80/20 Rule of Business- Why you must get your business right

Pareto Principle or The 80/20 rule of business or law of vital few states 80% of results comes from 20% of your efforts

80/20 rule of business

What is 80/20 rule of business?

In 1895, Vilfredo Pareto an Italian economist noticed that the society was divided in ratio 80 20 in which 80 percent of wealth was with 20 percent of people. According to Vilfredo, these were top 20 percent with respect to Power, Authority, and Influence. In modern society, we call them “the Rich”.

It was later proved that 80% of economic activity in Italy was controlled by 20% population as stipulated by Pareto. The further discoveries proved that the 80/20 rule of business is applicable to almost any situation.

I found this principle very interesting as it really helps me in prioritizing my tasks, days, weeks and months. In the business world, Motivation, Productivity, and Time management are the most vital things and that’s where top leaders use the 80/20 rule of business to reach their goals.

How the 80% work?

80/20 rule of business

If you work in 9 to 5 or will you’ll notice an organization is a group of people working on different aspects namely Production, Accounts, Marketing, and Sales etc. Each of these departments is led by the key player. They work hard on a common objective profit for the company. Sadly in India, we follow working long hours on a bunch of tasks that involves set procedures like data entry. This in itself violates the 80/20 rule of business as we spend our time more on things that are less profitable.

If we look at countries like the USA they have a work culture that enables people to have time to think about how they can do less and achieve way more. This brings me to a quote by Elon Musk

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How the 20% work?

80/20 rule of business

Your boss leads your company from the front end he has to do list. He will assign every department heads some tasks. If your boss has 10 tasks and 10 departments he knows out of 10 department heads 2 will play the most vital role in the success of his goal. This is how the world’s top 20% work. They delegate work and have time to think about what needs to be done rather than focusing on the 80% work that doesn’t matter as much.

By my above analogy, I don’t mean to say you need to start your own company to become 20%, here I am talking about the mindset.

How to have a 20% motivation mindset?
Goal setting

80/20 rule of business

The goal setting starts off with your ideas put on paper. Make a to-do list of tasks that you’ll do today. In your to-do list identify the tasks that will give you more results today and work on them. Slowly you’ll master the art of prioritizing and time management. Research says wealthy people always tend to work on one specific goal. You could work on your passions if you want to become wealthy with 20% of your time.

In a to-do list, 40% of work is never completed imagine you missed on the most vital 20% task that could boost your skill, confidence, and career.

How to use 80/20 rule of business as a motivation to become successful?

80/20 rule of business

Success starts with a dream and motivation to hustle. Bigger the dream bigger the success but however easy it may sound it’s not. The 80/20 rule of business in itself sets the bar high. According to which effort and result are not directly proportional to each other and thus makes the game hard. The biggest reason why the majority of people accomplish very little is that they don’t know their path to success” they don’t have a dream” and have no motivation to think out of the box.

80/20 rule of business

I would like to introduce you to “Theory of constraint” by Elihu Goldratt. This is a groundbreaking theory which has helped modern thinking and motivation. Theory of constraint states every goal you work on has a limiting factor a bottleneck. This constraint decides the speed at which your task is accomplished.

Example: You want to tell a designer to design a logo for your website you will tell him your needs, color and font etc suppose the designer’s understanding level is not as good as you. He has language barrier End result
waste of time and energy in accomplishing your goal.

What Goldratt found is if we focus our creative energies on eliminating these constraints like in above example by sending the idea in an easiest understandable form to your designer you would be able to speed up the process of completing the most vital difficult tasks that will make you the 20%
I would encourage you to read my post on how waking up early changed my life, again the habits of top 20%

80/20 rule of business

Tweet or share this post on facebook with your friends who need guidance and motivation to dominate in their life.
Would also like to hear from you on 80 20 principle

Comment your thoughts!

49 thoughts on “80/20 Rule of Business- Why you must get your business right”

  1. Thank you for this! I have just gotten back into the routine of daily goals and how to be more productive and feel accomplished. Thank you for this again! I never thought about the 80/20 rule like this

  2. Spot on with every point! You obviously have done your research on the 80 20! I found this so helpful and someone I can actually apply in my life right now. I’ve innately been doing some of these things so this has validated me in a few ways! Thank you!

  3. First time I heard this and I’d say I have learned something from it. I will try to be aware of it and incorporate it in my life

  4. Very well thought article. I generally set small goals which lead to a final bigger goal. Also, I believe in making fewer choices throughout the day as I give more time and energy towards what I have to do.
    This 80/20 rule is almost similar. Great article

  5. The Pareto principle (also known as the 80/20 rule, the law of the vital few, or the principle of factor sparsity) states that, for many events, roughly 80% of the effects come from 20% of the causes. … Pareto developed both concepts in the context of the distribution of income and wealth among the population.

  6. This is exactly what I need to be motivated and productive with my goals. I only know the 80 20 rule for blog posts but I never thought about this version of the 80 20 principle.

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