80/20 Principle in practice

Richard Koch popularised the work and concept of a French economist called Vilfredo Pareto that observed that 80% of the wealth was concentrated with 20% of individuals.

The concept is simple — a large proportion of productive output in a given field will come from a small proportion of inputs. In reality I’ve found this to be much more skewed than 80/20, it’s often 90/10 or 95/5. For example, in manufacturing 80% of your defects will come from 20% of the products. In sales 80% of your revenue will come from 20% of the customers. Your kids will only play with a few of the many xmas presents they get.

In my world of software design, traditionally most of what we design doesn’t actually make any measurable difference. It might be ‘neat’ or ‘cool’, but it doesn’t actually allow a business to lower its cost base, or increase its sales.

My focus for the next year is on continually asking myself “if I didn’t do this, would it matter?”, and making space for the things that truly matter.