Ideas and Solutions

Business Secret

The 80 - 20 Principle is still the best-kept business secret. Considering the importance of the 80 - 20 Principle, it keeps being very sensible. Even the 80 - 20 term itself caught on very slowly and without any visible landmarks. Given the partial use and consecutive spread, it still isn't utilized fully by those who understand the idea. It is extremely versatile. This principle can be successfully applied to absolutely any industry or any individual job. Why the 80 - 20 Principle works in business the 80 - 20 Principle applied to business has one key theme—to generate the most money with the least expenditure of assets and effort. The classical economists of the nineteenth and early twentieth century’s developed a theory of economic equilibrium and of the firm that has dominated thinking ever since. The theory states that under perfect competition firms do not make excess returns, and profitability is either zero or the ‘normal’ cost of capital, the latter usually being defined by a modest interest charge. The theory is internally consistent and has the sole flaw that it cannot be applied to real economic activity of any kind, and especially not to the operations of any individual firm.

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