80% of outputs come from 20% of the inputs.
In most endeavors, the results obtained are not equally dependent on all the inputs given. The Pareto Principle says that a disproportionately high amount of the result of any given function is likely dependent on one or two key things. Traditionally, the numbers used are 80% if the results stem from 20% of the effort, but those percentages are dependent on the situation aka arbitrary. This has resounding and sweeping effects throughout life and industry.
The Pareto Principle applies both to a set of concurrent inputs to some activity, but also may apply on a single input over time.
Other Names
- The 80/20 Rule
- The vital few vs the trivial many
- More wood, fewer arrows
In action
- Costco is an awesome and wildly successful example of the Pareto Principle. They don’t stock every possible option and permutation of the goods they carry. If you want olive oil, you MIGHT have two choices. They realized that 80% of the sales came from 20% of the products… so why have the other ones taking up shelf space that you could be using to sel other high-performance goods?
- Tim Ferris’s “The 4-Hour Work Week” is the Pareto Principle turned up to 11
- Napoleon only wanted woken up by his generals if the matter was truly urgent and bad. He would punish those generals who woke him up for trivial matters, and praise those who woke him appropriately. In doing so, this weeded out the trivial matters before they got to him.