Mouth watering 80/20 principle based entrepreneurship

by Ashvini on October 18, 2012

in General

I have been reading an book about the pareto’s principle: that 20% of cause lead upto 80% of causes. The book’s name is “The 80/20 principle” written by Richard Koch.

The principal was first thought of by Italian economist Vilfredo Pareto. While the principle is extremely easy to grasp, the implications both positive and negative are enormous .

For example , Pareto in 1906 found that in Italy 80% of wealth is owned by 20% of people. Or that in his garden 20% of pea pods gave 80% of pea production. Richard takes it to business and finds that 80% of sales are from 20% of products. 20% of customers make 80% of revenue. Also 20% of salesman bring 80% of revenue and so on.

It is a very interesting book because it contains a concept “The world is inherently unbalanced”. That means that rarely will one cause be equal to one effect. That means 50% cause 50% effect will probably never occur.

One important derivation then would be the fact there the world is full of opportunities . The imbalances will always be there, the opportunities will appear. The most important skill would be then to spot these opportunities and then concentrate your 80% of resources to exploit them. Isn’t that mouth watering Smile

 

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