Home Personal growth Guide: Apply the Pareto principle or the 80/20 rule in your life

Guide: Apply the Pareto principle or the 80/20 rule in your life

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Guide: Apply the Pareto principle or the 80/20 rule in your life
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You know the Pareto principle or the 80-20 rule, right? It is one of the most powerful mental models for moving forward faster in life. If you understand and apply the Pareto principle in your life, you can increase your effectiveness. It can take your success to a whole new level. Although the principle is very simple, it is sometimes difficult to apply.

It takes a certain amount of courage and confidence to go all in on the 80-20 line. But the rewards are well worth it. Read on to improve your skills to apply the pareto principle in your work and life. It's one of the most powerful ways to look at almost anything in the world.

This is a step by step guide, a guide where we show:

  • Why it matters
  • How to make an 80-20 analysis
  • How to Eliminate the Bottom 80%
  • What to do with the extra free time.

What is the Pareto Principle in life?

The pareto principle states that in very many cases 80% of the value comes from 20% of the input. The principle is named after the Italian economist Vilfredo Pareto who found that 80% of the country in Italy was held by only 20% of the population. This was the result of the development of the statistical concept of the pareto distribution.

Later in the 1940s, the Romanian-American management consultant applied Joseph M. Juran this division applies to quality management. Realized that 80% of the quality problems can be solved by 20% of the problems. In other words, as a quality manager you can work on only 20% of your tasks to reach a quality peak of 80%. Other researchers later discovered that comparable distributions can be applied in many areas. Since then, the principle of these unequal distributions has been applied to all kinds of fields. Think sports, fundraising or health at work.

Above all, the Pareto principle had a huge impact on project management and personal productivity. Experience shows: the value of tasks is an extension of some form of pareto distribution. In other words: "Not all tasks are created equal".

Does the 80-20 rule always apply?

The distribution is not always exactly 80 to 20, but the message is clear: most things in life have such a skewed distribution and the pareto principle applies. Additionally, whether the distribution is 80/20 or 75/25 or 90/10 doesn't make a big practical difference anyway. We therefore assume 80/20 as a guideline.

Most likely, your practical experience and common sense will demonstrate this as well. Sometimes a few small things can make a big difference. While at other times you work hours or days without making much progress. Some tasks simply create a lot more value than others.

How does the Pareto principle affect your life and work?

When you apply the Pareto principle to your personal life, it has several implications:

  • 20 percent of your tasks create 80 percent of the value
  • 20 percent of your friends provide 80 percent of your joy
  • 20 percent of your projects ensure 80 percent of your success
  • 20 percent of the effort for each task yields 80 percent quality
  • you could create 80 percent of your income with 20% from your work or clients

Sounds fascinating? Surely! This, of course, leads to the practical conclusion of having to focus on the 20% of your highest value work. You can then use the remaining time more wisely. But how do you get this done?

How to make an 80-20 analysis

Figuring out your most valuable work isn't always easy. If you've never done an 80-20 analysis, you can be the first to follow your intuition. You may feel good about your most time-consuming and low-contribution tasks. Start by making a list of these tasks. We will need these later to decide how to deal with it.

Be transparent about your time spent

To really make a leap forward, you need more transparency. Too often our minds fool us and we are biased by our likes and dislikes if we only follow our intuition. Therefore, we need to balance intuition with some careful research and analysis. It all starts with transparency. You need to know how you spend your.

Guide - Apply the Pareto principle or the 80/20 rule in your life - be transparent about the time you spend on what.

Guide - Apply the Pareto principle or the 80/20 rule in your life - be transparent about the time you spend on what. (fig.)

Track your time commitment over a 2-3 week period. You can use a time tracking app or a simple spreadsheet. It's about tracking EVERYTHING and doing it in enough detail. This level of detailed tracking will take you some time. But it is an investment in your future. Think of it as a temporary assignment. You do not always have to reduce things at this level of detail. Do it for two to three weeks and then watch the results.

Know the value of your work

The other part of the 80-20 analysis can be trickier. For some subjects you have hard indicators, such as the effective daily rate that you charge a customer. In other cases, it is not clear what value different tasks actually create.

After all, it's not just money to be reckoned with. Some activities help you grow your brand awareness, improve your skills or your health. Do your best to evaluate the effect you can achieve with the various tasks on your list. Apply the same principles as when setting daily priorities.

Identify Pareto's 80% of less value added

Based on the above, you should now have a list of all your tasks, along with the time spent and the value created. Either by analysis or from an intuitive estimate.

You now calculate the effort-benefit ratio: just divide the value by the time spent. Now you sort the entire list by this value with the highest ratios at the top. As a last step, you start at the bottom of the list and add up all the time spent. Once this number hits 80% of your time, draw a line.

Everything below this line is your lowest 80. This is the kind of thing that keeps you from creating more value and becoming more successful. Long story short, these are the things you shouldn't be doing anymore. Watch them carefully and ask yourself: How do I get rid of this?

How to eliminate the 80% from the Pareto principle

It turns out that there are six main strategies to follow Pareto's law and eliminate work with little added value.

Just don't

Some tasks can simply be omitted. They produce so little value that you don't realize it anyway. Stop immediately.

Simplify

Sometimes the reason for extra time commitment is the degree of complexity. Either the task at hand or the way you perform is too complicated. Ask yourself if there is an easier way to achieve your goals. Remember: productivity is never about the work itself. It's all about the output you produce. So, is there any way to use a better tool? Can you remove some steps or subtasks without compromising on the results? Are all relationships with other people really necessary? Or is it unnecessary organizational catch-up that you could ignore?

Automate

If you have to perform a task often, always look for ways to automate it. It's better to invest a day or more in automating a task than working an hour on it every day. Of course, tech-savvy people have an advantage here. Nevertheless, even if you can't program, there are options to use no-code environments to automate at least the simpler tasks. And you can always ask others to automate for you, especially when you see how much added value this can be for you.

Delegate

Some of the low to medium value tasks can be delegated. You don't have to do everything yourself. Instead, you can focus on the most important aspects of these tasks. Setting and defining the goals and general direction for a project yields greater value than actually doing it. Leadership and performance management also have a greater impact than being led. Use delegation wherever you can. If you don't have delegates, think of creative ways to delegate sideways or even upstairs. Provide an efficient follow-up or project management system.

Reduce the intensity of the work

Some low value tasks can be what we call “infinite tasks”. Essentially, those tasks can never be completed because they have no purpose. Often they appear in creative or conceptual work for which no clear result has been defined.

Set a clear goal for these types of tasks to really know when you're done. If you can't clearly define the outcome, set a budget and stick to it. Set the budget low enough so that the effort you put into it matches the value the task can create. It is essential to work with time constraints on these types of tasks.

Settle for good enough solutions: 80% perfection

The 80/20 value distribution of Pareto's Law applies not only to your work as a whole, but also to each individual task itself. If you can get along with an 80% is-good-enough solution for all your low-value tasks, you could cut nearly two-thirds of your workload. (80% from 80% is 64%). Think about that: you don't even have to stop doing anything. You only settle for a little less perfection on those tasks that create little value anyway. This step alone can give you more than five extra hours in a 40-hour work week.

What to do with the extra free time?

If you are thorough with your 80/20 analysis and can draw the consequences from it, you have a lot of free time. These can easily add up to several hours a day. How do you make use of this?

Double your effort on the valuables

An easy next step is to double your valuable tasks. Do more of the things that make you successful. This gives you a boost in productivity and success. However, you have to realize that at some point this will have diminishing returns.

Do the important things better

You should also use some of the newly available time to improve the quality of performing your most important tasks. Invest a little more time in that super important pitch for a new project. Make sure to grab that conversation with both hands that can take you to a new career level. Prepare better for the salary negotiations with your boss. Sometimes a single task can have a huge effect on your overall success. You have to make sure you do it even better.

Lower your workload to have more time for other aspects of your life

Finally, an important aspect is being able to reduce your workload. This is especially true if you are very overworked. By reducing your workload, you can extend your interests beyond your hobbies, family and friends.

Use the free time to discover new ideas and opportunities

The fourth and most rewarding opportunity for many is to use some of the time freed up to explore new ideas and opportunities. Start it own company or project next to it, which you thought about for a year. Participate in networking events and connect with new people. Learn a new skill or invest an hour a week self-reflection. Your life can become more colorful and rewarding as you increase your opportunities.

Get the most out of the Pareto principle

One fact that many people don't notice is this: the items in your top 20 percent also follow an 80:20 distribution. This means that when you are done focusing on the tasks that create the most value, you can increase your effectiveness again by running an additional 80-20 analysis on these top 20.

This means you should focus on just four percent of the things you normally did before. If you do this, you can get nearly two-thirds of the results with less than five percent of the effort. Your effectiveness would be 16 times.

Imagine how much better you would perform if you could only focus on those topics. You can spend a lot of time and energy on more productive use.

This can of course be repeated over and over. The principle also explains the huge differences between people in their effectiveness. Some people naturally focus only on those topics that generate the most value. The rest they ignore or delegate.

If you want to boost your success, get started by analyzing your work now!

Sources including Forbes (link), FortyThree (link), Mark Manson (link), Tony Robbins (link)

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