The Pareto Principle is Wrong and We Know It.

Kyle
5 min readApr 12, 2018
80 percent of clicks will be due to people wondering how this image relates to my essay.

I’ll cut to the chase. There are three reasons why the Pareto Principle is incorrect. Their implications are far reaching.

The first is human working memory.

The second is limited time.

The third is that the 80/20 statistic is a made up number, but we all knew that.

Let’s start with the third reason. 80% of results come from 20% of effort. Duh, not true, we just use that as a rule of thumb to think about effort and progress within a new paradigm. What it really means is: review your effort and determine what efforts of yours are disproportionately moving you forward, and which ones aren’t. Then, stop doing the ones that aren’t and focus on the ones that are.

It’s very important to be able to shift your perspective to be able to better understand your current strategies and invest or adjust them as needed. I think the Paraeto principle is a great thought experiment to help highlight things you have been doing that were not readily apparent.

That said, the Long Tail theory, in economic Pareto Principle terms is that each individual within 20% of a given market has a disproportionately larger share of the market than each individual within the remaining 80%. That said, it’s also expected that the larger 20% is a significantly more competitive space, and that in some cases, the sum total of the 80% of the market may even be bigger or comparable to the 20%.

The implication being, if you had the tools to competitively pursue the remaining 80% of the market, you could leave your competitors in the dust because they’d be busy competing over the 20%, while you’d get a lion’s share of the 80% bits and pieces.

Establishing the tools to do so, however, is extremely difficult, which is why most people don’t compete in that market. It’s often more time consuming and expensive to pursue small opportunities without automation.

The Long Tail theory is significantly more complex than what I’m saying and you can read more here if you’re interested.

Let’s move on to the first reason: human working memory.

It’s pretty bad and pretty impressive at the same time. It’s better with faces than with names. It can…

--

--