Pareto Principle
2 ways to interpret this
- focus on what matters, invest more in the 20% that produces the most results.
-
or bring stability by making the 80% more productive
-
80 percent of output is produced by 20 percent of input
-
80 percent of outcomes are from 20 percent of causes
-
Often the optimal ratio is closer to 90:10, or even 99:1.
- The more extreme the ratio, then the more at risk the overall business is.
-
doesn’t has to add up to 100, e.g. 15% of the business could generate 99% of the revenue
-
bring swift and easy clarity to complex situations and problems
- especially when deciding where to focus effort and resources.