Pareto and the Prepared Mind

Tuesday, March 03, 2015

It's a simple and powerful idea, but it is also harder to use than it seems like it should be. And what idea is that? The "80/20" rule. Statistician John Cook states it as follows:

[The rule] says that efforts and results are often very unevenly distributed. You'll get 80% of your results from the first 20% of your efforts. For example, maybe your top 20% of customers will provide 80% of your profit. Or when you're debugging software, often 80% of the bugs will be in 20% of the code. Once you become aware of it, you'll see 80/20 examples everywhere.
As Cook elaborates further, the principle (also called the Pareto Principle) applies, even if the actual percentages aren't exactly eighty and twenty. Cook goes on to list four reasons the rule might be difficult to apply. For example:
We're unclear how inputs relate to outputs. It may be hard to predict what the most productive activities will be. [link in original]
I see two common threads uniting his four reasons: (1) ignorance regarding various aspects of achieving the goal, and (2) lack of discipline. Cook explores what we can do about the former problem in the link directly above. The latter problem requires introspection and a committment to being clearer about why one is working on a problem. Might the most productive part of taking advantage of the Pareto Principle be best summarized by, "Keep your eyes on the prize?" Being clear about what one wants at the outset, being sensitive to signs that something is or is not working, and remembering to periodically check what one is doing and why are all important.

These are all good habits regardless of whether the Pareto Principle applies to a given endeavor.

-- CAV

No comments: