The Pareto Principle

Small Inputs, Large Outputs

Believe it or not, the following statistics are roughly true:

• 20% of a country’s cities house 80% of its population.

• 20% of customers generate 80% of complaints.

• 20% of the time spent on work produces 80% of the output.

• 20% of website content attracts 80% of the traffic.

• 20% of athletes secure 80% of game wins.

• 20% of the population controls 80% of the wealth.

• 20% of companies earn 80% of the economic revenue.

• 20% of authors are responsible for 80% of book sales.

The 80/20 Principle, or Pareto Principle, is famous.

It says that 20% of something accounts for 80% of something else. 20% of causes produce 80% of consequences.

This isn’t always true. But mysteriously often.

Whether in human-made systems, societal dynamics, or natural phenomena: 80/20 is a thing.

The 80/20 rule is driven by what’s called a Power Law Distribution. It shows how a few things can cause most of the results. This differs from more equal distributions like the normal curve used in basic statistics (e.g. to describe the distribution of people’s height).

Power laws dominate systems where resources like money, ideas, skills, and space are distributed.

Recognize the pervasive influence of Power Laws in general and the Pareto Principle in particular. You will upgrade your ability to analyze, decide, and execute — in all walks of life.

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