Tuesday, July 25, 2017

Pareto Principle Revisited


The Italian Economist Vilfredo Pareto (1848-1923) found that 80% of the effects came from 20% of the causes, and that rule has existed thereafter in applying to everyday instances where 20% effort leads to 80% of the results.

What we as practitioners of this rule MUST determine is what 20% of effort to choose to achieve this 80% of the results as otherwise you turn this on its head!

This is therefore a guide to all of us, to know that in doing anything, we must understand what is the most productive 20% of any action, to reap the maximum reward? This will save time and money on hair-brained schemes that achieve nothing because we are focusing on the wrong agenda or action!

By the way Pareto found that 80% of the land was owned by 20% of the people, another way of using this 80/20 rule.

So how do we apply this principle to our everyday lives? It is all about prioritizing our lives, to maximize satisfaction!

The attached link is not directly Pareto related, but goes to show that some people even with the wherewithal get bogged down in minutiae that they could very well afford to delegate to paid labor, servants maids, chauffeurs call it what you will so they have a greater sense of enjoyment.


Pareto if he lived today, would tell people to use his principle to determine what is important, prioritize them and then put them in order of importance, and attack the most important one first that will give you the greatest satisfaction and often, only when you list it, will you realize that both cost the same or take the same time, but are immensely different in their personal satisfaction index.


So in my case, though I own only two vehicles, both two wheeled hand tractors that are over 15 years old and would NOT have a resale value of even $100 each,  and do not have a bank account that will enable me to get even the cheapest car one could find, I still have the use of a company car and driver, that enables me to get home at any hour of the night from any event, back to the farm from even a night out in Colombo, not bad for a disabled person who is unable to drive at the moment. In the same vein, I know many who have cars worth Rs40M in their Colombo Garages who tell me that their driver goes home at 5pm so they are NOT able to come unless someone picks them up! 

How absurd is that? Does the car or a night driver give more satisfaction?  

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