Barry Rock's Blog

The 80/20 Rule

The 80/20 Rule

The 80/20 Rule

There are so many sayings and aphorisms. Often they are held to be true simply because they have been repeated so much. We’ve all heard them. Some, like the following, sound great but aren’t necessarily very accurate.

  • The customer is always right.  Henry Ford said that if that were true then he would have just built faster horses.
  • Cheaters never prosper. We wish this were true but even the Bible says that the rain falls on the just and the unjust.
  • No offense, but…  This is ALWAYS followed by an offensive statement.
  • What doesn’t kill you makes you stronger.  I’m not sure it’s original with me, but I always tack on: …right up until it kills you!

Other sayings hold a little more veracity. Though they may break down at some point, there is usually a grain of truth. For example,

  • Actions speak louder than words.
  • It is the last straw that breaks the camel’s back.  
  • The best thing about telling the truth is…you don’t have to remember what you said!

In the business world, there is one saying that I’ve heard in many different contexts. It goes something like this: 80% of the work is done by 20% of the people. It’s been applied to wealth, charitable giving, ideas, etc. Its origin is derived from the writings of an Italian economist, Vilfredo Pareto. In 1906, he completed a study in which he found that 80% of Italy’s land was owned by 20% of its people. This is been referred to as Pareto’s Principle, or, more commonly, The 80/20 Rule.

With regard to modern business, the exactness of Pareto’s percentages are probably unverifiable. But, the application of the principle seems to be true: Most of the value of anything resides in a relatively small percentage of the whole. Test this precept against your reality. Here are a few questions that may help:

  • Is the amount of work done evenly distributed across all employees?
  • Does every part of a project or product have equal worth?
  • Are there some things that, when left undone, aren’t really noticed while other omissions cause a ruckus?

My point in writing is simply this: As leaders, we need to recognize what’s vital and what adds value. Without this recognition we run the risk of spending time, resources, and energy on the trivial rather than on the things that are valuable. If we aren’t discriminating we can become sidetracked. If we lose sight of the essential ingredient, the “secret sauce,” we can produce without adding value; we can churn without ever making butter.

Jeff Sutherland, author of Scrum, writes that 80% of the value is in only 20% of the product. This demands that we know rather exactly the essential ways to spend our time and energies. Leaders need to know what is vital.

We need to spend the lion’s share of our time creating value–paying attention to the 20%. The other 80% will certainly add quality and interest; but, without the vital 20% we will fail to meet the real need, miss the essential product, or leave out the key ingredient. 80% of a hamburger is bun, lettuce, tomato, pickles, and condiments; 20% is meat. While all the extras add to the flavor, without the meat it’s only a veggie sandwich.

At the beginning of any endeavor, spend time identifying the things that count. Make completing the essence the priority. Don’t let colors, delivery, add-ons, or other peripherals get in the way of accomplishing the main thing. Grilling a really good patty is the best way to make a really great hamburger!

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