The following article outlines two interesting mental models - the Pareto Principle and the 1% Rule of Internet Culture. Both of these have connections with each other, and are of interest to anyone in Marketing & Advertising.
The Pareto Principle
This model (often called the 80/20 rule) is designed to help you realise that the majority of results come from a minority of inputs. In other words, most things in life are not distributed evenly.
It's called the 80/20 for that specific reason - 80% of the effects of something come from 20% of the inputs or causes.
For a business manager or entrepreneur, this principle can appear in a range of forms. Examples include:
- 80% of a companies profits come from 20% of its customers
- 80% of complaints come from 20% of the customers
- 80% of crashes come from 20% of bugs
- 80% of results are contributed by 20% of workers
Adapting to this knowledge involves uncovering this 20% and focusing on it. For example, if 20% or workers contribute 80% of results, focus on rewarding these employees. Or if 20% of customers contribute 80% of revenue, focus on satisfying their needs.