The Pareto Principle: Using the 80/20 Rule to Live Agile

Pareto Principle: The 80/20 Rule

What if I told you the top 20% of Americans own 85% of the wealth?

If you’re 19th century mathematician Vilfredo Pareto, you wouldn’t be surprised. Vilfredo was born to an exiled noble and raised in what we’d call today the upper middle class.

Vilfredo observed that in his native Italy, 80% of the land was owned by just 20% of the people.

Once he noticed the pattern, mathematicians and economists began to find it everywhere: income distribution among citizens of a particular country, the sizes and populations of cities, the returns of group of investments, and so on, and so on.

Vilfredo’s observation came to be known as the Pareto Principle, or the 80/20 Rule.

The Pareto Principle says that, in general, 80% (or more) of the results come from 20% (or less) of the causes.

Understanding the 80/20 Rule, embracing it, and implementing it in your life can fundamentally change the way you manage your time.

How the 80/20 Rule Applies to You

The 80/20 Rule has become a core principle of lifestyle design.

I’d heard about it before I encountered Tim Ferriss’s work, but like many of you, I didn’t make the connection between this abstract mathematical principle and my own life until I read The Four Hour Workweek.

The Pareto Principle applies to you because 20% of your activities contribute to 80% of your happiness. 20% of your work tasks generate 80% of your productivity. And 20% of your financial obligations create 80% of your expenses.

The 80/20 Rule focuses your time on the 20% of inputs that produces the 80% of outputs. In effect, you can quadruple your time if you put the Pareto Principle to work.

On the flipside, the Pareto Principle also says that 80%, or practically everything you do, is unimportant.

So the constant email checking isn’t making you more productive. The Facebook and Twitter status updates every 8 minutes isn’t bringing you happiness. And the mocha soy lattes you’re giving up aren’t making a dent in your spending habits.

For me, it was liberating to realize that 80% of what I was doing wasn’t effective. It meant that I shouldn’t expect every tactic to succeed. I was free to experiment and iterate until I reached another tactic that yielded 4:1 results.

It also meant that I didn’t have to keep throwing good time away on unproductive tasks. I could focus on the one or two things each day that really contributed to the big picture and safely ignore the rest.

How to Implement the Pareto Principle in Your Agile Lifestyle

Derrick Schwabe at Lifehacker reminds us that reserving just 30 minutes a day to work on our dream projects can lead to progress:

When faced with a mountainous journey, many of us turn back. Not because we don’t understand what to do—that’s the easy part. Go up. But the mountain intimidates us. We let our imagination scare us with the slippery slopes and bears we might encounter. So we’re more comfortable where we are. At the base, looking up.

The enormity of a project can cause analysis paralysis. But when you recognize that 80% of your to-dos are ineffective, you are freed to concentrate on what’s important.

Taking one action each day can lead to progress, so long as we focus on the right actions. The right actions are the 20% of to-dos that create 80% of the gains, according to the Pareto Principle.

But how do we know which are which?

The Pareto To-Do List

There is no algorithm for figuring out which next action is best according to the 80/20 Rule. Often it’s a mixture of your gut and your head. At 37signals’ blog, Signal vs. Noise, they talk about a good day’s work:

One pattern to help yourself fight the mad dash for the mirage of being done is to think of a good day’s work. Look at the progress of the day towards the end and ask yourself: “Have I done a good day’s work?”

One trick that’s worked wonders for me? Just do this in reverse.

You can work backwards from that feeling of a good day’s work.

Start your day by asking “What would I need to do today in order to feel like I did a good day’s work?”

And then do it.

It works. Every day I focus on the 2-3 things that will allow me to end the day feeling positive about what I accomplished.

It’s inevitable that 8 to 10 things are going to be added to my plate over the course of the day. But knowing my 80/20 actions ahead of time lets me keep focus on knocking those 2-3 to-dos off the list each day.

Over time, you can make massive progress using this approach. We often overestimate what we can do in one day, and underestimate what we can do in a year. We undervalue small but consistent progress taken over a span of time.

Even if you only have time to write 750 words a day, you’ll have a full length novel in just a hundred days. That’s a little over 3 months!

I think in your gut you know what actions you take will yield the most results.

Probably because you’ve been avoiding them!

The key to implementing the Pareto Principle in your life is realizing you don’t need to accomplish 20 things a day to be effective. Instead, concentrate on the 2 or 3 action items that you know will matter at the end of the day. Small but consistent actions over time add up to big progress.

♦♦♦

Your turn. How has the Pareto Principle or the 80/20 Rule changed your life? Let me know in the comments below or reply to me by Twitter!

Image by Emanuele.

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