The 80/20 Rule — Pareto’s Principle
In the late 1970’s, people had huge radios in their homes, they rarely used speakers, recording functionalities were limited to dedicated high-end studios, and headphones weren’t a thing yet. If you were to travel back in time to this period, and show them your smartphone that can do all this and more, you would appear to be a god-sent angel.
The concept of having portable music playing in your ears while you’re walking down the streets or taking a bus to work, was unimaginable.
The mistake was that, back then people wanted all the functionalities we have in our smartphones now. History has shown that things don’t work that way, baby steps are needed. It’s then that Sony discarded all the demands people had, and kept only two features — portability and tape playback.
And the revolution of the Walkman had started to unfold.
This piece is all about understanding the 80/20 Rule.
In the example of the Walkman, though surprising at first glance, it is obvious that Sony discarded almost 80% of all demands — of all the wants that people had, and worked with only around 20%, that they found out to be the real needs of the people.
Over 200 million cassette playing Walkmans have been sold till today, and this incredible profit came from only 20% of the original feature-set.
This is a clear demonstration of the 80/20 rule.
It was an Italian economist by the name of Vilfredo Pareto, who had first observed the income distribution in Italy for quite some time in the 19th century.
He came to the mathematical formulation — that 80% of the land in Italy was owned by 20% of the people. He put forward many similar examples to demonstrate how predictable, the wealth distribution was.
This principle was almost forgotten, until Joseph Juran, a quality-control management pioneer, observed that in the General Motors vehicle assembly line, around 20% of the flaws were responsible for almost 80% of the defects in the final products. He then laid down this 80/20 rule in his publication, the Quality Control Handbook, as the Pareto Principle.
In basic terms then, all this means is that a minority of inputs or efforts, lead to a majority of the outputs or results. In Graphic User Interface (GUI) design for example, we often see that most of the functions of any application are found deep in drop-down menus.
This is very significant — you see, once you identify the critical 20% of the functions, and put them in the menu bar, not only does this reduce the complexity of the display, but also makes the frequently used functions very easily accessible.
There are many more well-researched observations that you could use in your product design work. For example —
- 80% of a product’s usage involves only 20% of its features.
- 80% of progress in projects, comes from 20% of the effort.
Steering away from design, we can still see fundamental observations using the Pareto principle. Like —
- 80% of a company’s revenue comes from 20% of its products.
- 80% of innovation comes from 20% of the people.
The list is endless.
Do keep in mind however, that the numbers 80 and 20 are merely signifiers of the average percentage distribution.
Sometimes it’s 70/30, sometimes 60/40, and maybe even 90/10. But the core principle remains the same.
In your life, a few ideas will give you most of the results, again, small but deep effort in one area, will bring about the majority of rewards.
This is as real as the law of gravity.
The 80/20 rule — Pareto’s principle.
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