which therefore increases the earnings of the company. By identifying which products or processes work and which do not, you could easily get rid of the losers and focus on what is essential for the organization.

Aside from the financial gain, the Pareto Principle also teaches us the smart processes of building a better-performing qualities and standards to help develop the professional structure of an employee or an organization. The 80/20 Rule boosts the productivity and efficiency of an organization to amazing heights. It allows a very small threshold for wasting time, effort and resources of your company. It also makes us choose and identify better opportunities that hold an exponential impact to our future.

Innovate the path for improvement of your business and your personality! There is no better way of achieving more with less, than the Pareto Principle. Determine what gives you more reward for your effort, energy and resources. Start now and find the right 20% of your central skills to achieve the 80% gain and be 100% effective and happy!

Steven D. Foster 2010
© “Developing People to Drive Exceptional Results”