What can accountants learn about 80/20 success from Italian economist Pareto?
The 80/20 rule (as a rule of thumb) states that 80% of outcomes can be attributed to 20% of all causes for any given event.
It’s is also known as the Pareto principle, as it was first used by the Italian economist Vilfredo Pareto to describe the distribution of wealth in Italy in the 19th Century. Pareto introduced the principle in 1897 proving that 80% of the wealth in Italy was owned by 20% of the population.
But 80/20 is as relevant now as it was to Pareto 120 years ago and can be applied to much more than the wealth of nations.
You’d probably agree that one of our most important resources is time…
When you start to look closely at your time, whether personally or professionally you will almost certainly find an 80/20 imbalance.
So, if 20% of your time produces 80% of your results (or conversely, 80% of your time produces 20% of your results!) it suggests 2 actions:
1) Reduce the time you invest in low-value work
2) Increase the time you invest in high-value work
Look closely at your client lists and, chances are, you’ll discover your real profits are generated by just 20% of your customers…maybe it’s time to align the imbalance of time to the imbalance of client-value?
Think of the possibilities you have with the stronger diary/outlook management, if 4 days of your working week produces only 1 day’s worth of results at present!
Take a long hard look at your use of time.
Click here and find a checklist you can use to help you see a simple and relatively easy way to achieve greater profitability with ‘80/20 wins’...