Beyond the 80:20 Principle

By Gordon Rugg, Jennifer Skillen & Colin Rigby

There’s a widely used concept called the 80:20 Principle, or the Pareto Principle, named after the decision theorist who invented it. It’s extremely useful.

In brief, across a wide range of fields, about 80% of one thing will usually come from 20% of another.

In business, for example, 80% of your revenue will come from 20% of your customers. In any sector, getting the first 80% of the job done will usually take about 20% of the resources involved; getting the last 20% of the job done will usually be much harder, and will take up 80% of the resources. The figure won’t always be exactly 80%, but it’s usually in that area. Good managers are very well aware of this issue, and keep a wary eye out for it when planning.

Here’s a diagram showing the principle. It’s pretty simple, but very powerful. However, that doesn’t mean that it’s perfect. It can actually be developed into something richer and more powerful, which is what we’ll describe in this article.

eighty twenty

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