

Could the 80/20 principle be wrong? - danielodio
http://www.danielodio.com/drodio/index/Entries/2010/4/17_Could_the_80_20_Principle_be_Wrong.html

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littleidea
(just posted this to the blog before reading here... I essentially agree with
diziet)

Dan,

I like your conclusion, but disagree with the premise.

I contend that your understanding of the Pareto principle was initially
incorrect and you are not alone as your link to David's post is evidence.

I further contend that your new approach is actually more aligned with the
Pareto principle.

The Pareto principle does not say that 20% effort will give you 80% of the
benefit. The principle says that 80% of the effects come from 20% of the
causes. That is a very significant distinction.

The key is figuring out which 20% gives you the proverbial bang for your buck
and doing 100% of that. That is not always easy or obvious.

If you are talking about 'time' and all the hats a founder has to wear in an
early startup, the math quickly breaks if one tries to spend %20 of the time
on more than 5 things. IMHO, Pareto Power Law applied to entrepreneurship is
not about spending %20 time on anything, it is about getting to parity on the
undifferentiated infrastructure that every company needs to run for as little
time and money as possible, so you can focus on narrowing down and finding the
%20 of causes that really move the needle in your space.

Then go all in...

Regards, Andrew

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yason
It doesn't matter if it's 80/20, 90/10, 60/40 or whatever. The _point_ is that
a task consists of a two parts:

1\. a small part of effort that produces most of the results

2\. a large part of effort that produces what is needed to make #1 sufficient

What explains number #2 is that people simplify their tasks in their heads.

If you want to do task X then theoretically you only need to do X. But, in
practice, you will have to do half a dozen other possibly smaller tasks as
well which you have, while leisurely focusing on X, conveniently forgotten
exactly until the point you actually start doing X.

This applies to a surprisingly good number of various tasks, from programming
tasks to even physical ones such as gardening.

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diziet
Daniel, I always thought the principle was that out of all the different
various tasks you do, 80% of the benefit comes from doing 20% of the tasks --
rather than working on a task with 80% efficiency or effort. So, technically
what you might be observing with improved efficiency is that the extra output
comes from focusing on the most productive tasks.

Also, can you please tell me why the plain text and images aren't visible on
your blog without javascript enabled?

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erikstarck
Yeah, but only 20% of the time.

(Sorry, couldn't resist.)

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est
I am surprised people would even take it seriously. Rational speaking, half of
the law/principle out there are stated as-is without any warranties.

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known
Analogy is " Could Wisdom of crowds' be wrong?

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ahoyhere
Sorta fluffy article, being that it is all conjecture and nothing mentioned is
even remotely quantifiable. I'm a believer in the unquantifiable, but this was
an article looking for a premise… which it didn't find.

How about this, the 20/225 rule:

"Professors Cooper and Kaplan at the Harvard Business School have shown that
once the cost of supporting customers is taken into account, only about 20
percent of customers are profitable. In fact, these 20 percent of customers
account for 225 percent of the profits. Of course, this means that the other
80 percent of customers lose 125 percent of the profits."

\-- Pricing with Confidence (an excellent book)

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piguy314
I think it would be a mistake to apply the Pareto principle to time
distribution as the author seems to want to do here:

"so putting 20% into any one thing and reaping 80% of the benefits is a very
time-maximizing way to live."

The Pareto principle is really about the distribution of causes and effect and
factors. The goal would seem to be to isolate and identify your vital factors
and focus most of your energy on those to maximize your output.

