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Tuesday, 5 April 2011

80 / 20 RULE

80/20 RULE
In 1906, Italian economist and avid gardener Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country.He observed that 20% of the people owned 80% of the wealth.While gardening, he later observed that 20%  of the peapods in his garden yielded 80% of the peas that were harvested.
The priciple that 20% of something always are responsible for 80% of the results, became known as Pareto's Principle or "The 80/20 Rule."
"A minority of input produces the majority of results."
What it means?
The 80/20 Rule means that in any thing  for example in a"XYZ" industry Store a few (20 % ) are Vital and many (80%) are Trival items., That is significant many and insignificant few items. Based on this principle we can classify the items  as A B C based on their consumption value for a given period and exercise the control as Best, Better,and Good respectively .
We can apply the 80/20 rule to almost anything, from the science of management to the physical world.
* 80% of decisions come from 20% of meeting time.
* 80% of a manager's interruptions come from the same 20% of people.
*20% of a  sales force will develop 80% of the annual results.
* Spend 80% of your time on the 20% of your problem areas.
In conclusion, we should focus on the vital few in every area of our lives which provides geometric returns in terms of overall satisfaction, success and stress management. We need to get out of the activity trap and focus solely on the value-adding activities.

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