The 80/20 Principle
By Richard Koch
*A Book Review*
by Michael C. Gray
© 2022 by Michael C. Gray
About 100 years ago, the Italian economist Vilfredo Pareto discovered that about 80% of the income and wealth in 19th century England went to about 20% of the population.
This tendency for an imbalance in nature has been called Pareto's Law or the 80/20 rule.
For example, in America today, it has been observed that the overwhelming majority of the wealth is owned by very few individuals.
One thing to be aware of is that even when there is a redistribution of wealth by government fiat, eventually it will still shake out to a few individuals. Fighting Pareto's Law is fighting a tendency in nature.
This tendency of high-leveraged factors occurs over and over again in nature and in business. Like success philosopher W. Clement Stone said, "Big doors swing on little hinges."
For most businesses, about 20% of the customers make about 80% of the purchases.
About 80% of sales will be generated by about 20% of the products and services offered by a business.
In a sales force, about 20% of the salespeople will generate about 80% of the sales.
Somewhere in nature, there is probably a factor responsible for 80% of global warming.
This tendency of a few high-leverage factors is very important. By studying nature and business and identifying these high-leverage factors, we can focus on them to magnify (or reduce) results. We can reduce the effort and resources required to achieve a result.
The final chapter of the book focuses on the use of the 80/20 principle for social intervention. For example, we might be able to use the 80/20 principle to dramatically improve the effectiveness of our health care system, our educational system and for reducing crime.
The 80/20 Principle can help us have a new mindset to look for the few things that are really important in anything we do.
Buy it at Amazon: The 80/20 Principle: The Secret to Achieving More with Less.
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