Myths of Pareto Principle 2

The second myth of the Pareto Principle is that you can always predict the 20%. Since it has been applied in leadership and management circles the intended response is to invest in the 20% for your greatest return. Because the 20/80 principle is about returns it is something measured from the end, not from the beginning. That's not how I have heard it taught and applied. It is always presented in the realm of prediction:

Example1: If you have 20 out of 100 sales people who will bring in 80% of your revenue then as a good manager you should spend time resourcing and promoting those 20.

Example 2: If you have 100 people in your church then 20 people will likely do the work to move the vision of the church forward. So as a pastor invest time, resources, etc. in those 20%.

Here's the problem. You can't always predict the producers; things are always changing and people are never static. So the producers right now might not be your top 20% next time around. Further, when the principle is applied too broadly it fails to take into account the value of the fifth. The fifth is the other 20% or return -- turned in by the 80% of producers.

Constantly trying to invest in and resource the top producers is not a bad thing, that's good leadership in my opinion. But an application of the 20/80 principle that locks in on a prediction of 20% can set the leader up for missing real production and a diminished value of the fifth.

--Ben