Make your own free website on Tripod.com

What is a Pareto analysis and why is it valuable?

In today's world there never seems to be enough time for all the things that seem to need our attention. The minute one thing is checked off our list, three others seem to appear to take its place. Because of this, it is increasingly vital to ask yourself, are you doing what makes the most difference?

In the early 19th century, Wilfredo Pareto, an Italian economist discovered a statistical truth--that a small number of causes is usually responsible for the larger number of effects. To simplify, his findings were that usually about 80 percent of the effects are driven by 20 percent of the causes. Further, it was noticed that the remaining 80 percent of the causes seem to produce insignificant results. So, in essence, any significant time and effort spent toward those causes may very well be wasted.

Since that time, it has been proven this "80/20" rule is true of many areas besides economics. So, it should follow that by choosing the correct 20 percent of the tasks that face you every day, you should be able to make certain you are getting the most return out of your work efforts.

So, how do you determine which tasks to do and how much time to spend on each one. In this article, I'll explore one method of analysis for looking at these questions and then introduce a tool to make that analysis a snap.

To begin with, you need to know what your everyday tasks are. Now, please don't confuse everyday tasks with what is on your "to-do" list. "To-do" list items are probably not things you do every day. I am talking about the regular items that make up your average day. We'll talk about your "to-do" list in another article.

Let me give you an example of my daily retinue. My average day starts with a review of my calendar. Once I have looked at what the day might bring, I get and return any phone messages that might have come in over night, then move to my EMAIL--not to read, but to scan to see if anyone has requested any last minute meetings. Then if necessary, I update my calendar, hot-sync my palm pilot and head out for my first meeting. One meeting I always have is a 9:00 status meeting with all my supervisors. This meeting usually lasts about five to ten minutes and gives me a peek at what is happening in my area, from the trenches. After that, I attend various meetings until lunch time. In the afternoon, I try to spend an hour reading my EMAIL, and following up on any phone messages I missed or needed to do extra work on. I spend significant time filling out required performance paperwork to file on my employees. I update my "to-do" list with any items that might have been complete or any additions that came from meetings, messages, or calls. I hot-sync my Palm Pilot again and then leave.

Knowing this, my list of daily tasks might look like this:

Review and update calendar

Get phone messages

Read EMAIL

Visit with Supervisors

Fill-out performance charts

Follow up on messages (phone/Email)

Update "to-do" list

Next, it is important to come up with a method for measuring the importance of each of these items. I have chosen a subjective measurement called "value". I define value as a mixture of a couple of things. First, is it necessary that I do the task, or can someone else do it? Second, does it add value to the job that I do or to the institution for which I work. Putting these two issues on a scale of 1 - 7 with one being the lowest and 7 the highest, I take the average of the two scores. So my list now looks like Figure 1 ("rnd up" means that I rounded up to the next whole number):

Item

Requires Me?

Value

Average

Review and update calendar

3

7

5

Get phone messages

1

4

3 (rnd up)

Read EMAIL

2

3

3 (rnd up)

Visit with Supervisors

6

7

7 (rnd up)

Fill-out performance charts

2

2

2

Follow up on messages (phone/Email)

4

6

5

Update "to-do" list

6

6

6

Figure 1.

Because this grading system is subjective, it could be different for each person. Additionally, I did the averaging for illustration purposes. Normally, I come up with a value from one to seven by averaging these numbers in my head. Essentially I am thinking "Yeah this pretty much requires me and it is of pretty high value to me and the institution, I'll give it a 6". How you come up with the valuation is not as important as the fact that you use the same measurements and criteria to judge each task.

Now, in a regular Pareto analysis you would add up the total score in the "Average" column (36), sort them from Highest to lowest and put them in a histogram that looks like Figure 2.

Figure 2.

In this chart the bars represent the scores for each task and the line represents the cumulative percentages of scores from left to right. The vertical red line at 80% represents the point at which you should be getting the most return for the work put out (the "80/20" rule).

So, according to this analysis, I should be find some other way to fill out the performance charts, read my EMAIL, and get my phone messages. At the very least I should find a way to do them more efficiently. However, sometimes this type of single-thread analysis can be misleading. If we review our tasks on too narrow a criteria, we may miss some important trends. Additionally, we may already be working most efficiently at a task and not need to correct that portion of our workload. In other words, we may break something that is already working.

Because of this, it is important that we find a way to at least compare the time spent on each of my daily tasks. The idea is to determine which are being done too much or too often, which are being done to little, and which I am spending the right amount of time on.

When comparing the time spent on each of these items, I recommend using the same continuum (1-7) rather than actual time. I do so, because it makes certain my time units are the same as my value units. The importance of this will be clear in a minute.

So, if I estimate how much time I spend on each of these tasks with one being very little and seven being a lot, I can then compare time and value. The easiest way I have found to do that is to create a ratio of Value divided by Time. Having Value and Time using the same units makes this comparison much easier. After evaluating the time usage, creating the ratio, and to make the chart more readable sorting from highest ratio to lowest, my new table might look like Figure 3.

 

Item

Average Value

Time

Ratio Value/Time

Visit with Supervisors

7

2

3.50

Update "to-do" list

6

3

2.00

Review and update calendar

5

3

1.67

Follow up on messages (phone/Email)

5

6

0.83

Get phone messages

3

5

0.60

Read EMAIL

3

7

0.43

Fill-out performance charts

2

7

0.29

Figure 3.

To complete the picture I now have to set some guidelines. Based upon experience of the work habits of me and my co-workers, I have decided that a Ratio value of less than .5 means that I am spending too much time on that task (the Value is less than half as much as the amount of Time spent). If the Ratio value is between .5 and 1.5 then I am probably spending the right amount of time on the task. Finally if the Ratio value is greater than 1.5 then I could probably stand to spend more time on the task without damaging my reputation for value added work. You may find in your area that these values need to be slightly different.

Looking at my table and using the above criteria, I see that I should probably spend more time visiting with supervisors, updating my "to-do" list (planning), and reviewing and updating my calendar (also planning related). I seem to be doing the right amount of phone-message follow-up and retrieval. Finally, I should probably find more efficient ways to get my EMAIL processed and fill out the performance charts. Perhaps by spending more time planning, I can find some better, more efficient ways to take care of these last two tasks.

One last thing about the list of daily tasks, your goal should be to make this list as short as possible. My example shows seven, but seven is actually quite a few, especially if most of them take around an hour to complete. So, once you discover which daily tasks you should be doing less of, try and find ways to cut them out altogether. The fewer daily, repetitive tasks you have to do, the more time you will have for the more interesting and unique things.

Now that we have done the analysis and decided what we can do more of and what we need to reduce is there a quicker way to do this? There certainly is. I have developed a Palm/WinCE application called Pocket Pareto that allows this type of analysis to be done quickly and easily, no matter where you happen to be--in the office, at home, in a meeting, or somewhere in-between.

The use of Pocket Pareto has been refined follows analysis tool given above. However, I have simplified some of the steps to make the process faster. All that is needed is to list your daily tasks, assign them a grade for both Value and Time, and hit the "Calculate" button. Pocket Pareto churns through the numbers and specifically tells you which you should do less often or not at all, which you are doing enough, and which you should do more often. A limited use version of Pocket Pareto can either be downloaded free or you can try it right from our web site (see below).

So, the final question is, what are you waiting for? Making certain you are using your time to your best advantage is essential. If you are struggling beneath masses of work to become a success, or are trying valiantly to remain one, the analysis tool I've demonstrated, whether you do it by hand or using Pocket Pareto, can be incredibly valuable.

Additionally, Pocket Pareto in its registered or unregistered form can make this analysis very easy and quick. The additional abilities offered by the registered version, will allow you to regularly take a snapshot of how well you are working, and also allow you to "play" with the results to see which changes will pay you the biggest dividends. Finally, if you are not a Palm/WinCE user, keep your eye on our site for a registered desktop version that will run from your internet browser.

Good Luck!

To download and register PocketPareto, please visit PalmGear.Com (http://www.palmgear.com). For more information on Agatsu Masa Gatsu Software, please visit our web site at http://amsoftw.tripod.com or email us at skooner@aol.com.

_______________________________

References (and further reading):

"Pareto Principle and Charts." U.S. Bureau of Reclamation: http://www.usbr.gov/Decision-Process/toolbox/paretopr.htm

Brassard, Michael, and Diane Ritter. The Memory Jogger II: A Pocket Guide of Tools for Continuous Improvement and Effective Planning. Methuen, Massechusetts: GOAL/QPC, 1994

Brassard, Michael. The Memory Jogger Plus+. Methuen, Massachusetts: GOAL/QPC, 1996

Koch, Richard. The 80/20 Principle: The Secret of Achieving More with Less. New York: Doubleday, 1998.