The 80/20 rule: A Digital Marketers reflections on the Pareto Principle

The Pareto Principle has had an honored place in management theory since the 1960’s

In the early 20th Century, Italian economist Vilfredo Pareto noticed something peculiar about the world that he lived in . 80% of the land in his country was owned by only 20% of its inhabitants. Similarly, only 20% of the pea pods in his garden contained some 80% of the peas. In 1941, Joseph Juran read Pareto’s work and expanded on it, realizing that in many situations 80% of the output was contributed by only 20% of the input. Calling what he termed the “vital few and the trivial many” the “Pareto Principle”.

The Pareto Principle has had an honored place in management theory since the 1960’s, with many seemingly strange correlations being noted. For example, it has been observed that 80% of decisions come from only 20% of meeting time, and that 20% of a sales force will produce 80% of the sales. Similarly, when applied to other areas of life the 80/20 principle still seems to hold. For example, anyone thinking back to school may recall that about 80% of the trouble in classrooms comes from only about 20% of the students.

 

Pareto, Pareto Principle, Digital Marketing

The Pareto Principle can also be thought of as applying to our personal lives as well. If we think about the people we know, it is often 20% of them that are giving us 80% of the most grief, while another 20% are giving us 80% of the most joy.

This has been extrapolated into the work day, where it is often said that only 20% of what you do will produce 80% of your results, so that when faced with multiple things to do, one should focus on those tasks and people that will the greatest benefit for the least input.

This means that we need to focus on what our goals are and how we can best move towards achieving those goals. Within many business settings, our goals will be fairly well defined by certain Key Performance Indicators, or by sales and production figures. Unfortunately a large number of small businesses don’t seem to have any goal beyond “stay financial” and as such, much time is wasted trying to do to much with too little. For example, in starting up a new restaurant, it is not sufficient to say that you want “everyone” to be your clients. Rather, you need to identify a niche and tailor your menu and marketing towards attracting that type of client.

Much of what passes as our work day is often taken up by fluff and things that aren’t really that important. Do your pens and paper clips really need to each have their own colour co-ordinated paper box on your desk? Or would you be better off spending the time getting on top of your accounts?

The key here is that we all need to identify those things that you can do and those things that other people can do and to focus everybody’s efforts on those tasks that value add, while putting those that don’t lower on the priority list.

We often can get caught up in trying to do everything ourselves, but need to remember we have been hired for a designated role, specifically for the unique skills that we bring to the equation. As such, we are often going to be at our most productive when we are engaged in those tasks that utilise our special skills and we would be better off delegating tasks that require lower levels of competancy. (Just don’t do what the US developer from Verizon did, I don’t recommend this approach.)

For example, the Australian Army once had all of its soldiers do work in the various messes. Given that your average tank soldier has no training in cookery, the jobs that they would do in the kitchens were unskilled and menial. This was an absolute waste of resources. Given that the Australian Army had spent tens of thousands of dollars training soldiers to crew armored vehicles, and pays them very well, it effectively had the most expensive bottle washers in the country doing work that they presented. Eventually, common sense prevailed and civilians were bought in on the award wage, thereby freeing hundreds of soldiers around the country to to what they were actually trained to do and saving hundreds of thousands of dollars in the process.

One of the best ways of implementing the 80/20 principle in the workplace

is to identify those outcomes that are the most significant and review the steps that you took towards achieving them. This will accomplish two things. Firstly, many people in business honestly don’t seem to grasp what outcomes are the most significant for them and as such have no way of prioritising, or managing deadlines.

Secondly, within any particular job, there are also going to be more productive ways to make something happen and it should be one of your priorities to identify these and incorporate them into your daily routine. For example, simply having a “daily routine” will help you harness the benefits of habitual behaviour in a way that will make many tasks routine and more easily accomplished.

To fully implement the 80/20 Principle, we need to understand more than just our jobs and our expected outcomes. Most importantly, we need to understand ourselves. What drives us? What motivates us? What are we good at and what are we bad at? What do we love and what do we hate?

Once we understand ourselves, we will be in a much better position to understand our capacity for high achievement. It is no secret that a huge number of people hate their jobs and if you are one of these, it will be almost impossible for you to excell. The sheer mental effort in forcing yourself to do something that you hate, day after day is simply too much for most people to cope with for very long.

pareto

This doesn’t mean that you should simply drop your job and immediately begin turning your hobbies into work. What it does mean, however, is that you should reassess what you are currently doing and see if there is a way in which you could use your job knowledge and experience in a new role that will provide you the enjoyment and satisfaction that you need in order to be able to excel to your full potential. This may require investing in the advice of a professional careers counselor.

One thing to bear in mind is that the Pareto Principle is just that; a principle. It is not a law of business and does not apply in every situation. For example, it is not the case that 20% of operating systems are in use on 80% of desktop computers. Rather it is one provider, Microsoft, that dominates with nearly 90% of the market share. Going the other way, it becomes apparent that out of the top 25 car manufacturers in Australia, the top 20% only have about 55% of the share, not 80%.

Taking the 80/20 rule to stupid lengths can do more damage than it is worth. For example, some sales organizations have a policy whereby they fire their lowest performing sales staff at the end of each KPI period. Not only does this produce poor morale, along with some seriously dysfunctional and uncooperative behaviors in the workplace, but it can often see good staff let go simply because of a bad run of luck, or because of transient personal circumstances that have impacted their ability to function. Management engaging in this behavior are also forgetting that their own role isn’t simply to arbitrarily sack people, but instead that their own personal 20% of value time is going to come largely from cultivating under performing talent to an acceptable standard, rather than simply relying on a few stars to carry the whole game.

For specific information on Pareto 80/20 applied to Marketing visit

Image Courtesy of Maddock Douglas Inc

Ian Hopkinson
Follow Us

Ian Hopkinson

Founder | Head of Results at Mad Scientist Digital
Ian Hopkinson is a digital creative who is passionate about the online marketplace and its potential to enable smaller businesses to compete on a global stage.
Ian Hopkinson
Follow Us

Melbourne HQ

This is where the real work is done

+61 3 9813 5988

Visit us by appointment

Level 1
620 Burwood Rd
Hawthorn East, Victoria, 3123
Australia

Other Australian Cities

We travel a lot to meet cool people.

Make appointments with us to travel to your neck of the woods.

New California Office

Coming Soon!