Marco's Blog

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Pareto Principle

One common mental model is the 80/20 rule, also known as the Pareto Principle. This principle states that roughly 80% of effects come from 20% of causes. In other words, a small number of inputs or causes account for the majority of the outputs or effects.

The Pareto principle is widely used in business and management to identify areas where small changes can have a big impact.

For example, a company may find that 80% of its sales come from 20% of its products, or that 80% of customer complaints are caused by 20% of its employees. By focusing on these high-impact areas, the company can make significant improvements to its bottom line.

The Pareto Principle can also be used in other areas of life such as personal productivity when 80% of the results come from 20% of the efforts. In this way, people can prioritize the most important tasks or activities that will give the greatest results and achieve more with less time and effort.

It’s worth noting that the 80/20 rule is not a hard and fast rule, but rather a general principle and the exact ratios may vary depending on the situation. But it provides a useful framework for identifying areas where small changes can make a big difference.


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