Pareto Analysis (a.k.a., the 80/20 rule)

Using the 80/20 rule to boost your productivity

As you scroll through your social media feed, you often stumble upon people that seem almost superhuman. For them, no obstacles exist. They manage to complete their work tasks, spend time with their loved ones and still have moments for their own joy. Mental barriers and procrastination are foreign concepts for these high-achievers. This can make you wonder – why can’t I do the same?

The truth is there’s nothing special or unusual about them. What separates successful people from others is having the right tools and knowing when to use them. The 80/20 rule can be a game-changer when it comes to getting things done. Let’s dive in and see why Pareto analysis should be a part of your life and how to utilize it properly.

What is the Pareto principle

Making decisions, regardless of whether they are small or big, can be challenging, especially for people who aren’t natural-born decision-makers. If that’s something you or your team struggles with, the Pareto principle can come in handy. The technique created by Italian economist Vilfredo Pareto in the late 19th century suggests that 20% of actions are responsible for 80% of outcomes. 

Have a look at this video. Don’t let the bad graphics discourage you – it simply explains everything you need to know about the concept.

In today’s world, the power-law distribution isn’t always exactly 80/20, but the principle remains the same. Knowing the rule, it’s much easier to prioritize tasks you need to get done during the day.

Although Pareto’s discovery was focused on economics and process improvement, now his ideas are also incorporated into modern culture. Many people, including our Cloudberry team, use the 80/20 rule to boost productivity. Here’s how it works.

Identify your problems

To utilize the 80/20 rule, you must first list the issues you or your team are experiencing. This can be anything – missed deadlines, communication problems, lack of profitability, or anything else that’s not going as you wish.

Find the root cause of each issue

Next, you should look in-depth at each problem. What’s causing the issue? Why are you missing your deadlines? Perhaps you’re wasting your time on social media? Maybe the deadlines you’ve set aren’t realistic? To understand the root of your problems, another convenient method to use is the Cause and Effect Analysis. You can read more about it here.

Assign a score to each problem

Once you’ve listed all the issues and their causes, make sure to score them by importance. There are many ways to do this. The simplest option is to assign higher numbers to more critical problems. For money-related issues, you can score problems by how much they cost.

Make a group

To find a solution, you must make groups of all the issues you’re experiencing. For example, if you have several problems caused by too much social media usage, place them together. Or – if you have issues due to a lack of resources or staff – put them into the same group.

Score the groups

In a similar way you scored each problem, now you have to add a score for every group. The group that has the highest score should be your priority.

Take action

Once you’ve figured out your priorities, it’s time to do the work! Usually, problems with the top score also have the most impressive payoff. Prioritize them and figure out ways to fix them. 

Using the 80/20 rule, you might realize that some issues (with the lower score) aren’t really worth your attention.

End notes

Time is money, especially in today’s world. We shouldn’t waste our energy and resources on issues that don’t deserve it. Test out the 80/20 rule to see which problems you should take care of first. In our Cloudberry planner, you’ll find a designated place to make notes. Use it and see that things aren’t as bad as they might seem at first.