Don’t be a slave to the 80/20 rule

Also known as the Pereto principle. It was Vilfredo Pareto who, in 1906, observed that about 80% of the land in Italy was owned by about 20% of the population. He also noted that about 20% of the pea pods in his garden contained about 80% of the peas! (Wikipedia)

So we all know that 80% of our business comes from 20% of our customers and 80% of our debtors is owed by 20% of them as well. And so it goes on. Here are some more from Richard Koch “

Living Life the 80/20 way

• 80% of a company’s profits come from 20% of its customers
• 80% of a company’s complaints come from 20% of its customers
• 80% of a company’s profits come from 20% of the time its staff spend
• 80% of a company’s sales come from 20% of its products

   

• 80% of a company’s sales are made by 20% of its sales staff

I was talking to a school principal the other day and he told me that 20% of the parents weren’t interested in their childrens’ schooling. I guessed that they were the same 20% who were always behind with their school fees and their kids were the 20% who performed worst and caused the most trouble. That’s when I got to thinking again about the 80/20 rule

Who says it’s a RULE?

As soon as you accept that it is a rule, you accept that you can’t do anything about it.

It’s not a RULE it’s a CHALLENGE!

your company is forced to employ more staff, rent bigger premises, carry more inventory, it’s the 80% rubbish (the 20% in the case of the school) that is forcing the extra cost. That’s not the fault of the “rule” it’s your fault for not doing something about it

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