C1 Business English · Brand and Strategy

The 80/20 Principle: Why a Few Things Drive Most of Your Results

From Pareto’s pea pods to top-selling products and your most valuable customers, the 80/20 principle explains why a small share of effort produces most of the results. This C1 Business English lesson uses it to build vocabulary for discussing focus, efficiency, growth and strategy.

What business leaders can learn from the story

Effort and results are rarely evenly balanced. A few products, customers and tasks usually create most of the value. Leaders who regularly ask which 20% matters most, and move time and resources towards it, get more done with less. They also keep an eye on the other 80%, because that is often where the next opportunity starts.

AWarm up

Before starting the Business English lesson, discuss these with a partner or your teacher.

Think about a typical working week. Which few tasks create most of the value in your job, and which ones take up time without adding much?
In your company, do a small number of products, clients or people bring in most of the results? How does your company respond to that?

BRead the text

The 80/20 Principle

a distribution the way something is shared or spread out among people or things
disproportionate too large or too small in comparison with something else
to monetise to start earning money from something

The 80/20 principle, also known as the Pareto Principle, was first discovered by the Italian economist Vilfredo Pareto in the early 20th century.

Pareto initially observed that approximately 80% of Italy’s land was owned by 20% of the population, with the same distribution seemingly applying to the overall wealth in the country. He soon noticed that such a distribution of wealth and land ownership was prevalent not only in Italy but also in numerous other countries he studied.

Pareto’s Garden

He soon found the same principle at play in his own garden! Over the next year, it became apparent that 20% of his pea pods produced 80% of his peas, demonstrating that the principle could apply to agricultural production as well.

Applying this to Business

This principle was later applied to business and economics by management thinker Joseph M. Juran, who named it the “Pareto Principle” after Vilfredo Pareto.

In business, for example, he analysed that 80% of results come from 20% of efforts. Leveraging this principle can vastly improve efficiency. If 80% of your results come from 20% of your efforts, identifying and maximising this efficient 20% can multiply your productivity. Taking the time to analyse work processes and focus on those 20% high-impact tasks can pay off immensely, allowing you to achieve the best of both worlds: increased productivity and reduced work!

The 80/20 Principle with Company Products

Let’s apply the principle to products themselves. Coca-Cola’s classic flagship drink constitutes around 80% of the company’s revenue. The same goes for Apple’s iPhone and the Big Mac at McDonald’s. Zeroing in on top-performing products and focusing resources on them can help companies to reduce costs. Of course, that doesn’t mean to say that you should take your eye off the remaining 80% completely!

Many businesses have reported that 20% of customers often bring 80% of the revenue. By targeting the most valuable customers, businesses can achieve better outcomes and foster customer loyalty.

Where does this 80/20 imbalance stem from?

The 80/20 principle exists primarily due to a combination of mathematical properties, human behaviour, natural phenomena, and systemic factors that create imbalanced distributions. In wealth distribution, for example, those who have more resources can invest and grow their wealth more effectively, often leading to something resembling an 80/20 distribution.

With various other contexts, passing a certain threshold can lead to a disproportionate increase in impact. When a YouTuber reaches a certain number of subscribers, they can monetise their content, thus allowing them to invest further in better quality content, further attracting new subscribers. In networking, simply having more high-quality connections can open up the opportunity to broaden your network exponentially, thus allowing an 80/20 distribution to play out naturally over time.

CKey words from context

Based on the context of the article, can you match the words in the box to the definitions listed below? Then add the word into the example sentence. You may need to change the form of the word to fit the meaning of the sentence.

A large number, many

“We have observed opportunities for growth in this market.”
A level or point beyond which something happens

“We have exceeded a of 50 employees, which means we will have to follow certain employer regulations.”
“We have reached a significant revenue , which means that we can now think about expanding the company.”
The benefits of two different situations at the same time

“Our new hybrid work model offers employees : flexibility and in-office collaboration.”
“The new product design incorporates : functionality and aesthetics.”
To stop paying attention to something

“We may be the market leaders, but we cannot afford to the competition.”
Mainly

“Our campaign will target 20–30 year-olds.”
“Our business focuses on helping professionals with their Business English needs.”
To be part of

“These two countries 80% of our total sales.”
As a result, therefore (this word can be followed by an -ing form or a full sentence)

“Our investments in research and development have paid off, allowing us to stay ahead of the competition.”
“The market analysis revealed a growing demand for eco-friendly products; the company decided to expand its green product line.”
To develop in a particular way

“Let’s see how the negotiations before we start taking any action.”
“We need to see how the situation before we change our strategy.”
To use something for maximum advantage

“I need to my strengths in order to compensate for my weaknesses.”
“We need to the power of our brand reputation in order to maximise sales for our new product launch.”
Everywhere, existing very commonly

“The use of AI is now across all industries.”
Used to introduce a statement that is clear and obvious

“ the market is changing quite rapidly, so we need to make some changes to our strategy.”
“Based on our sales figures from the past month, we are falling behind our competition.”
In a manner that increases rapidly; with growth that becomes more and more rapid over time

“Our revenue has been increasing over the past year.”
“We can help you to build your network .”
To focus closely and intensively on something

“Our strategy is to the most profitable markets.”
To give you good results after investing time, effort or money into something

“All of the preparation that we have put into this event will when the event proves to be successful and we generate a lot of revenue.”
“The intensive marketing campaign really , resulting in a huge increase in sales.”

DComprehension

Can you answer the questions below about the text? Then compare your answer with the model answer.

What were the three main distributions that Vilfredo Pareto observed, leading to the inception of the Pareto Principle?
Show model answer
- Land: about 80% of Italy’s land was owned by 20% of the population.
- Wealth: the same distribution seemed to apply to wealth in Italy and in numerous other countries.
- Peas: in his garden, 20% of his pea pods produced 80% of his peas.
What advice does the article give to ensure that you improve your productivity?

Show model answer
Take the time to analyse your work processes, identify the 20% of high-impact tasks that produce 80% of your results, and focus on them. This can increase your productivity and reduce your work.
What should you not do when attempting to leverage the 80/20 principle to enhance your business?

Show model answer
You should not take your eye off the remaining 80% completely. Focusing on top-performing products is useful, but the rest still needs some attention.
According to the article, what is one potential reason why 20% of the population hold 80% of the wealth?

Show model answer
People who already have more resources can invest them and grow their wealth more effectively than others.
How does the article explain why 20% of YouTube content creators enjoy 80% of overall subscriptions on the site?

Show model answer
Once a YouTuber passes a certain threshold of subscribers, they can monetise their content. They can then invest in better-quality content, which attracts even more subscribers, so their growth keeps speeding up.

EKey words in a new context

Below you can find a text. Can you fill in the gaps with the words from the box below? You may need to change the form of some of the verbs in order for them to fit into the sentence.

Word box

exponentially
numerous
apparent
leveraging
to take your eye off
to pay off
the best of both worlds
to play out

A Digital Transformation

In the contemporary business landscape, digital transformations have become absolutely crucial. Digital transformation essentially means integrating digital technology into all areas of a business. This can fundamentally change how a business operates in ways, such as remote work, cybersecurity and generative AI. It is that digital transformation is more relevant than ever across all industries in 2024. The digital transformation process can be a long one, potentially lasting up to 5 years for larger organisations. However, such efforts will immeasurably, as this can lead to vastly increased efficiency and growth.

The power of generative AI is increasing , which means that there really is no time to waste if you want to ensure that your business remains competitive. digital tools allows companies to streamline operations and enhance customer engagement. By integrating both traditional and modern methods, businesses achieve , maintaining their core values while innovating for the future.

The digital transformation process doesn’t always run smoothly and according to plan, and it is difficult to predict exactly how the transformation will . The process can disrupt the day-to-day running of the business quite significantly, and it is important not to the business’s core values and clients during this challenging process.

Glossary

Key words from the article.

prevalenteverywhere, existing very commonly
numerousa large number, many
it is apparent thatused to introduce a statement that is clear and obvious
to leverageto use something for maximum advantage
to pay offto give you good results after investing time, effort or money into something
the best of both worldsthe benefits of two different situations at the same time
to constituteto be part of
to zero in onto focus closely and intensively on something
to take your eye offto stop paying attention to something
primarilymainly
a thresholda level or point beyond which something happens
thusas a result, therefore
exponentiallyin a manner that increases rapidly; with growth that becomes more and more rapid over time
to play outto develop in a particular way

Knowing the word is step one. Using it under pressure is step two.

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Check out more leadership psychology in our lesson about the sunk cost fallacy.

Do you believe the English will hold onto its crown as a global lingua franca? Check out our advanced Business English lesson on the future of English.