Vilfredo Pareto (1848-1923) was an Italian economist who established what is now known as the Pareto Principle, or the so called 80/20 Rule. In 1906 Pareto observed that 80% of the land in Italy was owned by 20% of the population. Later he found out, that this principle was valid in many other parts of [...]
Vilfredo Pareto (1848-1923) was an Italian economist who established what is now known as the Pareto Principle, or the so called 80/20 Rule. In 1906 Pareto observed that 80% of the land in Italy was owned by 20% of the population. Later he found out, that this principle was valid in many other parts of life, too.
Explained in short terms the 80/20 Rule means that in any task a few (20 percent) are very important and high percentage of 80 are trivial. In Pareto’s task it meant 20 percent of the people owned 80 percent of the wealth. Today we know that this statistical 80/20 Rule can be applied to almost any environment, let it be management, science, leisure time or housework.
So applying this priciple to the workfield in the online business means that approximately 20 percent of the efforts produce 80 percent of the results. The lesson out of that is that we really need to recognize that 20 percent and then concentrate on it as the key to making the most effective use of our time.
So being aware of these let`s scan our working habits:
If that 20 percent produce 80 percent of our result in online business we urgently need to to get our actions „imbalanced“ putting more actions in those resultproducing activities. Its an old rule of time management also to split up ur duties in A,B and C – Priorities. So since our goal in online business in most cases – aside from other altruistic goals one might have – is to earn a lot of money without trading time against money
We can find out out our A-Priorities just by looking at our last years balance sheet or the numbers of our income sources. The best income sources should be focussed on as we can be easily distracted and spend hours fixing bugs or optimizing one part of our system which doesnt bring results (of course we still need to consider the potential of these task). Also while being online and hitting one of these temptating links we can end up spending an hour on youtube or facebook instead of working on a highly income producing project that will jumpstart our business towards success.
The second measure line for for the 20% of A-Priorities can be the separation of urgent and important things. If we just let the ‘urgent’ things, or the things that our mind picks out as ‘urgent’ rule our timetable, we might end up focussing to much on the 80 percent. Doing that won’t leave us enough time to do the ‘important’ things. As a simple rule you can say the urgent things are the ones which you think by general paradigm need to be done now, whereas the important things are the ones which make the real difference in the long run for your and your families life and have the potential to fulfill your dreams.
If you want to find out more about this separation of urgent/important things then you might want Steven Covey’s advice – Urgent/Important quadrants as he outlines it in his First Things First book.
Here you can find a great mindmap of the priciples of Covey
So after all in focussing on the important 20 percent you will have a much bigger reward for your energy and effort. Combining the principle of urgent/important with the 80/20 rule is very powerful. And there is another very similar theorie as the mother of Total Quality Management which I will write another blog on soon.
If you would like to read more on the 80/20 rule, I would suggest The 80/20 Principle: The Secret to Success by Achieving More with Less
But you don’t need to read the book to start using the 80/20 rule. You allready possess enough knowledge to act now as the most powerful change is allways now,right? 
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Regards, Dirk
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