80 vs 20
Less is more than more. Finding the right few here can simplify life. Because 80% of the results are 20% of the actions. So the real issue is finding the right 20%.
There are many ratios in the world. One is the ratio of 80 to 20. It was first observed in economics. In 1897, the Italian economist Vilfredo Pareto realized that 80% of Italy’s land belonged to 20% of the population. Then he observed this ratio in different areas and immediately named it, the Pareto Principle.
He observed that there was a visible imbalance in every area and place he could observe. This situation, which has been described as income inequality, is still valid. 20% of the world’s population owns 80% of the total wealth. You can also observe this current situation in your own life. 80% of what you produce accounts for 20% of your efforts. 20% of the products sold in the business world constitute 80% of profitability. 80% of traffic accidents are caused by 20% of drivers.
One of the aims of the Pareto principle, which reveals the imbalance, disproportion and inequality in life, is to make the time to be done productive and to minimize the time they will do. In addition, the Pareto principle, the optimum, is functional in terms of identifying the underlying causes of problems and listing these causes.
If you’re a business owner, you know that 20% of your customers make up 80% of your revenue with the Pareto policy. If you focus on customers, who make up the 20%, you can increase your revenue.
Pareto analysis is a bar diagram used to separate important causes of a problem from relatively insignificant causes. It is also a frequently used method in team work. Pareto analysis is one of the basic methods of problem solving techniques.
We learned what the Pareto principle is. So how is Pareto analysis done?
· Processes or problems are identified.
· The appropriate unit of measurement for the process or problem is detected and the units of measurement are recorded.
· The acquired information is classified.
· Their cumulative distribution is calculated.
· The Pareto chart is drawn.
Sample Pareto Analysis:
In a project to try to increase customer satisfaction by reviewing the complaints of customers in a business, a list is created as follows.
Then, a list is created again and the ratio of each complaint to the total number of complaints is written in the list. And in the row next to it the cumulative totals are indicated.
In the last step, the data is converted into a bar chart and classified.
As can be seen, the first five complaints correspond to 79% of all complaints. In other words, about 80% of all complaints are caused by these five problems. If we want to improve the problems with customer complaints, it will be much more effective to focus on the five problems found in the first place.
Those who find 20% of the reasons that make up 80% of the results raise a finger!
