Named after an Italian polymath Vilfredo Pareto, this principle states that about 20% of the input is responsible for about 80% of the output. In 1906, Pareto made the now-famous constatation that 80% of the land in Italy was owned by 20% of the population. Similar distribution was (anecdotally) seen across many different contexts.
Some of the examples I came by are:
- The rule of thumb that 20% of a company’s biggest clients account for 80% of the company’s sales
- Video rental businesses in the late 1980s, reporting that 20% of the top titles were responsible for 80% of their revenue
- 20% of the population consuming 80% of the healthcare budget
- Natural phenomena, such as bird sightings
Of course, in many cases, this wouldn’t turn out true, or there may be a 30/70 or similar distribution at play.
Pareto in Product
When it comes to product management, it’s assumed, based on the Pareto principle, that 20% of the features cover the needs of 80% of the users (or that 20% of the product brings 80% of the value). This is also true for bugs – as shared in a memo by the former Microsoft CEO, Steve Ballmer: “Microsoft has learned that 80 percent of the errors and crashes in Windows and Office are caused by 20 percent of the entire pool of bugs detected” (Rooney).
This is not a rule or literal true proportion in every case. It should be more of a reminder to focus on value, an antidote against overengineering, and one of the tools in the product manager’s toolkit (best combined with other tools, and taken with a grain of salt).
Pareto in Life
To me, this principle is a reminder to be more conscious of my time, attention, and energy. To think about what brings the most value, and deprioritize what doesn’t.
Of course, we’re not machines. I often find myself pursuing multiple projects, then not finishing them as I spend too much time on things that don’t bring me a lot of value. I doom scroll and binge watch Netflix. I overengineer stuff. I can unnecessarily work beyond the point something is pretty good, and use hours and hours to maybe get additional 0.5% in value, or I don’t start at all, as I feel I will not be able to fully finish something, as emotionally it’s all or nothing, and a certain percentage of done won’t cut it.
A good example: dirty dishes piling up, and me not doing them as I don’t feel I can finish the whole pile. And while we’re at it, I should also clean the cooktop and throw away the expired food from the fridge. So, as I can’t do everything, I don’t do anything.
Could Pareto apply here? Maybe a tiny bit would actually bring a ton of value: maybe it would be easier to pour myself a glass of water if I washed the huge casserole? Not to speak of the increase in motivation and positive loop when you start getting things done.
Tool Is a Tool
The Pareto principle is one interesting, and perspective-changing principle, but at the end of the day, it is just a principle. One of the many good and perspective-changing principles, sometimes contradicting each other.