The Pareto Principle and uneven distribution

Born in 1848, Vilfredo Pareto was an Italian philosopher and economist. Legend has it he noticed that 20% of the pea plants in his garden generated 80% of the healthy pea pods. This observation led him to think about uneven distribution.

He discovered that 80% of the land in Italy was owned by just 20% of the population. He investigated different industries and found that 80% of production typically came from just 20% of the companies. The generalization became: 80% of results will come from just 20% of action.

This is known as the Pareto Principle: the observation – not a law – that most things are not evenly distributed; it is also known as the Pareto Rule or the 80/20 rule. Statistics from virtually any domain: project management, quality control, production, healthcare, software crashes, etc. will demonstrate an uneven distribution of largest outcomes resulting from much smaller amounts of triggers.

The 90/10 rule

Modern thinkers have continued to use the Pareto Principle, but the standard 80/20 distribution appears to be evolving to 90/10, especially in the domains of time management and behaviour.

According to Jeff J. Hunter, the self-proclaimed King of Outsourcing1: “The 90/10 Rule is one of the most helpful concepts for life and time management.” The idea is to accomplish the biggest task first. Resist the temptation to clear up and resolve trivial, and therefore low value, matters. Ask yourself the question: on a scale of 1 – 10, how important is this task? Try to put maximum effort into high value goals. If you can’t define a goal as high value, Mr. Hunter’s advice is crisp and to the point:

  1. Delegate it.
  2. Automate it.
  3. Stop doing it.

The traffic light system

Further insight comes from Jennifer Dulski, head of Groups and Community at Facebook and author of the book Purposeful2. Ms. Dulski has more than 15 years’ experience at successful start-ups and big-brand Internet companies, including as a business unit leader at Yahoo! and as CEO of The Dealmap, which was acquired by Google in 2011.

She explains that, when she was the president and COO of, employees used a “traffic light” system, which worked like this:

Green: Decisions that employees can make on their own without having to check in with anyone or obtain approval. They constitute approximately 90% of decision-making.

Yellow: Decisions that aren’t cut and dry as to whether they need approval. Employees should reach out to their manager for clarification and approval. These decisions should make up about 5% of the total.

Red: The remaining 5% of decisions are those that will absolutely need the approval of a manager or senior leader. These types of decisions are typically hard to reverse and usually impact multiple parts of the company.

Ms. Dulski notes that managers who structure the decision-making process in this way accomplish two things:

  1. They make employees feel empowered and trusted.
  2. They provide everyone with a “clear, non-threatening way” to discuss decision-making.

Make fewer, smarter decisions

Decision-making requires an investment of time & energy that can often result in “decision fatigue”, the kind of exhaustion that can’t be cured by a good night’s sleep, and compromises the quality of our decisions.

Following the 90/10 rule, Dulski recognized that only 10% of decisions are critical enough to require the direct involvement of managers. Delegating not only helps managers focus on more pressing matters but helps employees feel a sense of ownership and a belief that they’re adding value to their team. “The core idea is that people should be able to make roughly 90% of the decisions that are required for them to get the job done,” she states in the book.

Allowing employees to make a majority of their decisions on their own, enables you to create a professional culture of high expectations, which those employees rise to meet – and often exceed. “Not only do people perform better when they feel trusted and supported, they also respect and trust their leaders more too,” Ms. Dulski concludes. When leaders can fully focus on the matters that affect business direction and performance, everyone benefits.

The so-called “90/10 rule” isn’t infallible. It’s important to remember that something can rarely succeed in its whole unless 100% of its parts are addressed. But perhaps 10% of those parts might not need to be perfect because the effort required to render them perfect could be better spent elsewhere. To consider the application of the 90/10 rule can help us identify where our efforts are best exerted when faced with any project or task.

Time is a commodity we can’t buy, and most leaders – whether in families or business – are challenged by lack of time, attempting to achieve too much.

Our experience has shown us that the empowerment of our team is a critical factor that enables us to serve our clients with a high degree of professionalism and efficiency.


Ces articles pourraient également vous intéresser

Invest with TWM Group

Our clients and their families typically have a net worth of $2M or more. If you have an amount under the minimum, we still invite you to get in touch with us to discuss your options.

*Please note that TWM Group does not provide investment advice nor do we solicit or share personal information through public forums or platforms such as social media. Please communicate with us only through official channels like email, the client portal or your portfolio manager.