Now we see dimly in a mirror, but then we will see face to face. Now I know in part; then I will fully understand.

1 Corinthians 13:12

The 80/20 Principle is not widely celebrated, but it is well known among successful companies and individuals. There are many articles on the subject and I am only aware of one book, The 80/20 Principle by Richard Koch. It’s almost as if the successful have realized the importance of the 80/20 Principle and wanted to keep it a secret to protect their good fortune.

The quality revolution

Between 1950 and 1990, the quality revolution transformed the quality and value of many of the products we use today. The objective was to obtain a zero rate of defects in the products and, at the same time, reduce the cost. Joseph Juran and W. Edwards Deming separately developed quality control procedures based on the 80/20 Principle, but were able to find interested companies in the US Japan became interested and both moved to Japan in the 1950s , the rest of history is history and Toyota is now believed to be the best automaker in the world.

Juran commented that “losses” do not arise from a large number of causes:

Rather, the losses are always poorly distributed in such a way that a small percentage of the quality characteristics always contributes a high percentage of the quality loss.

His approach was to identify the problems that are causing the lack of quality control and rank them from the most important to the least important. Then they focused their efforts on at least 20% rather than trying to tackle all the issues at once.

The information revolution

The information revolution began in the 1960s and has transformed the work habits of many companies. The 80/20 principle played an important role with its concepts of selectivity and simplicity.

Think small. Don’t plan to the nth grade on the first day. Return on investment generally follows the 80/20 rule: 80 percent of the profits will be found in the simplest 20 percent of the system, and the final 20 percent of the profits will come from the top 80 percent. complex system. Chris Vandersluis (May 25, 1994, Canadian Computer Science)

The 80/20 principle remains the best kept trade secret

The 80/20 Principle remains little exploited, even by those who recognize the idea. It is extremely versatile. It can be profitably applied to any industry or organization, any role, or any job. Companies that use the 80/20 principle will be successful in markets where it is possible for that company to generate the most revenue with the least effort. Companies must direct their resources to the most profitable segments.

Businesses must also identify the parts of the business that generate the most profits and give them the most power and resources. At the same time, identify the parts of the business that generate the lowest negative income and take away their resources.

Jesus taught in the parable of the talents:

For to everyone who has, more will be given, and they will have an abundance. Whoever does not have, even what he has will be taken away.

Matthew 25:29

Although the teaching here is much more profound and is about our spiritual life, it also literally applies to how we should conduct our business. This parable is a great example of the 80/20 Principle, in this case 30% of the workers produce 70% of the profit. One servant doubled his five talents, another servant doubled his two talents, and one servant got no reward for his talent. His one talent was taken and given to the servant who had ten talents.

Suggested Reading: The 80/20 Principle, by Richard Koch, ISBN 0-385-49174-3