Management
Applying 80/20 Analysis to Your Business
At some time we’ve all heard, “The devil is in the details” and “Don't sweat the small stuff.” These aren’t mutually exclusive statements. Execution will always be important. In your own work, a simple error can create loads of pain and hours wasted.
In the late 19th century, an Italian economist observed in nearly every country he examined, that 20% of the
population controlled 80% of the wealth. Since then, many other academics have observed these phenomena in other aspects of life — that 80% of the results of something usually come from 20% of the efforts.
For instance, even though everything or everyone you come in contact with makes up the whole of your life, you already know it’ll be a precious few people and events that will truly bring meaning to your life.
What the ‘80/20’ principle tells us is that we need to concentrate our execution on those aspects which are going to have the greatest pay-off. Often, it’s neither the first 20% nor the last 20% of efforts that produces the 80% of results, but rather it’s distributed amongst all the effort.
An important exercise, for your business and yourself, is to stop every now and then. Examine what’s really important, so you can make decisions that will ultimately lead to the success you’re looking for.
