80% of Results from 20% of Actions, Firms, Products, Services

Only 20 percent of actions lead to 80 percent of results, in business, life or telecom.

It usually is surprising how often a Pareto distribution occurs in business or nature. Most underlying trends in any business follow a Pareto distribution, commonly known as the “80/20” rule, where 80 percent of results flow from some 20 percent of the instances. That applies for consumer manufacturer warranty claims, for example.

In the telecom and most other businesses, as much as 80 percent of the profit is generated by serving 20 percent of the customers, while 80 percent of the revenue is generated by 20 percent of the products.

Apparently equity market returns also show a Pareto distribution.

source: Longboard Funds

Most workers make tradeoffs between housing costs and commuting time and hassle that show a Pareto distribution.

In  the healthcare domain, the sickest 20 percent generate 79 percent of health care costs.

In the domain of athletic training roughly 20 percent of the exercises and habits have 80 percent of the impact

It is likely that similar Pareto distributions exist for all forms of internet access and communications infrastructure, where 80 percent of the value comes from 20 percent of the decisions or instances.

As a practical matter, Pareto means I have to spend more of my research time on the relatively few connectivity firms that generate 80 percent of the revenue in any particular market, even if much of my work has included managed services providers, distribution partners and others that are part of the 80 percent of firms that generate 20 percent of the revenue.