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The Pareto Principle

November 29, 2010 Leave a comment Go to comments

Under “the Pareto Principle”, 80% of the work is done by 20% of the workers. Sometimes called the 80-20 rule, the concept was developed from an observation by Vilfredo Pareto in which he noted that 80% of Italian land was owned by 20% of the population. Based on his observations it was later found to ring true in a number of different distributions. It has now been found to be reflective of global wealth, power and influence. History, it seems, has proven Pareto true.

But why is this the case? Is it a human need for simplicity or for focus? In terms of financial power, a corporation controls a market by most efficiently managing finances and, more than likely, selling the greatest number of products. Market domination is less about quality and differentiation and more about branding and the human need to belong. Interestingly we reserve an expectation of standardized experience with our brands and hold these standards up as both measures of taste of comparison. Though we do not expect the exact same taste of coffee in every cup or the same crisp in an apple we claim our Coke is better than Pepsi or that Pepsi just tastes better than a coke. Do we even really know? The real power at play is the brand and the “buying in” to a corporate message.

These forces are major players in continuing The Pareto Principle’s power. A more equal distribution of power and effort would be more fair but human nature is not interested in equality: we are instead interested in focus and simplification. Humans crave a single focus and will pool their resources into this focused source. Anything less lacks focus, is largely inefficient and proven incorrect by The Pareto Principle

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