Ben Asks: What is the Pareto Principle?

Life can be completely chaotic. Understanding where our time, energy and resources go and use this information to our own benefit ourselves, could be the key to taking back control. Understanding the 80/20 law is a wonderful way to explain life in better detail.


Vilfredo Pareto is a hero of mine. He is a person that looked at the world and applied numbers to it. He found logic and rules in the chaos. He was an engineer. 

His most famous piece of work was his analysis of the distribution of wealth in Italy. He found that 20% of the people owned 80% of the land and therefore he could say the remaining 80% of the people owned only 20%. 

Now-a-days, the ‘80-20 rule’ is applied everywhere from finance, to engineering, to horticulture. It is well-known 80% of the sales will come from 20% of the clients, 80% of the defects in a production plant will occur on 20% of the products, 80% of the harvest will come from 20% of the land.

How does this help us in a chaotic life?  Well, how do we analyse ‘life’? A good starting point is to use this simple tool to show us how to be more savvy about the tasks we take on.


80/20 Energy Distribution

As a generalisation, we can say 80% of a given project will take 20% of the effort, therefore when we understand this, and when we reach the last 20% and we start to struggle. We can understand that it is completely normal. 

The higher effort required to finish a project is the reason why so many jobs end up half completed or the final detail work comes out at a lower quality standard than the rest. The energy to finish, as a generalisation, is so much greater – 60% higher in fact (80-20%), than the ‘normal’ energy required to start and roll through 80% of the project itself.  Knowing it will be a struggle, we can ensure we apply the correct strategy to cope. 

We act rather than react. 

Imagine you take a long drive with your partner to a new city for a weekend away. If we apply the Pareto Principle, we know that 80% of the journey will be easy. Requiring only 20% of the effort, the miles will flow under the vehicle as you waft along without a care in the world. That is, until you reach the final 20% of the journey. Strap in and hold on as this shit’s going to go down. 80% of the effort is going to be needed to get you through that city centre. The unfamiliar road signs, the crazy local drivers and the bonkers one way system is going to be taxing to deal with. 

However, knowing this in advance we can find a strategy to cope. We could plot the distance and find an appropriate place to take a break around 80% of the total journey. A good coffee break to sit down and accurately plan the final route to the destination. 

The interesting (albeit super nerdy)  thing about the principle is the extrapolation that comes with it. 

As 80% of the effort is on the last 20% of the project, in this last 20% of the activity, the first 80% of it will take 20% of the effort, then the final 20% of the final 20% will take 80% of the 80% of the effort. Confused?! Take a look at the graph for a more visual explanation.

Exponentially increasing, the closer you get to 100%, the more and more effort you need to finish. Finding the entrance to a city centre hotel car park is always the worst, right?


Overloaded at Work?

Have you ever sat down and thought “why is work so hard now-a-days?”. In the past it seemed like you could give your full attention to a project, the stress was lower and the end result was better. But now, it feels like you are just pounding out project after project? I know I do.

Maybe the Pareto Principle can help us understand this. Imagine all of the projects you ever completed at work were taken in series. One after the other after the other. Start a project, see it through until the end, finish and then start the next. The graph of effort against time would look like this. 

Periods of low effort and periods of high effort. After each high effort, a chance to relax and recuperate due to a period of low effort from the next project. A manageable system that works, right?

But if you are a manager of a company and you looked at this chart, would it not be so unreasonable to say that the workforce is only running at 20% of their effort for 80% of their time? Therefore, running projects in parallel should be completed. A reasonable assumption one might say for the overall productivity of the company.

That’s great until projects get delayed, high level periods start to overlap and of course the average overall maintained effort increases. 

With the prolonged increase in effort, comes the stress and fatigue that if not properly managed, can cause failure. 

In this instance, failure may mean not completing a project or turning the project in at a substandard level. While objectively, any rational human would judge you compassionately for having attempted to juggle multiple projects, in your mind, neither failure nor a lack of quality, is going to make you feel good.

Understanding this, could help realise why you are feeling exhausted, or why you need to sit down with your boss and ask for a time out. Without this understanding, without knowing your limits, you could be exposing yourself to the harm of a stressful environment for too long a period of time.


Managing your Time, Money and Resources

In production facilities, we use Pareto charts to look at defects. We need to know where the biggest problems are to fix, objectively, rather than with subjective opinions. Imagine we were in a car factory and every day a car came down the line with a smashed windscreen. In addition, 20 cars came down the line with a passenger door that didn’t open and 100 cars came down with a scratch in the paint work. Which is the problem to solve first?

Many people would think the windscreen first – it’s a terrible thing, right? Then the doors, followed by the paint as that’s an easy fix. That was my assumption when starting as a graduate engineer, but how wrong I was. First we would tackle the paint. 100 customers would complain of the scratch in the paintwork Vs. the one person with a smashed windscreen. Therefore to satisfy more people, we take the highest amount first.  

We need to assess the amount of potential complaints by the number of incidents. The way we can do this is with a ‘Pareto Chart’. The below chart shows an example for defects in a titanium facility. A classic Pareto Principle distribution showing a clearer picture of where to focus our attention. 

File:Pareto chart of titanium investment casting defects.svg

https://commons.wikimedia.org/wiki/File:Pareto_chart_of_titanium_investment_casting_defects.svg

Pareto charts are something I consider essential to my daily life. I use them everywhere. At work, at home and when trying to figure out a ‘why’.  Have you ever inputted your budget into a chart like this to see where your money goes? 

The same pattern will emerge. The highest is probably the mortgage, followed by the bills, then clothing, food, entertaining etc. How does this help you though? Well just like an engineer in a production plant trying to reduce defects to bring the total level down. When plotting your monthly budget into a Pareto Chart, it is easy to identify areas to save money. You look at the highest bar first and work your way down the chart to the bottom. 

To take another example, have you ever measured what you do during the day and plotted the times on a Pareto Chart? 

A typical day could be, wake up at 6am, lay in bed until 6:15. Get up, shower, have some breakfast and leave for work. Commute to work and slave away all day before returning home. Go for a run, prepare the evening meal, take a shower. Sit down to eat food, turn on the TV. At the end, brush your teeth and go to bed. Read for half an hour and sleep.

The data in a table format would be as follows.

ActivityTime
Sleep8
Wake up0.25 (quarter of an hour) 
Showering (morning and evening)0.5 (half an hour)
Breakfast0.25
Commuting (to and from)2
Work8
Running1
Evening Meal Prep1
TV2.25
Brushing teeth and going to bed0.25
Reading0.5
TOTAL24

And this data plotted as a bar chart.

What if we now move the chart to a Pareto style? We simply re-order the blocks to show the biggest on the left and the smallest on the right.

Now the results become quite interesting. If we were to look for things to reduce to allow us to have more free time, it becomes quite easy to see where our time is being wasted. 

How many people put ‘watching TV’ as a hobby on their CV do you think? The 3rd biggest usage of time in our days! Statisica.com reports for people aged 25-44, the average TV time per day was 2.75 hours, (just in case you thought my numbers were above average).

When I completed this task on myself to try and make my day more productive, it was a shock to realize where my time went – and I am pretty abnormal. I make sure I have eight hours in bed each night, most people only manage six to seven. If I wanted more time, to create more freedom, I knew where I could find it. Turning off the TV and investing some of that time to better myself… 

80% of the time above goes to working, commuting and sleeping activities. Therefore you only have 20% left for you. What would you like to do with it?

The Pareto Principle can be applied to almost anything to understand where your energy, time, money, resources etc are going. It can help you understand why you are burnt out. It can be a tool to show your manager that you need to cool it down a bit. It can be a guide to knowing when to take a break before you do that final push. 

Think about an area in your life you would like to understand and see how Pareto can help you. 

Let me know how you get on! 

Ben Stalsberg


https://en.wikipedia.org/wiki/Pareto_principle

https://www.statista.com/statistics/276748/average-daily-tv-viewing-time-per-person-in-selected-countries/

Copyright © 2020 – Ben Stalsberg – All Rights Reserved


Ben Asks: Why is it so difficult to change? Explaining the ‘Water Principle’.

You’re stuck in a rut, struggling to move forwards and you just don’t understand why? Well let me help you understand it better with a theory about water.


To make a change, we input energy to divert away from our current normal, to create a new normal. Some changes are immediate and significant, such as moving house — where we use a short sharp burst of intense energy for a sustainable period of time. 

Other changes though, are more incremental. You start with a project and you have a dedicated goal in mind, however that finish line may be way ahead in the future. It’s easy to start the change as the amount of energy required is lower than the level of excitement you may have. Gradually though, that constant continued effort over months and months without any perceivable results can end up being absolutely draining if not managed correctly. 

Most humans have experienced the vast valley of demotivation that so often comes with a long term project, and I’m sure we are all guilty of looking for the easy way out when faced with a dark and miserable climb. 

But with any long term project, the more you can ‘normalise’ the situation you are in, the more you can understand the ‘why’ and with this understanding comes a better chance of success.

Any seasoned marathon runner will tell you it’s going to hurt like hell at mile 18-20, therefore any beginner experiencing ‘the wall’ will understand it to be normal and it makes it easier for them to carry on.

Taking a more general goal of ‘Fitness’ – unless you’re shredding calories and limiting calorie intake unhealthily, you’ll not see the incremental changes that the increased exercise brings; until you try on an old pair of trousers that have been too snug for far too long.

In engineering, it’s quite common for inspiration to come from nature. Biomimicry is all around us —not least on our roads, where ‘Cat’s eyes’ reflect headlights to guide the route ahead. When we have problems in our lives, we can look to nature to provide a better understanding and this is why I want to talk about water. 


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There is no easy way to explain this theory without a small section of dry science. So please hang in there and I’ll see you on the other side. 

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Water, to change itself from a solid state, into a gaseous state, must first melt from ice into water and then evaporate from water into steam. 

You may remember from science class, we conduct an experiment where we take a lump of ice, heat in a pan with a bunsen burner, then measure the temperature over a given period of time. Typically that time limit is when the water is boiling like mad and the teacher gets a bit worried about over-eager kids wanting to stick their fingers in! 

The chart we drew up after the experiment would look something like this.

The temperature rises steadily, until the ice changes to water or the water changes to steam and in these transitions something strange happens.

During these transformation phases, the observed temperature on the chart shows only a flat, steady line. We can’t see that any change is happening from the outside. However, we know at an atomic level, energy is applied in the form of heat and the molecule’s natural vibration increases.

The inward heat energy is being converted into kinetic energy. 

And remember that the fundamental rule of science: energy cannot be created or destroyed, it can only change forms. 

The water molecules continue to vibrate until finally they have enough energy to break free from their bonds and end up in a new, more fluid condition. Then, and only then, the observed temperature will increase again.

The same occurs when cooling. When we cool steam, to water and finally to ice, the temperature will also flatline in the transition phases. This is due to the molecules receiving less heat energy and forming restrictive bonds again.  

These plateaus of change are proportional with time and energy. Therefore if change is a constant, to decrease the time, we need to add or remove more energy. 

OK we made it. . . good job.

Considering our life progression and everything in our lives – projects, relationships, health, fitness, confidence etc. water is a handy analogy. 

When we change, and we want to move paths, from our current normal to a new normal, we need to input energy.

When we are in that transitional phase, we need to keep inputting energy — even if we see no results — until finally our bonds are broken with our old path, and we can move onto the next one.  

The energy we are inputting is not being wasted. It is being used somewhere. If we are not seeing an obvious result on the outside, it is likely the energy is being used on the inside.

When we fail to maintain consistency in long-term changes, our energy towards our mission reduces. Just like water, then we can slip back along the plateau and form bonds again to lower elements—AKA our original bad habits.


When times have been tough in my life, the one constant that has kept me motivated is the belief that the more energy I put into the system, the better the result.

I stumbled onto the ‘water principle’ idea when talking with a friend who was struggling to find his feet with his business. 

It was clear he was demotivated and a bit down in the dumps. It was only natural to try and think of a way to help his situation. We all say to our friends, “don’t give up” in times like these. However, without some context behind it, I felt it was a bit of an empty statement. Just like telling your mate who has split up with their partner, “It’ll get better soon”, you know that’s not the full story.. It’s going to be hell for 90 days as they ride the emotional rollercoaster of missing messages, bittersweet memories, tunes and smells that spark sadness—all the fun that comes with heartbreak.

I had watched a YouTube video on professional CrossFit athletes and was fascinated with the coaches explanation of ‘plateaus’. He described it as swimming under ice. At some point you won’t be able to get up for air. The only way to break through the ice is with technique. He would coach his athletes to actively stop chasing big weights, or top scores on the board (a habit formed from childhood) and focus only on the way they were moving.


The parallels between my friend, the athletes and the way water reacts just seem to fit together quite nicely. 

I started to think about all the times that I had found it hard and no matter how much energy I was putting in, nothing seemed like it was moving forwards.

Projects at work, becoming debt free, moving to a foreign country. All these projects which took so much energy and were completely demotivating in the heat of the battle. They all started to move when I had freed myself from bad habits, poor discipline or finally just accepted the situation I was in. 

It was only when I had used energy to break free from the bonds from the past, that I was set free for the future. 

“Don’t give up” with more background no longer seems as empty. 

We all know the expression ‘no pain, no gain’. If the only ‘pain’ you’re experiencing is the discomfort of not being able to visibly see results, perhaps you need to ask yourself how much you want the change?


But be careful. As I will discuss next week, if you are going to use your precious energy on change, it should be completed as efficiently as possible. The Plan, Do, Check, Action, method, can help you laser focus that energy to great success.  

Ben Stalsberg

New posts out fortnightly on Fridays!


Try to think of a time where you were struggling to change. What can you learn from that?


Heating Curve for Water

https://en.wikipedia.org/wiki/Conservation_of_energy


Copyright © 2020 – Ben Stalsberg – All Rights Reserved