This is conceptual and the exact numbers are not critical. The point is to pick the right things to spend our time on. If my simple graph had 10 things on the x axis, there would be 2 things that give me about 80% of my bang for a buck....or I could waste my time on the other 8 things and get 20% return on my investment.
Some examples of the type of ideas the 80-20 concept is pointing at;
- 20% of the people do 80% of the work
- 80% of sales come from 20% of our customers
- 20% of our Christmas activities provide 80% of our pleasure
It's a useful concept when we want to understand something about linear vs. non-linear relationships. In general terms a linear relationship means there is a one to one relationship between the independent variable and the dependent variable (the cause and the effect), conversely a non-linear relationship exists when we do not have a one to one relationship for growth, or decay, of some function.
If you want to look into the math part a little more you could start at Demystifying the Natural Logarithm (ln) | BetterExplained and Wikipedia - Natural Logarithm.
Why the heck would I care about that you ask?
Non-linear functions exist all around us, but this isn't a math lesson, it's pointing at things that we know intuitively to be true and can use to our advantage if we spend a little time thinking about them.
For example I might think that if I work twice as hard or twice as long, I'll get twice as much done or that if I study 2 hours I'll learn twice as much as I do in 1 hour or if I make twice as much money I'll be twice as happy, or spend twice as much on Christmas gifts the recipients will be twice as satisfied...etc.
This makes sense to a point but when we start to expand it a bit we can see the non-linearity. If I work 50 times as hard I'm not going to get 50 times as much done and if I study 24 hours cramming for a test I'm not going to learn 24 times as much as I would in 1 hour of study.
If we extend our graph to increase time, effort, or money; we can easily see that it is possible to reach a point of diminishing returns, and get on a slippery slope downward, where we can do more and more and accomplish less and less - missing whatever it was we wanted to do in the first place (be happy, live a healthy life, be a good mother/father, be a productive worker, etc).
This is almost proof that laziness is the key to happiness, but not quite....it's a challenge to find the balance, the right things, and concentrate on those. It's something we all struggle with everyday.
Pareto can help us is in understanding that we can make our working and daily activities much more efficient and pleasant by doing our best to eliminate the trivial many and concentrate on the vital few.
If we can't learn to do this we end up very dissatisfied because we are lost in a sea of triviality, accomplishing little of value, spending our time jumping from one trivial thing to another, and eventually burning out or stressing out.
The key out of this trap is to stop doing whatever we are doing long enough to do some sorting and prioritizing. If we quiet the external and internal noise, take a break, and reflect on what is truly important, we are in a position to learn, grow and ultimately be much happier people.
