Make the right decisions – Pareto can help!
When you’re about to make a big decision or change in your business, it’s worthwhile giving it some extra thought. A Pareto Analysis is essentially a tool that you can use to analyse which potential changes to your business will result in the greatest benefits. Vilfredo Pareto was an Italian economist who noted that approximately 80% of a society’s wealth was owned by only 20% of the population. Otherwise known as the 80:20 rule, the Pareto Effect also notes that 20% of the work typically generates 80% of the benefit.
How can you make it work for you?
Step 1: Create a list of the changes you could make to the way you do your work.
Step 2: Score the changes. The scoring method you use will depend on the sort of problem you are facing. If, for example, you are trying to improve profitability, you would score options on the basis of how much profit each option would generate. If you were trying to improve customer satisfaction, you might score on the number of complaints eliminated by each change.
The first change to tackle is the one with the highest score, as it will give you the biggest benefit if you implement it.
For more information about problem solving and decision making, come along to TPP’s Organisations and Management course with tutor, Kate Campbell, starting 24 July 2017.