What is the Pareto Principle and How to Apply It in Life

What if I told you that by applying a simple principle in your life, you could achieve more with less effort? What if I told you that you could get closer to your goals and dreams by focusing on a few key actions?

That’s where the Pareto Principle comes in. You may be wondering, what is the Pareto Principle, and how can it help me achieve my goals? Let’s dive in and discover how this powerful principle can transform you and show you how to apply it in your daily life to achieve greater success and fulfillment.

What is the Pareto Principle and How to Apply It in Life blog image

What is the Pareto Principle?

The Pareto Principle, also known as the 80/20 rule, is a powerful concept that can revolutionize how you approach your goals and aspirations. The principle states that 80% of your results come from just 20% of your efforts. In other words, a small minority of your actions are responsible for the majority of your success.

The principle is named after Italian economist Vilfredo Pareto who discovered that 80% of the land in Italy was owned by just 20% of the population. This resulted in the development of the statistical concept of the Pareto distribution.

Later in the 1940s, the Romanian-American management consultant Joseph M. Juran applied this distribution to quality management. He realized that 80% of the quality problems could be solved by 20% of the issues.

In other words, if you are a quality manager, you can work on just 20% of your tasks to achieve an 80% spike in quality. Other researchers later found that similar distributions are common in various areas. Since then, the principle of uneven distribution has been applied to all sorts of fields. Think sports, fundraising, personal development, or occupational health.

Now, you might be thinking, “That sounds too good to be true. Can one principle really have that much of an impact?” The answer is a resounding YES! The Pareto Principle has been proven time and time again in a wide variety of fields.

Woman sitting down on a couch and working on her laptop

How to Apply the Pareto Principle in Life

So, how do you use the Pareto Principle? Let’s say you’re a salesperson trying to boost your numbers. Instead of trying to do everything at once, you focus on the 20% of customers who generate 80% of your sales. By putting your energy into building strong relationships with these customers and tailoring your approach to their needs, you can dramatically increase your sales figures without burning yourself out in the process.

But the Pareto Principle isn’t just limited to the world of business. It can be applied to virtually any aspect of your life, from fitness to relationships to personal growth. So, for example, if you’re trying to get in shape, you could focus on the 20% of exercises that give you the most bang for your buck, such as squats and deadlifts, rather than wasting time on ineffective exercises.

Does the 80-20 Rule Always Apply?

The distribution is not always precisely 80 to 20. Still, the message is clear. Most things in life have such a skew distribution, and the Pareto principle applies. Moreover, whether the distribution is 80/20 or 75/25, or 90/10 does not make a significant practical difference.

How to Do An 80-20 Rule Pareto Analysis

Finding out what your most valuable work is, is not always easy. If you’ve never done an 80-20 analysis, you can first follow your intuition. You might have a good feeling about your most time-consuming tasks with low-value contributions. Start out by making a list of these tasks.

Get transparency on your time spent

To really make a leap forward, you need more transparency. Unfortunately, our mind tricks us too often, and we are biased by our likes and dislikes if we only follow our intuition.

Thus, we need to balance intuition with some scrutiny and analysis. It all starts out with transparency. You need to know how you spend your time.

Track your time usage over 2-3 weeks. You can use a time-tracking app or a simple spreadsheet.

The point is to track EVERYTHING and do it in sufficient detail. This level of detail will cost you time. But it is an investment in your future. See it as a temporary assessment. You will not want to track in this level of detail all the time. Do it for two to three weeks, then look at the results.

Know the worth of your work

The other side of the 80-20 analysis can be trickier. For some topics, you have complex indicators like the effective daily rate you charge a customer. In other cases, it is unclear what value different tasks actually do create.

Finally, there’s more than money to be considered. For example, some activities help you grow your audience or improve your skills or your health. Make your best effort to evaluate the effect you can achieve with the different tasks on your list. Apply the same principles as when you set your priorities on a daily basis.

Use a To-Do List App

A to-do list app like our 43me app can help you stay organized and on track. Once you’ve identified your most important tasks, you can schedule them using the app’s 43 Folders system. This ensures that you’re making progress towards your goals every day and not getting sidetracked by less important tasks or distractions.

A to-do list app can also help you stay accountable to yourself and others. By sharing your to-do list with friends, family, or colleagues, you can create a sense of accountability and motivation to help you stay on track and achieve your goals faster.

Try out the 43me app for free today.

Identify Pareto’s Bottom 80

You should now have a list of all your tasks, the time spent, and the value created, either from analysis or an intuitive estimation.

You now calculate the effort-benefit ratio. Just divide the value by the time spent. Now you sort the whole list by this value with the highest ratios at the top.

As a final step, you start at the bottom of the list and add all time spent together. And as soon as this number hits 80% of your time, you draw a line.

Everything below this line is your bottom 80. This kind of stuff keeps you from creating more value and becoming more successful. These are the things you should not be doing anymore. Look at them carefully and ask yourself: How can I get rid of this?

Here are a few ideas on how to do just that.

How to Eliminate Pareto’s Bottom 80

There are six main strategies to follow Pareto’s Law and eliminate work with little value.

1. Just don’t do

Some of the tasks can just be omitted. They produce so little value that you will not realize it anyway. Stop those right away.

2. Simplify

Sometimes the reason for excess time consumption is complication. Either the task at hand or the way you perform needs to be simplified. Ask yourself if there is an easier way to accomplish your goals.

Remember, productivity is never about the work itself. It’s all about the output you produce. So, is there a way to use a better tool? Can you remove some steps or subtasks without compromising the results? For example, are all reconciliations with other people really needed? Or are they organizational folklore that you could ignore?

3. Automate

If you need to do a task often, always look for ways to automate it. Investing a day or more in automating a task is better than working on it for an hour each day.

Tech-savvy people have an advantage here. Nevertheless, even if you can’t code, there are possibilities to use no-code environments to automate at least the simpler tasks. And you can also always ask others to automate for you.

4. Delegate

Some of the low to mid-value tasks could be delegated. You do not need to produce everything yourself. Instead, you can focus on the high-value aspects of these tasks. For example, setting and defining a project’s goals and general direction brings higher value than actually doing it.

Leadership and performance management also have higher impacts than being led. Use delegation wherever you can. If you do not have delegees, think about creative ways to delegate sideways or upwards. Make sure you have an efficient follow-up system in place.

5. Reduce the intensity of work

Some low-value tasks might be what I call “infinity tasks.” Those tasks can never be finished because they do not have an inherent end to themselves. Often, they appear in creative or conceptual work for which no clear outcome has been defined.

Set a clear goal for this type of task to know when you are finished. If you can’t define the outcome clearly, set a budget and stick to it. Set the budget low enough so that your effort corresponds to the value the task can create. It is essential to work with time constraints on these types of tasks.

6. Settle for good-enough solutions: 80% perfection

The 80/20 value distribution of Pareto’s Law does not only apply to your work as a whole but also to every single task in itself. So if you can get along with an 80%-is-good-enough solution on all your low-value tasks, you could already cut almost two-thirds of your workload (80% of 80% is 64%).

Think about that: You would not even need to stop doing anything. You only content with a little less perfection on those tasks that create little value anyway. This step alone can give you more than five extra hours in a 40-hour workweek.

Happy young woman enjoying free time

What to Do With the Free Time

When you are thorough with your 80/20 analysis and draw its consequences, you will have a lot of free time. These can easily add up to several hours a day. So how do you make use of these?

  • Double down on the high-value stuff – A straightforward next step is to double down on your high-value tasks. Do more of the things that make you successful. This will give you a boost in productivity and success. However, you need to realize that this will have diminishing returns eventually.
  • Do the important stuff better – Invest a little more time in that super-important project pitch. Make sure you nail that audition that brings you to a new career level. Prepare better for the salary negotiation with your boss. Sometimes a single task can have a tremendous effect on your overall success. Make sure to get it right.
  • Spend more time on other areas of your life – Having decreased your workload, you can follow your interests outside the realm of your core work with hobbies, family, and friends.
  • Explore new ideas and opportunities – Start the side project you have been thinking about. Participate in networking events and get in touch with new people. Learn a new skill or invest an hour a week in reflection. Your life can become more colorful and rewarding as you extend your opportunity space.

Pushing the Pareto Principle to the Limit

A fact many people notice: The items within your top 20% also follow an 80:20 distribution. This means when you are done with focusing on the most value-creating tasks, you can again increase your effectiveness by magnitudes just by redoing an 80-20 analysis on these top 20.

This means focusing on just four percent of the stuff you did previously. Doing this could achieve almost two-thirds of the results with less than five percent of the effort. So your effectiveness would be 16-fold.

Just imagine how much better you would perform if you could only focus on those topics. You could channel a lot of time and energy into more productive uses.

Of course, this can be repeated again and again. However, the principle also explains the enormous differences between people regarding their effectiveness. Some people naturally only focus on those topics that drive the most value. The rest they either neglect or delegate.

Happy and successful Asian professionals

What is the Pareto Principle and How to Apply It in Life – In Conclusion

Ultimately, the Pareto Principle is all about working smarter, not harder. By identifying the key actions that will have the greatest impact on your life and focusing your energy and attention on those actions, you can achieve more with less effort and reach your goals faster than you ever thought possible. So, if you’re ready to start living your best life, it’s time to apply the Pareto Principle and see the incredible results for yourself.