Nobody wants to waste energy. We are striving with all our might to improve the efficiency - our own, subordinates, enterprises, technology in the end. And no matter how much we strive for it. One of the simplest and most understandable methods for evaluating efficiency is the construction of the Pareto diagram.
The history of the "magic" proportion
At the end of the XIX century, one Vilfredo Pareto, engaged in the study of the economy, decided to investigate the distribution of material wealth among the British. The result was stunning: it turned out that 20% of the population of England own 80% of the country's wealth. Deeper research has shown that the principle "the minority belongs to the larger" extends to the remaining 20% of the wealth: 5% owns 50% of the capital, and 10% - 65% of all material wealth. The amazed scientist began to test his theory on the inhabitants of other European countries, and came to the same results - the construction of the Pareto diagram gave the same frequency distribution.
However, he could not generalize the obtained data and formulate a certain regularity. Therefore, the theory remained unnoticed. We again turned to it in 1949. George K. Zipf, a professor at Harvard, discovered the regularity that about 80% of the result is only 20% of the effort. At the same time, the American Joseph Juran, dealing with the issue of production of defective products, again received a proportion of 80/20. Having published the results of his research, Juran formulated the law of "little that has significance." Thus, the Pareto law was reopened and received a clear formulation.
Nevertheless, in the United States, industrialists were not yet ready to accept the Pareto rule, and Yuran left with lectures in Japan. There the heads of enterprises agreed with the findings of the scientist, and the notion "Pareto chart in quality management" appeared. It should be noted that prior to the 70s of the 20th century this method was used only in Japan. And only after nearly 20 years, when products produced in Japan, became a serious competitive threat to American goods, Yurana was invited to the US to get acquainted with the theory of Pareto.
Pareto law and life
Having accepted the statement that 20% of efforts bring an 80% result, a person can completely rethink what is happening. Most of us think that the more body movements (efforts) we make, the more success we will achieve in life. We believe that all our acquaintances are equally important (and necessary) to us, that all clients bring equal income, and, accordingly, it is necessary to spend equal efforts on contacts with all.
However, after thinking and studying the data of the Pareto diagram, we come to different conclusions. We redistribute our efforts and literally become freer and happier. Work does not seem so exhausting, and communication with friends is painful. Studying the cause-effect relationships of our actions, we come to the conclusion that a very small part of the activity gave a really meaningful result. And everything else is superfluous and unnecessary.
Pareto's Law in Marketing
In the early 60-ies of the twentieth century, IBM employees found that computers spend a maximum of time on processing a minimum number of transactions. The identification of these time-consuming tasks allowed to significantly increase the speed of the technique. And this means that the Pareto chart, the example of which was taken as a basis by the technicians from IBM, allowed to bypass competitors and increase sales.
Generally, when managers accept the fact that the maximum profit is brought by a small number of customers, the enterprise starts to progress significantly - both in terms of sales growth and from the position of increasing the loyalty of personnel (after all the recognition of the fact that not every client is the same releases a lot of energy of managers ). In addition, the study of the Pareto chart allows you to focus your efforts on those products and industries that will maximize revenue growth and allow the company to win in all competitive wars.
Accept and accept
As we have already noted, the most difficult thing is to accept for truth the fact that 80% of our actions do not bring the expected result. Managers of enterprises often require their managers to have the same attitude to all customers, and in fact the analysis of the Pareto chart will give the usual result for sales: the bulk of clients provide active activity of managers, but not the income of the enterprise.
Therefore, they say that leaders need to reconcile themselves with the idea of "free time" of subordinates. It is necessary to unify the work with the majority of clients, develop general principles for communicating with them and servicing their orders. This will allow you to focus on large customers and significantly increase sales.
Analysis of the quality of production
In 1979, the Japanese Union of Engineers and Scientists supplemented the list of recommended methods of quality control of enterprise products by analyzing the Pareto chart. Practices have developed two types of analysis: on the results of activities and on the causes of problems.
The first is used when the task is to identify the main problems that lead to undesirable results. The second is designed to find the main reason for the unsatisfactory performance of the company. In both cases, it is necessary to construct a Pareto diagram for a clear understanding of the essence of the processes occurring at the enterprise and the efficient allocation of resources.
Actually, for analysis it is required a little: to clearly formulate the problem, to maximally reveal all the factors of influence and, having collected certain statistical material, to name the root causes of the problem that has arisen. For the sake of clarity, all statistics are displayed as a diagram. Further, it is necessary to carry out measures to eliminate (change) negative elements of activity.
From theory to practice
It's easy to say - apply the Pareto technique. But what steps should be taken, where to start, in order to really effectively analyze the situation? How to build a Pareto chart ? Here you can not do without experience and intuition, but the beginner should not be afraid to analyze. At the first stage it is necessary to understand which questions (problems, causes) to investigate; How to classify them and what information to collect.
It is at this stage that inexperienced analysts develop fears: did I take everything into account, and how much information would be collected, etc. But applying Pareto's law to its activities, we recall: 80% of the activity will give only 20% of the result. Therefore, do not be afraid, and at first should be as detailed as possible to record all the causes of what is happening. Over time, you will learn to intuitively identify really significant sources of problems.
Having decided on the collection of information, it is necessary to develop statistical data cards. Usually these are questionnaires or tables, in which data recorded at certain time intervals is recorded. These data are then generalized and plotted on a plane in the form of dots. To accelerate, it is still necessary, at the stage of processing the information obtained, to consolidate (combine) the most similar indicators.
Transfer information to paper
To construct a Pareto chart, it is necessary to prepare a table in which to rank the ranked research results. In this case, take into account the frequency of the emerging feature. Data in the table should be entered in descending order (again, in order to speed up the process).
Preparing the plane for plotting involves two vertical scales of measurement and one horizontal scale. The left vertical axis determines the number of manifestations of one or another factor, and the right axis characterizes the percentage. On the horizontal axis, in order of decreasing frequencies, all factors are applied. In the end, you should get a bar chart.
Then you should draw a cumulative curve - connect the points above the bars that determine the percentage value of the factor (oriented to the right axis), the curve. The Pareto chart is built! Next, you should analyze the result obtained, identify the "little that matters" and optimize the activities of the enterprise.
- It is necessary to increase the indicators only by several parameters; Do not clutch at all at once.
- First of all, it is necessary to deal with those resources (causes) that have the greatest impact on the company's productivity.
- Throughout the process of building a chart, you should do the analysis, trying to discard all the small. Even without experience, the analyst intuitively understands what is really important and what is not.
The Pareto law can be used everywhere
Modern theories argue that there is a universal methodology for estimating "everything and everything" - the Pareto diagram. An example in an enterprise of any industry will not surprise anyone. Modern specialists have moved the proportion of 80/20 in all areas of our lives.
In self-realization, for example, it is recommended to do things that are given simply and easily. It is these minimum efforts that can give the maximum result. Time management suggests analyzing your employment for the day and identifying "useless" actions. You will be really surprised to discover a lot of free time.
It is even more interesting to apply the Pareto law in private life. Having looked through the list of contacts in the phone, you can easily identify those 20% of the necessary and interesting people that help you develop. Psychologists recommend getting rid of the remaining 80% of links. And what can we say about the things that surround us in everyday life! The opinion that a thing that is not in demand for a year, will never be useful - it's not new.
Use the Pareto law - and life will become more interesting and colorful!