By Stewart Gandolf
Chief Executive Officer
In1906, Italian economist and avid gardener Vilfredo Pareto established that 80% of the land in Italy was owned by 20% of the population. While gardening he later observed that 20% of the peapods in his garden yielded 80% of the peas that were harvested. And thus was born a theory that has stood the test of time and scrutiny.
Management thinker Joseph Juran adopted the idea and in 1937 introduced “The Pareto Principle,” expanded the observations to the assumption that most of the results in any situation are determined by a small number of causes. In other words, 80% of consequences stem from 20% of the causes.
The 80-20 Rule in Action
- 80% of the wealth in America is controlled by 20% of the population
- 80% of decisions come from 20% of meeting time
- 80% of your measurable results will come from 20% of the items on your daily “to-do” list
- 80% of a manager’s interruptions come from the same 20% of the employees
- 80% of sales will come from 20% of the sales force
- 80% of customer complaints are about the same 20% of employees, products, services or processes
- 80% of results from an advertising campaign will come from 20% of the ads
- 80% of beer is consumed by 20% of beer drinkers
- 80% of the business in any industry or segment is controlled by 20% of the businesses in that industry or segment
Here’s something else that is really interesting.
The top 20% of the top 20% is responsible for 80% of the 80% of results. In other words, the top 4% is responsible for about 64% (two-thirds) of the outcomes. Taken a step further, about 1% of the cause creates about half the effect.
Going back to one of our previous examples, about 1% of Americans own half the wealth, while everyone else shares the second half of the pie.
How to Leverage the 80-20 Rule in Your Hospital or Practice
You can apply the 80-20 rule to almost anything, but here are some of the most relevant for healthcare marketing.
- Focus on the 20% of marketing efforts that yield 80% of your results – and consider eliminating much of the rest.
- Vigorously protect the 20% of your referring doctors who send you 80% of your patients.
- Ethically utilize marketing to attract the 20% cases that can deliver 80% of the revenue.
- Spend 80% of your time working on the 20% of your business that matters most to your success!