Most of us have heard of the “80/20 Rule,” but how many of us have taken time to apply its lessons to our business?
The 80/20 Rule, in its most general form, says that 80% of you outcomes come from 20% of your inputs. It was invented by the 19th century Italian economist Vilfredo Pareto, who observed that 80% of Italy’s land was owned by 20% of its people.
In business, this has many applications. Which might be true for your business?
- 80% of your profit comes from 20% of your customers.
- 80% of your sales come from 20% of your product assortment.
- 80% of your complaints come from 20% of your customers.
- 80% of failures come from 20% of defects.
- ….
OK so what? Here’s how you use this knowledge to improve your business results.