What is the “80/20 Rule”?

Freakonomics. Crazy patterns. The few things that really matter. All of these are ways of describing what the “80/20 rule” is. In its simplest form the 80/20 rule, or the Pareto Principle, describes a phenomena -- that a minority of causes, inputs, efforts, or choices lead to a majority of results, outputs, or benefits. This “80/20 rule” is all around us. We use it in problem solving to determine the biggest problems or issues to work on and to determine the few causes, or a single cause that affects the majority of the reason for a defect or failure. But the “80/20” rule is not just for manufacturing or process improvement. It is all around us in our daily lives. Take a look at some of these examples --

- The pair of shoes on our feet -- 1 pair out of 10 is worn 85% of the time (85-10 Pareto)

- The route we take to work each day -- 30 route choices, 6 are used 95% of the time (95-20 Pareto)

- The carpet/flooring wear pattern in our homes -- 80% of carpet/flooring is still good when all of replace all of it (80-20 Pareto)

- The shows we watch on TV: When the TV is on, we watch 4 shows 70% of the time when there are 100 to choose from (70-4 Pareto)

Also, the “80/20 rule” can be used to help determine where our efforts should be spent in our daily lives, or help to analyze the changes that may need to happen:

- Spend most of your time to nurture your most important relationships -- 20% of the relationships give 80% of the value/happiness

- Give away or throw away your unused stuff -- 20% of your stuff is used 80% of the time

- Focus on your strengths -- 20% of yours skills give 80% of the returns

- Focus your $ saving effort on your major expense categories -- 20% of the categories make up 80% of the expense

The “80/20 rule” should not guide every decision that is made and it is not the “silver bullet” of problem solving, but it is a pattern that can help guide problem solving both at work and in our daily lives.