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The 80/20 rule, also known as Pareto Analysis, is the generalisation that 80% of any result comes from 20% of the effort. Therefore, if we focus on the 20% of the effort that produces the results we are more likely to be successful. The challenge for many of us is…

How can we use 80/20 effectively?

In many situations it is not obvious which 20% of effort is generating 80% of the result. Should we look at 20% of our team, or is it 20% of each individuals effort? Is it 20% of time, or 20% of activity? In practice, how we apply the rule varies with what we are trying to achieve.

Problem Solving:

Many of our daily work problems don't have a single root cause. One factor may be a partial cause of several problems, while each problem may have several quite separate contributing factors. In this case, Pareto Analysis is useful to help us decide which of all the contributing factors we need to deal with first.

For example: Suppose we experience increased difficulty in recruiting. When we look into the problem we see that our starting salaries are now below average for the role, a major new employer has opened in the locality, new managers have removed a number of flexible working options that were attractive to our workforce, and the skill set we need seems to be in relatively short supply.

Pareto Analysis looks at numbers to get a handle on why people are not joining. In our example we might interview the recruitment company and find that, out of 20 potential employees who turned down the opportunity:

•      5 opted for higher base pay
•      5 wanted flexible working hours and higher pay
•      10 would have accepted the lower pay if the flexible hours were on offer.

On this basis, to recruit all 20 would need both higher pay and flexible hours. However, the exit interviews of recent leavers showed that loss of flexible working hours had been the prime cause of people leaving.

Using Pareto, we can see that, by restoring the flexible working hours, the company would be most likely to retain more staff (reducing its need to recruit) and find it easier to recruit the people it needed.

When problem solving, addressing the 20% of the problem that could have the greatest impact on the solution will give the best return on investment of your resources.

Creative Thinking:

Part of the point of creative thinking is to generate lots of ideas. Because a relatively small number of the ideas may be finally used, it is often tempting to think that the Pareto Principle should be used to cut down on all the waste. This approach indicates that as soon as sufficient useable ideas have been generated, then any creative thinking process can cease.

Paradoxically, because only 20% of the ideas are likely to create 80% of the results, it is vital that many ideas are sought, and creative thinking is extended as far as possible – since this gives the greatest possible pool for good results. Creative thinking is an area where cutting out the 80% of the apparently unproductive material may well reduce the quality and effectiveness of the 20% of the ideas that are finally used.

Summary:

Recognising that a small part of what you do every day will have a disproportionate effect on the overall result is useful in helping you to allocate priorities. It is also important not to devalue the thinking time that may not seem to yield results immediately, but eventually leads to better ideas, planning and use of resources.

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