AFY Gina Newell - Biz-Card V1 - 2961

CHAPTER 3 Pareto's Principle

“Eighty percent of results will come from just twenty percent of the action.” This is the Pareto principle, attributed to Italian economist and philosopher Vilfredo Pareto, who in 1906 observed an intriguing correlation. He began thinking on the “80/20 rule” with the observation that 20% of the pea plants in his garden generated 80% of the healthy pea pods. This observation caused him to explore other uneven distributions. He discovered 80% of the land in Italy was owned by just 20% of the population. He investigated different industries and found that 80% of production typically came from just 20% of the companies. The generalization became the concept that 80% of results will come from 20% of the action. While it does not always come to be an exact 80/20 ratio, this imbalance is often seen in various business cases: • 20% of sales reps generate 80% of total sales • 20% of customers account for 80% of total profits • 20% of the most reported software bugs cause 80% of software crashes • 20% of patients account for 80% of healthcare spending


Understanding the 80/20 rule concept can save you time in selling your home. Applying the 80/20 rule, you can stop trying to sell people on your entire home. Applying the rule, you highlight 20% of your home’s best features or on things that make it special such as a stunning view. The remaining 80% of your home still affects 12

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