Sunday, May 23, 2010

PARETO'S 80:20 - AND BEYOND - TELLS HOW SUCCESS IS EASY !!


PARETO'S PRINCIPLE

AND BEYOND




HOW BEST YOU CAN USE


The 80-20 Rule




VITAL FEW AND TRIVIAL MANY - is  a fantastic, enduring and almost  universal principle propounded by Dr.Joseph M.Juran in the 1930s and 40s.

Based on this, he suggested the “80 – 20 principle” and named it after the Italian economist Vilfredo Pareto

Vilfredo Pareto had observed earlier in 1906 that "80% of the land in Italy was owned by 20% of the population." Later, it was found that the situation is no different in many other countries.
Pareto developed his 80:20 principle, by further  observing that 20% of the pea pods in his garden contained 80% of the peas.
After Pareto made his observation and created his formula, many others observed similar phenomena in their own areas of expertise.
In Juran's initial work, he identified 20 percent of the defects causing 80 percent of the problems.
As a result, Dr. Juran’s observation of the "vital few and trivial many", the principle that 20 percent of something, always are responsible for 80 percent of the results, became known as Pareto's Principle or the 80/20 Rule.
It means :-
20 Percent  of our EFFORTS  (or INPUTS) produce  80 percent of the EFFECTS (or,RESULTS).


(OR)


80 percent of actual contribution comes from 20 percent of potential contribution available.


These are different ways of expressing the same principle. In different fields, people have observed the operation of these principles, as we can see below :-






  • 20 percent of a company’s stock occupies 80 percent of the warehouse space.
  • 80 percent of revenue comes from 20 percent of customers.
  • 80 percent of the difficulty in achieving any thing lies in 20 percent of the challenge.
  • 80 percent of problems come from 20 percent of causes.
  • 80 percent of your telephone calls are made to less than 20 percent of the people you know
  • 80 percent of your time is spent with less than 20 percent of people known to you.
  • 80 percent of the day – produces less than 20 percent results.
  • 80 percent of the results are produced in 20 percent of the day.
  • 20 percent people control 80 percent of world’s wealth.
  • 80 percent of crimes are found to be committed by 20 percent of criminals.
  • 20 percent of people need 80 percent of healthcare.
  • 20 percent of activities give you 80 percent of the financial rewards.


We can go on and on in this fashion.In personal life, organizational activities or National statistics, we find this 80 : 20 staring at us from many places.

                 
The reader may begin to feel that we are generalizing too much. Yes. We are. In fact, most Pareto analysts are fond of generalizing too much.

               
First thing, there is no 80 or 20 as water-tight compartments. It can be 70:30 or 90:10 or even 1:99. Nobel Prize winner Paul Krugman says that the benefits of economic growth over the last 30 years have largely been concentrated in the top 1%, rather than the top 20%.



             The point of interest really is – there is UNEQUAL DISTRIBUTION –in almost every area of human activity. Be it skills, resources, work, strength, rewards or whatever we may cite – in almost all cases, the distribution is tilted towards 20 : 80

             We must also note that 100 percent of INPUTS (things, people etc) contribute 100 percent of results. Zero percent of INPUTS can never give us more than zero percent of outputs.

            This means, over all, there is no luck factor. Some one’s input may contribute to some one else’s output.

           How does the 80:20 PRINCIPLE aid us in achieving SUCCESS in LIFE?



It is a FANTASTIC principle, which shows you where your attention must concentrate in each area of your endeavors so that you achieve the success you desire.

Take a look at some of them here.
 
YOUR TIME : Identify that 20 percent of time of the day – which is most productive for you. It has many natural and personal advantages for you. Avail that time to the maximum. Do not let it go!


YOUR ACTIVITIES :- Identify that 20 percent of your activities – which contribute to 80 percent of your progress. Write them down. Place them into the 20 percent high productive time. Combine PRIME TIME with PRIME ACTIVITIES - to the extent feasible. The very same activities will give you admirable results - which you never anticipated earlier.


YOUR SKILLS / KNOWLEDGE / RESOURCES :- Identify that 20 percent of your skills / knowledge / Resources that contribute to the 80 percent of the HIGH PRODUCTIVITY – and spend more time on enhancing them.


YOUR PEOPLE :- Identify that 20 percent of people in your small world, who love you more than others, want you to be happier and are willing to be of some help to you. Concentrate on increasing your relationship with them. Usually, most people, unconsciously spend more time with people who do not care for them at all.


YOUR MONEY :- Identify that 20 percent of your money’s use, which gives you maximum satisfaction – find why – and enhance the same. Let your money work for you better in the best of its uses.  You can also take a look at some of the Investor education Blog Posts, for this purpose -  in my blog "www.wiseinvestmentideas.blogspot.com"


YOUR WORDS :- Less than 20 percent of the words you use are enhancing and sustaining your relationships. Identify them. use them more effectively.

In other words, find the 20 percent quality time, quality work, quality skills, quality People, quality words and quality things in your life – and enhance your 80 percent satisfaction to a new high.


There is another side of the SAME 80 : 20 PRINCIPLE.


Pareto”s Principle points, not only TO the BEST 20,  but also to the WORST 20.

Find that 20 percent of people who are giving you maximum problems, maximum losses, and maximum sorrow, and reduce their interaction – or shun them, if possible, totally.

Find those 20 percent things that are spoiling your health. Shun them too.

Find that 20 percent use of your money – which is totally or largely useless – and shun that.
Less than 20 percent of your words, in fact, hardly 5 percent of your words, are devastatingly affecting your relation-ships. Refrain from them.

TO SUM UP : (1) Find the BEST 20  -  use them Effectively.
                   (2) Find the WORST 20 - Control, Minimize & supervise

IS THERE SOME THING MORE BEYOND 80 : 20?

Yes. There is.
Your small known world is not every thing. There is life beyond that.
There are better skills to learn.
There are better uses of time.
There are better people to learn from / befriend.
There are better ways of earning and spending money.
There are Better words - which can enhance your relationships.
Be on the look out constantly for these!
Pareto looks within WHAT IS.
.
.
.
You must look at WHAT CAN BE! 




Look at - the "ULTIMATE POTENTIAL" within you!


REACH FOR THAT!!!



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