Have you Paretoed your Pareto?

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No it’s not a new dance craze the kids are all doing nor that cool new restaurant downtown. Paratoing the Parato is all about doubling down your focus to the very few things that matter the most.

A client pointed the idea out to me (hat tip Stephen Mooney) a little while ago.

What is Paretoing the Pareto?

We all know about the Pareto principle in which economist Vilfredo Pareto observed that 80% of the wealth was owned by just 20% of the population. Since then the idea that most of the effect you are looking to create can be achieved by focusing on the right 20% of the problem has been applied to many situations.

That’s all well and good but if you have 100 ways to invest your time that still leaves you with 20 things on which to focus.

Now to Pareto the Pareto: just apply the Pareto rule to the top 20%. That will leave you with 64% (80% x 80%) of the outcomes for just 4% (20% x 20%) of the effort. So now we have the Parteo squared effect.

Does this rule hold up to rigorous statistical analysis? Probably not, but neither does the original 80/20 effect apply to all situations. However, it is a nice application of the approach and surely you can focus on just 4 things (out of 100).

How can you use it?

There are of course plenty of ways you can use this approach. Our favourite is in the customer feedback and action space.

Focus on the most common 4% of customer issues or process problems and life should get 64% better.

Republished with author's permission from original post.

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