Pareto Principle: The 80/20 Rule

Pareto Principle: The 80/20 RuleThe Pareto Principle

Recently I have started reading The 4-Hour Work Week, A life design and self-improvement guide by Timothy Ferris and advocate of the Pareto Principle. The further you get into Internet Marketing and the whole “Passive Income” thing, the harder it gets to avoid this book.

For me, I have been aware of this book for about 8 months. I first heard about it when trawling through Pat Flynn’s website Smart Passive Income. A super cool website and ridiculously successful, the Smart Passive Income blog was pretty much where it all started for me and the main reason I decided to give this a go. I hope that I get to thank Pat Flynn for his tips and advice one day, it can be pretty tough starting out in this industry, time and time again you will feel like pulling the plug but sometimes, all you need is a podcast from someone who has walked this road before you to convince you to keep going.

As an Internet Marketer you will read about numerous individuals who have found success in their chosen field, when I read about such people, apart from being super impressed by their motivation, dedication and creativity, I like to think that I am heading in the same direction but just taking a bit longer to get there ( a late starter if you like). As you set out on your journey, I think it is very important that you read as many success stories as you can, not only will this open your eyes to a wider range of ways to make money on the internet, it will also show you the things that have worked for others, the things that did not and the things you should avoid at all cost.

Back to the Pareto Principle

The four main areas of the book are categorised as Definition, Elimination, Automation and Liberation (DEAL), I imagine that I will be alluding to this book more and more in the future so for now I am purely focussing on the Elimination section, and in particular, a key component of this section: Pareto’s Principle: The 80/20 rule.

The Elimination section of this book requires you to take an honest look at all of your current activities and remove yourself from the unimportant, and you would be surprised at how unimportant some of the things you do seem when you read this book. I read this chapter and felt like a right muppet, yes I check my emails about 20 times a day, yes I think that by spending an hour writing a to do list makes me efficient and yes these are all great ways to make you feel like you are accomplishing things when in actual fact, you are simply preventing yourself from progressing.

Like I said earlier, there will be things that you read which really strike a cord with you, and this was definitely one of those for me, now I’m not saying that having read this, I am going to reinvent myself; unfortunately for me, it’s the way I am and changing would be hard, but it has made me aware that a lot of the things I do could be classed as counter-productive to my end goal.

One aspect of the Eliminate chapter which certainly got my attention was The Pareto Principle, or as it is commonly referred to: The 80/20 rule.

The Pareto Principle, surprisingly, was not championed by Pareto but was named so by a business consultant called Joseph Juran. Pareto was an Italian economist who observed that “80% of the land in Italy was owned by 20% of the population”…Thanks Wikipedia :) It was Juran who then applied this theory to business management and it now common place in the business arena to make the following assumptions. Back to Wikipedia for this one…

  • 80% of your profits come from 20% of your customers
  • 80% of your complaints come from 20% of your customers
  • 80% of your profits come from 20% of the time you spend
  • 80% of your sales come from 20% of your products
  • 80% of your sales are made by 20% of your sales staff

Rather than focusing on time management, the eliminate phase of The 4-Hour Work Week suggests that you non time manage. Do not try and please the 20% of customers who make your life difficult and focus more on the 20% of products which make the majority of your income. I like to think of myself as a pretty level headed and rational thinker yet I could not find much of an argument to this, it all seems to make a bit too much sense and I found myself wondering, why bother with some of my under-performing products (80% of them) when the others (20% of them) are clearly selling. It was at this point in the book that I made myself put the brakes on. As I continued to read, I found myself having all of these wild thoughts about streamlining my websites and putting a few of these recommendations in to practice, very unlike me!

That’s when it kind of dawned on me that although this information seemed to be perfectly logical, it is not quite the right time for me to implement it. Whether this is a case of me trying to justify what I am doing, and having complete blindness to my procrastination and shortfalls I am not sure but I just feel that I am still trying to find my feet. Why apply the 80/20 rule when I am still trying to map out my market, yes it is something that I am certain to do in the future but while my marketing and promotional endeavours are still in their infancy I am yet to find out what works and what does not for myself.

What I am trying to get across in this post is that it is very easy to read about someone else’s actions and think that if it has worked for them, it will work for me, while this may be true and lets face it, these people know far more about it than what I do, I can’t help feeling that you should take some time to think things through before you act. I completely admire Timothy Ferris for what he has achieved but also recognise that the path he took is not for me, there are some absolute gems of information in his book which I will definitely apply to my online activities and I would recommend that anyone should read it, not just those who are interested in online business, but there are also some practices which are completely alien to me and will take a bit more experience on my part before I see them through.

Thank you for reading this post and I hope you have learned a little bit more about the Pareto principle

 

 

 

 

 

 

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