When the Pareto Principle Goes Wrong – the 80/20 Rule #Fail

Ever feel like you have too much to do and not enough time to do it in? You’re not alone. In an attempt to get your busy life under control, you may have experimented with the Pareto Principle, also known as the 80/20 rule.

Advocates of the Pareto Principle explain how you can maximize your productivity by focusing on the most valuable 20% of tasks, products, services, and people. In order to do so, you’re instructed to minimize the remaining 80% as it only provides marginal benefits. Sounds straightforward enough, but is it really that simple?

Statistically speaking the distribution of your input and output may often fit the 80/20 rule, but when applied across the board, the practices around the Pareto Principle can go horribly wrong. Here are a few reasons why.

The Numbers Can Be Misleading

 
The 80/20 rule represents a key feature of statistics: generalization. This poses a problem if the rule is interpreted literally. In some cases 65% of output may come from 4% of input or 70% from 10% and so forth. The 80/20 ratio does not apply to all situations.

Imagine if the top 20% of performers in a company were given a promotion and everyone else was fired. The impact of this action would vary from case-to-case, but it’s likely the remaining 80%—while perhaps not directly responsible for most output—served as an essential support structure for the top 20%. Although firing the bottom 80% of performers may make sense mathematically, in real life, it would likely result in the company closing.

The perception that a large proportion of input is wasteful isn’t always applicable when the nature of the work is taken into account. Artistic work can require investing years of practice before it can ever be capitalized on. A creative worker may spend days gathering information and brainstorming before they put pen or paintbrush to paper. It wouldn’t be possible to produce and sell artistic pieces without first investing this time. The 80/20 rule can go wrong when such activities are removed from the agenda.

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You Might Be Setting the Bar Too Low

 
In a work environment where the Pareto Principle is emphasized, it can be easy to fall victim to the self-fulfilling prophecy. It may be that the more the 80/20 rule is looked for, the more it will be found. It’s a benchmark that can cloud our judgment, especially when it comes to maintaining high standards.

Let’s take the meeting room as an example. If only 20% of those present are contributing and everyone else is close to falling asleep, is that acceptable? Even if participation will never be perfectly equal, couldn’t this time be managed more efficiently? In this case, the 80/20 rule represents a status quo that needs to be challenged if performance standards are to be raised. Rather than automatically eliminate 80% of the meeting participants, perhaps the agenda needs to be refined.

You Can’t Always Predict Outcomes

 
You can’t always know whether you’ll reap what you’ve sown. We don’t live in a vacuum. External influences are constantly at play and what’s profitable today may change tomorrow.

Maybe it’s fair enough to predict that 80% of the output will come from 20% of the input. The tricky part is predicting in advance which input will result in that output. There are forecasting methods which have been developed to give us a shot at it, but the level of accuracy is not always reassuring.

Contrary to the 80/20 rule, it may not be the best idea to put all of our eggs in only 20% of our baskets. The Pareto Principle recommends “overinvesting” in the most profitable ventures, but if a business wouldn’t survive the loss of its biggest client, then it’s probably time for a change.

The Pareto Principle is based on the idea of exploitation—concentrating on doing what we already do in a more efficient way. On the other hand, exploration allows us to consider other possibilities for growth and improvement and is at the core of innovation. The 80/20 rule can be valid for exploitative strategies, but fails to take new opportunities into account.

So What Is the Key to Maximizing Productivity?

 
When it comes to the 80/20 rule, it’s important to acknowledge that there are times and places for its application. It’s not a bad idea to scrutinize where resources are being spent and how much bang you are actually getting for your buck. At the same time, you shouldn’t be too rigid when it comes to your analysis.

Keep in mind that value can be subjective. What keeps the most money coming in may not necessarily be what customers find the most appealing about you or your business. Maybe it’s how charming you are.

You can always adjust how time is spent. If meetings aren’t effective, put more thought into how you plan and execute them. Goals should be clear. When a decision is made, the right people should be notified and they should know exactly what they are expected to contribute.

Every person has a specific role to play, and they should be allowed to stick to that as much as possible. They should only be asked to participate in anything else when it’s absolutely necessary. Get to know the people you work with and build systems and processes to enable them to do their best work. And remember to only apply the 80/20 rule with caution.

Angela Murphy

Angela works with customer success and marketing. She also side hustles as a freelance content writer, proofreader, painter, babysitter, and comedienne.