Pareto Principle and happiness !!

	Message From: madure	Total Posts: 261	Join Date: 06/06/2006
Rank: Coach	Post Date: 14/08/2006 20:22:30	Points: 1355	Location: Sri Lanka

If there was ever a principle that was responsible for the most happiness and achievement in the world, it would be the 80/20 Principle.

The 80/20 Principle or "Pareto Principle" was discovered in 1897 by an Italian economist Vilfredo Pareto while he was searching for patterns of wealth and income in England.

What he found was that 80 percent of the wealth was enjoyed by only 20 percent of the population. Additionally, it was consistent in different countries and in different times.

This has been found in present day as well and in almost any activity that we perform, business or otherwise.

In other words, 80 percent of your results in a given activity, are generated by 20 percent of your input or effort. Just the same, 80 percent of revenue or profits are generated by 20 percent of your efforts or sales.

The 80/20 relationship can also easily be documented in personal achievement and happiness.

Most people have never taken the time to count their achievements or much less figure out what makes them happy. If they did, they would have realized that there are very few things that contribute to most of their happiness. They would also have found that there are very few things that they have done that has resulted in most of their achievements.

A great example of the 80/20 Principle in achievement would be to look at some achievement that you've made in your life, and write down all of the things that you did that "truly" got you there. If you're looking at it honestly you'll see that it took consistent effort on very few things to get you most of your results.

The website of Rasheed Ali is another great example. He could have spent a lot of working hours and even more money to get his traffic up, but in reality it took very little work and money to get Alexa traffic rank from over 3,000,000 in the world to currently 212,901 and climbing every week! It has taken very few, small but effective steps to achieve this. You will find this time and time again in your life if you take a closer look. What you may have thought of as hard work may have been a few effective actions combined with many ineffective actions. By the way, this was done in less than three months.

Now, although achievement makes us happy, what else does?

A serious "Happiness Analysis" is also something all of us should do at least once in our lives. If you documented the things that contribute to your happiness then number the things that make you the happiest, you will find that there are only a few things that contribute to most of your happiness. In other words 20 percent of the things that make you happy, contribute to 80 percent of your happiness!

	Message From: Danish	Total Posts: 28	Join Date: 06/06/2006
Rank: Executive	Post Date: 15/08/2006 07:47:00	Points: 140	Location: Sri Lanka

Dear Professor,

The 80/20 principle is really an interesting one which created many a curiosity when introduced and was written first. Here's what Wikipedia has to say :

" The principle was suggested by management thinker Joseph M. Juran. It was named after the Italian economist Vilfredo Pareto, who observed that 80% of income in Italy was received by 20% of the Italian population. The assumption is that most of the results in any situation are determined by a small number of causes "

By the numbers it means that 80 percent of the outcomes come from 20 percent of our inputs. However, It really doesn’t matter what numbers we apply, the important thing to understand is that in our life there are certain activities we do (your 20 percent) that account for the majority (your 80 percent) of our happiness and outputs.

Regards,

DaNiSh

	Message From: srini	Total Posts: 120	Join Date: 06/06/2006
Rank: Leader	Post Date: 15/08/2006 21:03:53	Points: 600	Location: Sri Lanka

The 80/20 priniciple is the most famous but sadly the most neglected tool. It is said that 20 percent of customers bring in 80 percent of your revenues. Find out those 20 percent of the customers for each year and also for the gross total of the last five years.

These are the customers that deserve special attention. Companies that do not follow this principle spend 80 percent of their effort on customers who are giving them a mere 20 percent of revenues.

Not just revenues, it is also said that these top 20 percent revenue contributors are also the ones that generate the entire profits of your organisation. The rest 80 percent are usually loss making because of the effort spent on them.

REgards

srini