The 80-20 principle or the Pareto Principal

                  THE 80-20 PRINCIPLE

                                   or

              THE PARETO'S PRINCIPLE 

In this book "The 80-20 principle" the author discusses about a life changing observation done by Vilfredo Pareto that's why also known as "Pareto's principle" which states that the universe is unbalanced and our all the efforts do not produces the same result and most of the times only our 20 percent of the efforts produces 80 percent of the results . So we can become more productive by analyzing those 20 percents so that we can do more efforts to those 20 percent only and can achieve more in less efforts . 

In this book author discusses about a life changing principle which applies on every aspect of our life and business as well ,"The 80-20 principle " states that our 20 percent of the efforts are responsible for our 80 percent of results and it applies everywhere like in our daily conversation we use 20 percent of the words 80 percent of the times , we wore our 20 percent of clothes 80 percent of times and remaining 80 percent 20 percent of times , the 80 percent of total wealth of the world is accommodated by 20 percent of the population and  only 20 percent of the wealth is divided into remaining 80 percent of population . This applies to our business as our 20 percent of the customers are responsible for our 80 percent of the profit or revenue and our 20 percent of employees produces 80 percent of the results .

Our 20 percent of the friends are the soul reason for our 80 percent of the happiness , Our 20 percent family members cares 80 percent about us .

We might ask so what to do with it ?

But it has great importance when it comes to focus , when it comes to achieve more with less efforts  ,  when it comes to business you have to choose those 20 percent and work more on it and you might ask ,

 What to do with that 80 percent ?

So the answer depends on you whether you leave it or made it atleast that much effective so that don't make negative impact on your 20 percent.

In this fastly changing world with internet , facebook , instagram ,twitter etc. , you have much more to do , but doing much more or making yourself very much busy doesn't mean you are growing , your growth depends on your " productivity " . If you are not productive , If you are not growing , If you are not gaining anything it means you are not busy , you pretends to be busy.

That's why pareto's principal  has importance because it pushes us to choose our that 20 percent which gives us our 80 percent of results . You have to build excellence in that 20 percent rather than a good performance in 100 percent . Our very wrong assumption that all the efforts produces equal results is very wrong and that's why after so much of hardwork we most of the times fails to achieve what we wanted to achieve . Because rather focusing on the things which are actually important we focus on whole results in lack of excellence on the most important ones . 

      "Strive for the excellence in few things rather than good performance in many "

The quote itself means that you have to focus on the important one's get excellence in 

them rather than just being average as a whole .

The pareto's principle applies even to stocks as many legendry investors believes that their 20 percent of the stocks provides 80 percent of the profit and it is even applied by many entrepreneurs to make their product and services much better for their clients some of them focuses more on their 20 percent of the clients rather on 100 percent .

The biggest and the best example is the example of  "Steve Jobs " the man who makes the most valuable brand and company "Apple" and reshaped the technological world strongly believes on pareto's principle as he focuses only on the 20 percent of the total product present at the "Apple" when he came back after getting fired from apple . He only focuses on that 20 percent products that provides him 80 percent of results and work on the excellence of those 20 percent only and he achieved that by making his products much more beautiful and creative.

we can apply 80-20 principle in many aspects following are:-

Thinking 80/20

80/20 thinking requires, and with practice enables, us to spot the few really important things that are happening, and ignore the most unimportant things. It teaches us to see the woods for the trees.

80/20 thinking is reflective, unconventional, hedonistic, strategic, and nonlinear; in that it combines extreme ambition (in the sense of wanting to change things for the better) with a relaxed and confident manner.

80/20 thinking is reflective

80/20 thinking is different from the type of thinking that prevails today. The latter is usually rushed, opportunistic, linear, and incrementalist.

Our objective is to leave action behind, do some quiet thinking, mine a few small pieces of precious insights, and then act; selectively, on a few objectives and a narrow front, decisively and impressively, to produce terrific results with as little energy and as few resources as possible.

80/20 thinking is unconventional

80/20 thinking discovers where conventional wisdom is wrong, as it generally is. The power of the 80/20 principle lies in doing things differently based on unconventional wisdom.

 80/20 thinking is nonlinear

Traditional thinking is encased in a powerful but sometimes inaccurate and destructive mental model: It is linear.

Linear thinking is attractive because it is simple, cut and dried. The trouble is that it is a poor description of the world and an even worse preparation for changing it. Scientists and historians have long ago abandoned linear thinking. Why should we cling to it?

The most valuable insight from 80/20 analysis will always come from examining nonlinear relationships that others are neglecting.

Only a few decisions really matter. Those that do, matter a great deal.

80/20 in Happiness

Happiness is not money, and it is not even like money. Money not spent can be saved and invested and, through the magic of compound interest, multiplied. But, happiness not spent today does not lead to happiness tomorrow.

Happiness, like the mind, will atrophy if not exercised. 80/20 thinkers know what generates their happiness and pursue it consciously, cheerfully, and intelligently, using happiness today to build and multiply happiness tomorrow.

• 80% of our achievement and happiness takes place in 20% of our time — and these peaks can be expanded greatly.
• Our lives are profoundly affected (for good or ill) by a few events and decisions. We can improve our lives dramatically by recognizing the turning points and making the decisions that will make us happy and productive.
• Everyone can achieve something significant. The key is not effort, but finding the right thing to achieve. You are hugely more productive at some things than others, but dilute the effectiveness of this by doing too many things when your comparative skill is nowhere near as great.
• Most of our failures are in races others enter us into. Most of our successes come from races we want to enter.
• Few people spend enough time and thought cultivating their own happiness. They seek indirect goals like money or promotions that may be difficult to attain and will prove when they are attained to be extremely inefficient sources of happiness.

80/20 in Investing

Typically, 80% of the increase in wealth from most long-term portfolios comes from fewer than 20% of the investments. It is crucial to pick this 20% well, and then concentrate as much investment as possible into it.

Let those good investments compound: Nobody ever went broke by taking a profit, but many people never got rich by following the same procedure.

80/20 in Relationships

You don’t need many allies but you need the right ones, with the right relationships between you and each of them and between themselves. You need them at the right time, in the right place and with a common interest in advancing your interests.

Do not assume your friends and allies are all of roughly equal importance. Focus on your attention on nurturing the key alliances of your life.

You alone cannot make yourself successful (in any area of life). Only others can do that for you.

If you have a strong alliance with both X and Y and they have one between each other, that is excellent. A chin is as strong as it’s weakest link. However strong relationships between X and Y, the ones that really matter for you are your with X and yours with Y.

80/20 at Work

80% of the value in any organization or profession comes from 20% of the professionals. Workers who are above average will tend to be paid more than those who are below average, but nowhere near enough to reflect the differential in performance.

It follows that the best people are always underpaid and the worst people always overpaid.

Being Intelligent and Lazy

The key to earning more and working less is to pick the right thing to do and to do only those things that add the highest value.

Identify where 20% of effort gives 80% of the returns: In any sphere of activity, 80% of people are achieving 20% of the results, and 20% of the people are achieving 80% of the results.

What are the majority doing wrong and the minority doing right?

80/20 Time Management

80% of achievement is attained in 20% of the time taken. Conversely, 80% of time spent leads to only 20 of output value.

Key takeaways

• Most of what we do is low value.
• Some small fragments of our time are much more valuable than all of the rest.
• Treat time as a friend, not the enemy: Insight and value are likely to come from placing ourselves in a comfortable, relaxed and collaborative position towards time. It is our use of time, and not time itself, that is the enemy.
• If we can do anything about this, we should do something radical; there is no point tinkering around the edges, seeking marginal improvements, or making our use of time a little more efficient.
• The 80/20 principle says that if we doubled our time on the top 20% of activities, we could work a 2 day week and achieved 60% more than now.
• If we make good use of only 20% of our time, there is no shortage of it.

Make the difficult mental leap of disassociating effort and rewardWe need to make a conscious effort to step away from the Protestant work ethic. We enjoy hard work — or at least the feeling of virtue that comes from having done it.

What we must do is internalize that hard work—especially for someone else— is usually not an efficient way to achieve what we want. Hard work leads to low returns. Insight and doing what we ourselves want leads to high returns.

Free yourself from obligations imposed by othersIt is very difficult to make good use of your time if you don’t control it.

Eliminate or reduce low value activitiesSince there is little value in the activities you want to displace, people may not actually notice if you stop doing them. Even if they do notice, that may not care enough to force you to do them if they can see that this would take major effort on their part.

80/20 in Business

Your strategy is wrong
If you can identify where your company is getting back more than it is putting in, you can up the stakes and make a killing.

Unless you have used the 80/20 principe to redirect your business strategy, you can be pretty sure that the strategy is badly flawed.

It is almost inevitable that you are doing too many things for too many people.

A few things are always much more important than most things. Keep the vital few in the front of your brain at all times.

A few people add most of the valueThe best people generate enormous surpluses, usually far beyond what they are allowed to take out.

Managers love complexityComplexity is stimulating and intellectually challenging; it leavens boring routine, and it creates interesting jobs for managers.

Customer valueValue delivered to customers is rarely measured and always unequal.

80/20 in Negotiation

Few points really matter20% or fewer of the points at issue will comprise over 80% of the value of the disputed territory.

You may think this will be obvious to both sides, but people like to win points, even completely unimportant ones. Similarly, they respond to concessions, even trivial ones.

Therefore, build up a long list of spurious concerns and requirements early in negotiation, making them seem as important to you as possible. These points must be unreasonable. Then, in the closing stages of a negotiation, concde the points that are unimportant in exchange for more than a fair share of really important points.

Don’t peak too earlyMost negotiations go through a phony war and only get going in earnest when the deadline looms.

80% of the concessions will occur in the last 20% of the time available.

E.g. When asking for a pay rise: If you have a 30 min meeting booked to discuss this, don’t make the request too early to permit a gracious compromise on your supervisor’s part.

The Vital Few Gives You The Success

The most valuable 20 percent is called the "Vital few " and the 80 percent is called "Trivial many " . The author explains that the vital few's are responsible for our most of the profit and success whereas the trivial many puts an negative impact on the overall performance .

So we have to take more care of our vital few's and have to give more importance to them where as with our vital few's we have to many at-least that much productive so that at-least they don't put the negative impact on our overall performance.  

An addition of 80-20 can be applied on studies also to make your studies more effective and reliable is that divide your study time in 80-20 ratio , means if you decides to study for 80 minutes then take a break of 20 minutes so that your mind gets charged for next 80 minutes . In this ways you can study for long hours without getting bored and frustrated . This is scientifically proven you can't study for long hours continuously if you do so you will loose your effectiveness so the best way to study is apply pareto's principal there and divide your time effective and accordingly .

 So last but not the least the 80-20 principle taught us that the universe is imbalanced and all our efforts don't produces the same result , most of the times only a small proportion of efforts provides us the maximum of our result , some of the causes are responsible for our most of the consequences , our only 20 percent of the input is responsible for our 80 percent of the outputs , so we have to analyze our 20 percent and must gain excellence in it rather an average performance in all 100 percent tasks , our analysis of our 20 percent helps us to achieve more in less efforts , again don't be confuse with the less efforts and relate with the lazyness , less efforts means putting effort's in right direction always cost you less than putting efforts in any random direction .

So Choose your right direction , right path , work less , enjoy more ...

Again 80-20 is just a number you can divide your ratio which suits best for you it can be 70-30 , 90-10 , 99.9-0.1 whatever , in the worst case it might be 50-50 also.

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