Pareto’s principle is a well known decision making tool and enables you to manage affairs more effectively. An Italian Economist by the name Vilfredo Pareto formulated a mathematical equation to describe the unequal distribution of wealth in his country.

He observed that 20% of the people own 80% of the wealth. Joseph Juran recognized the trivial many and vital few principle which states that 20% of something is generally responsible for 80% of results. This became known as the Pareto’s rule or the 80/20 rule and is now commonly used to solve several management issues.

To apply this principle one must be able to apply it to daily management issues. 20% of your production staff provides 80% of your results or otherwise 20% of your time is spent in productive work, work that produces results or even 20% of your products provide 80% of your sales.

Such sensible assumptions enable us to focus on the vital few and ignore the trivial many. You will need to keep your focus so that you spend most of your time on productive things, productive people, products that actually bring in revenue and so on. The unproductive things should be slowly eliminated so that you can attain more success in your business.

Since this principle can be interpreted as you like beware of theories that make you focus on 20% of your staff and make you ignore the rest. Rather you need to spend your time on the 80% who are not producing results and help them work better.

How does one do a Pareto analysis? Firstly you need to identify the problem itself it could be something like 20% of your sales staff are responsible for 80% of your revenue. Then what are the 80% of your sales staff doing? So have a brainstorming session list the changes that need to be made to make everyone work effectively.

If you end with a long list make it into groups. Next put a score for each of your items so that you can prioritize the changes accordingly. Once you prioritize bring about the first few changes and ignore the ones with very less score they may not be worth solving. Try using the principle and you will be surprised at the results.