The 80/20 rule also known as “The Pareto principle” named after the Italian economist Vilfredo Pareto.
It is often referred as law of
the vital few, or the principle of factor sparsity. It explains that 80% of the
effects come from 20% of the causes or it takes 20% of effort to get the 80% of
the results.
Pareto in his research showed
that approximately 80% of the land in Italy was owned by 20% of the population,
"80% of sales come from 20% of clients", 20% of the hazards account for 80% of the injuries, 20%
of infected individuals are responsible for 80% of transmissions of disease
and many other connections. Pareto developed concepts in the context of
the distribution of income and wealth among the population. Mathematically, the
80/20 rule is followed by a power law distribution (also known as a Pareto
distribution).
10 golden rules of 80/20 rule
2. Chose
a niche that you enjoy where you can excel and stand a chance of becoming an acknowledged
leader
3. Realize
that knowledge is power
4. Identity
your market and your core customers and serve them best
5. Identify
where 20 percent of effort gives 80 percent of returns
6. Learn
from the best
7. Become
self-employed early in your career
8. Employ
as many net value creators as possible
9. Use
outside contractors for everything but your core skill
10. Exploit capital leverage
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