Thinking Like Mr. Pareto
Does any of this sound familiar?
Two of the eleven of the consumer-goods products I support account for 74% of all dissatisfied-customer phone calls. We serve over 150 customer accounts where I work, and three of those accounts make up 68% of our total sales. Of the multitude of electrical appliances in a home, typically three or four appliances account for 60%+ of a typical home’s energy consumption. Out of the 30-plus family and friends that I keep in contact with, three of them bring most of the joy to my life. Does anyone see a pattern here?
These facts are examples of the Pareto Principle, and recognizing this principle at work and at home can produce noteworthy results.
The Pareto Principle
Italian economist Vilfredo Pareto discovered a simple but powerful truth in the early 1900′s that is known today as the “80-20 Rule:” A small number of factors (i.e. 20%) will often control the majority of a given outcome (i.e. 80%) the most.
Mr. Pareto’s rule is true in so many situations that his name has become synonymous with process improvement, and the Pareto Chart has become a fundamental problem solving tool that bears his name.
Try This…
Think about a problem you have at work or in your personal life, and see if the Pareto Principle applies. If it does, you may have a better opportunity to focus your efforts and quickly solve your problem. Here are a couple of examples -
1. Weight Loss
Break down your calorie intake by food category, i.e. sweet snacks, alcohol, etc. If you are taking in too many calories, you will probably find that one or two food categories are driving most of your overeating. Focus on controlling these areas, and you will see positive results over time.
Here’s another Pareto approach with weight loss -break down your calorie intake by the time of day – breakfast, morning, afternoon, and evening. You may find that you are taking in a disproportionate number of calories at a given time of day. By focusing your attention on controlling food intake during your “high intake” times, you can achieve lasting weight loss.
2. Spending
How do you spend your money? Try breaking down your gross income into spending buckets to see where it goes. I say gross income because you might be surprised at how taxes and other commonly unnoticed factors are hampering your progress. You may also find that small things add up, like lunches out or too many trips to Starbucks.
Try applying the Pareto principle to your life, and you will find some terrific opportunities for big gains in the areas that are important to you!
Image via Wikipedia
