Understanding the Pareto principle (The 80/20 rule) - Asana

The Pareto principle (also known as the 80/20 rule) is a phenomenon that states that roughly 80% of outcomes come from 20% of causes. Resources|Productivity|UnderstandingtheParetoprinciple(The...UnderstandingtheParetoprinciple(The80/20rule)SarahLaoyanJune19th,2022•4minreadfacebooktwitterlinkedinJumptosectionWhatistheParetoprinciple?Howtousethe80/20ruleAdvantagesofusingtheParetoprincipleDisadvantagesofusingthe80/20ruleAligntaskstogoalswithAsanaViewTemplatesSummaryTheParetoprinciple(alsoknownasthe80/20rule)isaphenomenonthatstatesthatroughly80%ofoutcomescomefrom20%ofcauses.Inthisarticle,webreakdownhowyoucanusethisprincipletohelpprioritizetasksandbusinessefforts.Whenyougetintotheofficeinthemorning,what'sthefirstthingyoudo?Mostpeoplegrabtheircaffeinatedbeverageofchoice,checktheiremail,andprioritizetheirtasksfortheday.Butwhattechniquesdoyouusetoidentifywhatneedstogetdonefirst?OnecommontechniqueiscalledtheParetoprinciple,alsoknownasthe80/20rule.Thistechniquecanhelpyoudetermineandprioritizeyourhighest-impacttasks,increasingyourproductivitythroughouttheday.WhatistheParetoprinciple?TheParetoprinciplestatesthatformanyoutcomes,roughly80%ofconsequencescomefrom20%ofcauses.Inotherwords,asmallpercentageofcauseshaveanoutsizedeffect.Thisconceptisimportanttounderstandbecauseitcanhelpyouidentifywhichinitiativestoprioritizesoyoucanmakethemostimpact.WheredoestheParetoprinciplecomefrom?TheParetoprinciplewasdevelopedbyItalianeconomistVilfredoParetoin1896.Paretoobservedthat80%ofthelandinItalywasownedbyonly20%ofthepopulation.Healsowitnessedthishappeningwithplantsinhisgarden—20%ofhisplantswerebearing80%ofthefruit.Thisrelationshipisbestmathematicallydescribedasapowerlawdistributionbetweentwoquantities,inwhichachangeinonequantityresultsinarelevantchangeintotheother.Thisphenomenonalsogoesbyacoupleofdifferentnames:ParetoprincipleThe80/20rule(mostcommon)LawofthevitalfewPrincipleoffactorsparsity The80/20ruleisnotaformalmathematicalequation,butmoreageneralizedphenomenonthatcanbeobservedineconomics,business,timemanagement,andevensports.GeneralexamplesoftheParetoprinciple:20%ofaplantcontains80%ofthefruit80%ofacompany’sprofitscomefrom20%ofcustomers20%ofplayersresultin80%ofpointsscoredCreateanEisenhowermatrixtemplateHowtousethe80/20ruleWhilethe80/20ruleappliestoalmosteveryindustry,theParetoprincipleiscommonlyusedinbusinessandeconomics.Thisisbecausethe80/20ruleishelpfulindeterminingwhereyoucanfocusyoureffortstomaximizeyouroutput. ThebasisoftheParetoprinciplestatesthat80%ofresultscomefrom20%ofactions.Ifyouhaveanykindofworkthatcanbesegmentedintosmallerportions,theParetoprinciplecanhelpyouidentifywhatpartofthatworkisthemostinfluential.Hereareafewexamplesofhowtousethetoolinpractice.ProductivityYoucanusethe80/20ruletoprioritizethetasksthatyouneedtogetdoneduringtheday. Theideaisthatoutofyourentiretasklist,completing20%ofthosetaskswillresultin80%oftheimpactyoucancreateforthatday.Soinordertogetthemostimpactdone,identifywhichtaskshavethemostimpactforyourteamandfocusonthosefortheday.Todothis,listoutallofthethingsthatyouneedtogetdonethatday.Thenidentifywhichofthosetaskshavethehighestimpact.Doanyofyourtasksinvolvecollaboratingwithotherteammates?Arethereanytasksonyourplatethatareblockingprojectsfrommovingforward?Thesetasksmaybesimpleinexecution,buttheycanmakealargeimpacttotherestoftheteambyallowingtheprocesstokeepflowing. Read:Howtobemoreproductive:13tipstopracticetodayDecisionmakingTheParetoprinciplecanhelpyoutomakethebestdecisionsduringtheproblem-solvingprocess.Whentherearemanydifferentcausestooneproblem,theParetoprinciplecanhelpyouprioritizesolutions.Hereareafewstepstohowthisworks:Identifytheproblemsthatyourteamisexperiencing.Thesearetheproblemsthatyou'retryingtofindasolutiontowithinthisdecisionmakingprocess.Identifythecausesoftheseproblems.Usingatoollikethe5Whysprocess,findallofthecausesoftheproblemsyou'retryingtosolve.Categorizeyourproblemsintosimilargroups.Ifsomeofthecausesoftheproblemsyou'retryingtosolvecanfallintosimilarcategories,usethisasanopportunitytogroupthemtogether.Thiscanhelpyoudecideifonesolutioncanresolvemultipleissues. Assignavaluetoeachoftheseproblemsbasedontheimpacttothebusiness.Thevaluecanbeassimpleasanumberbetween1-10,oractualmonetaryvaluetoindicatetheimportance.Developaplantofocusonthetop20%oftheproblemsthatimpactthebusiness.Theideaisthatonesolutioncanresolvemultipleproblems.Basedonthevaluesyouassignedtoeachproblem,calculatewhichonesareinthetop20%.Onceyou’veidentifiedthemainproblem,developaplantocreateasolutionthatcanresultin80%oftheresultsusingproblem-solvingstrategies.Exampleofhowtousethe80/20rulefordecisionmaking: Imagineyouworkatanecommercecompany.Youtakealookat100ofyourmostrecentcustomerservicecomplaints,andnoticethatthebulkofthecomplaintscomefromthefactthatcustomersarereceivingdamagedproducts.Yourteamcalculatestheamountofrefundsgivenforyourdamagedproductsandfindsthatapproximately80%ofrefundsgivenwerefordamagedproducts.Yourcompanywantstoavoidprocessingrefundsforbrokenproducts,soyoumakethisproblemaprioritysolution. Yourteamdecidestoupdatepackagingtoprotectyourproductsduringshipping,whichresolvestheissueofcustomersreceivingdamagedproducts.QualitycontrolTheParetoanalysisandtheParetochartarekeytoolsusedwithintheSixSigmaqualitycontrolmethodology. IntheSixSigmamethodology,usingaParetochartcanhelpyouvisualizeyourdatatoidentifyhowtoprioritizeactions.SixSigma’smaingoalistoreducetheamountofvariationinaprocesswiththegoalofincreasingtheamountofproduction.ParetochartsarecommoninSixSigmamethodologybecauseyoucanquicklyidentifywhatthemajorityofthevariationsareinaprocess. AdvantagesofusingtheParetoprincipleThebiggestadvantageofusingtheParetoprincipleisthatyoucancreatethemaximumamountofimpactwiththeleastamountofwork.Thiscanallowyourteamtoworkmoreefficientlyandstayfocusedonspecificinitiatives. The80/20rulecanhelpyourmetricsincreaseinlesstime,simplybyprioritizinginitiativesintherightorder.OtherbenefitsofusingtheParetoprinciple:ClearprioritiesbothforyouandyourteamIncreaseddailyproductivityAbilitytoportionyourworkintomanageablesegmentsMorefocusedstrategyDisadvantagesofusingthe80/20rule​​There'sacommonmisinterpretationoftheParetoprinciplethatwith20%ofeffort,youcanachieve80%oftheresults.Thisisnotnecessarilythecase.The20and80%numbersdon’trefertotheamountofeffortyou’reputtingin,butthecausesandconsequencesyou’reworkingon.Thegoalisnottominimizetheamountofeffort,buttofocusyoureffortonaspecificportionofworktocreateabiggerimpact.Youstillhavetoput100%ofeffortintothat20%offocustoachieve80%ofresults.Anotherdownsideofthe80/20ruleisthatsometimesteammemberscangettoofocusedandlosesightonothertasks.Ifyouonlyfocusontheimportanttasksandputasidethelessimportanttasks,likeemailandothercorrespondence,thingscangetlost.Thechallengeisfindingtherightbalanceofusingthe80/20rule,andgettingthroughtherestofyourtasks—eveniftheydon'tresultin80%ofresults.Tocombatthis,youcanusetechniquesliketimeboxingortheGettingThingsDone(GTD)method. AligntaskstogoalswithAsanaFindingdifferentwaystohelpyourteamachieveproductivityisanimportantpartaboutbeingateamleader.UsingaworkmanagementtoollikeAsanacanhelporganizeallyourteamprojectsandtasks,sharefiles,leavecommentsandfeedbackallinonelocation,whilesavingyoutime. TryAsanaforfreeRelatedresourcesTemplateWeeklyscheduletemplateArticle4tipsforovercominganalysisparalysisArticle6stepstocreateadailyscheduletemplate(withexample)ArticleHowtoprotectyourenergyinachaoticworld