Who Is Pareto And Why You Should Listen To Him
*Original article on andersonmatias.co
If you have already studied or worked with Statistics, Quality, Economy, Product Development, Customer Service, in summary, with virtually everything related to data-driven work, you most likely have already eventually stumbled into the “Pareto Principle”, or at least had the opportunity to. This article is specially dedicated to those who never heard a thing about our Italian friend’s work.
Vilfredo Federico Damaso Pareto, accomplished economist and sociologist (among other areas of expertise) in the 19th century, has developed what it is widely known as “80/20 rule” (The Pareto Principle). It states that roughly 80% of the effects come from 20% of the causes. This simple concept has been having a huge impact on business, through the way one prioritizes issues and direct efforts to cover the most meaningful and impacting sources of the problem, instead of tackling it all at once or randomly. Related to this principle, there is a tool we use called “Pareto Chart”, which is a visual representation of the number of occurrences of some categories of events, organized in descending order, from the left to the right, together with the cumulative percentage summed up until it reaches 100% (represented by a line). The more you analyze Pareto Charts, the more you see that the principle is valid. Important to say: it is not a law, you won’t get always 80% of issues caused by 20% of the causes, it may be sometimes 70/30, or eventually 90/10, the exact percentage is not that important, the message here is this: to get maximum results with minimum possible effort, you need to focus on the vital few that actually cause most of your problems.
The academic and professional applications of the Pareto Principle are quite clear and intuitive, but have you ever used it consciously outside these spheres? Think about it: how many times in your personal life have you actually systematically efficiently prioritized your problems in a measurable and traceable way? Likely not much. What if you could use the Pareto Principle to understand where do your monthly variable costs come from, for example? or maybe understanding what causes you to be stressed out the most? how about monitoring the top reasons you argue with your wife/husband? Why not?
As obvious as it may sound, most of us simply don’t do it because we tend to have an empirical way to live, based almost exclusively on our own experiences only, without structuring it into a system. Many consider it a “robotic” and cold way to handle things, but when everything goes south and you have no clue why and where to go, isn’t it worth to give it a shot? Some of us create this dichotomy between personal and professional matters, “personal is emotional”, “professional is technical”, “personal can be neglected”, “professional is priority”, let’s go for balance, people! This means not just dedicating proper time for both personal and professional aspects of your life, but also to take benefit of professional best practices adapted to your personal needs. Not having a structured and well-thought life might be as serious as not being passionate about your job.
One of the most relevant reasons for this lack of awareness is that we seldom have metrics to track the other aspects of life besides work. Your “performance” as a human being is normally not being consciously tracked. Of course, please, don’t freak out and start to measure every single aspect of your life and don’t believe also what many reproduce about “you can’t manage what you can’t measure”. However, is much easier to understand and define a plan of what to do when you are backed up by measurable and understandable data to at least some of the most sensitive stuff.
One does not need to go crazy and start to generate charts for absolutely everything. If you at least understand that your energy is limited and how huge is the amount of effort you need to accomplish everything that is demanded of you by yourself and others on a daily basis, then you will clearly see that it makes sense to prioritize and that there is no need to be desperate about the difficulties in your life, for it very often happens that just one or two main factors may be the source of your struggle at that specific moment. This gives a more positive perspective when solving problems. You can use the Pareto Principle but it is not limited to it, there are many other ways to accomplish self-awareness and control over your life. The point is: try not to solve everything at once or randomly, focus on the big hits, increase the efficiency on how you manage and spend your energy (This has to do with my previous article, Energy Management and the Circle of Influence, if you did not read it yet, click here), figure out ways to measure and track things. It may sound like a lot more effort, but in the end, it will be worth it…
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