80/20 Principle
September 19th, 2005 by Hal
areto's Law or the 80/20 Principle is well-known to economists and quality improvement professionals. Simply, it states: 80% of the gain will come from 20% of the effort; conversely, 80% of our effort produces only 20% value. The relationship was first distinguished about 100 years ago by Italian economist Vilfredo Pareto. He observed that 80% of the wealth was concentrated among 20% of the citizenry. The law is more of a way of observing phenomena than it is an irrefutable principle. However, empirical studies have shown one situation after another where the law holds up.
The art of the project manager is to focus all team members on the few things that really matter.
Author Richard Koch wrote the book The 80/20 Principle: The Secret to Success by Achieving More with Less to introduce this perspective to general business. Koch does a good job explaining the principle and giving examples. He writes encouragingly of the opportunity in being highly selective in the actions we take to further our aims. At one point he shares his view on the ten biggest opportunities for using the 80/20 principle. Number 9 on his list is project management. Here's a summary of his points:
- Simplify the objective
The more aims of a project the more complexity the team will encounter. Strip the project to its essential aims. - Impose an impossible deadline
Break larger projects into shorter ambitious milestones. - Plan before you act
Project success is directly related to the ratio of planning time to execution time. - Design before you implement
80% of the opportunity in the project will come in the first 20% of the time spent. Spend that time doing good design.
Projects are great ways for many people to spend large amounts of time producing very little. Koch claims we can change that by adopting 80/20 thinking in the design and organization of our projects. If the idea of bringing focus to what you do is interesting, then check out Koch's other books, The 80/20 Individual: How to Build on the 20% of what You Do Best and Living the 80/20 Way: Work Less, Worry Less, Succeed More, Enjoy More. I have not read these books, but I intend to get copies.
As a side note, the 80/20 Principle was recommended by Paul Sieben, CEO LeanTrak, an engineering and project management services firm serving the process industries and other clients doing AEC projects. Paul has strung together more than 125 successful lean projects in the last three years. That's quite a feat — one Paul credits in part to the focus he brings from the 80/20 principle.
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September 20th, 2005 at 8:00 pm
An business acquaintance asked me years ago “what the most important business principle you’ve learned and/or applied?” and I answered without hesitation, “The Pareto Principle.” I continue to be amazed at how the “80/20″ rule applies to nearly everything, from inventory management to HR. The devil is in being discplined and focused in execution. If one is successful in doing so, the results can be astounding.