For all those here, who haven’t heard of Pareto’s principle, I present to a gist of one of the most widely applicable, simple, intuitive, yet brilliant, theory of our time – The Pareto principle.
In essence, what this principle (also known as the 80-20 rule) says is that most population sets have a 80-20 break. So when you hear – 80% of the country’s wealth is held by 20% of the people – you say, “aaahh, true!” But dig a little deeper, and you see that this principle applies to almost anything. From segmenting your market for retail, to solving your math homework assignment (80% of your time goes in 20% of your problems) to macroeconomic issues of resource allocation.
So how do we make this knowledge work for us?
My idea was to look at it rather simplistically (it helps to make things simpler when you’re in digital marketing/retail).
When solving a problem, a big problem – you want to make you sure that you have 80% of the problem taken care of. For instance, preparing for an exam for the next day, and you know you aren’t going to be able to finish everything. Now that the starting line is to cover your losses, you might want to aim for the meat of the problem. The 80%. Trick here is though in figuring out what signifies that 80%.
When part of a population set or a group of people, usually, you want to be in the 20%. I say usually, because if 80% of the people are honest, law abiding citizens, it might not be the most prudent decision to be a part of the 20% that isn’t. But when it comes to innovation and adding value, and you see that you are a part of the 80%, it might be a good time to consider a few radical decisions that get you in the 20%.
The misleading bit about percentages here, as with anywhere else, is that they tend to be highly dependent on the way that the problem is defined. So if you want to be rich, figure out if you’re in the 20% of your population set and then work on the margins. On the other end of the spectrum, if you want to be among, the most creative people, regardless of the money, you are looking at a completely different parent set.
All this is getting a bit complex, but if 80% of your understand 80% of what I am trying to say, I belong to the 20% of people who’s blogs people actually read!