Has the Pareto principle (80:20 Rule) stopped working today?
Vilfredo Pareto while being at the University of Lausanne in 1896 suggested a principle that became an axiom of business management that “80% of sales come from 20% of clients”. Pareto stated this from a fact that 80% of the land in Italy was owned by 20% people.
Now taking the principal to business that “80% of sales come from 20% of clients” which made sense until a few years ago when few of the clients gave most of the revenue to companies. But in today’s world where every business is turning into mass scaled global business with thousands of clients contributing small amounts to make the billion dollars in revenue, it starts to feel that we might need a new principal. That principal already has been established as a subscription business of today’s world. It’s amazing how you don’t have to own or pay upfront for anything at all.
Be it music (Saavn or apple), video ( Netflix or Amazon prime), audiobooks, furniture, lifestyle to food on demand. The era we live in is truly an exception as it gives so much comfort and ease of living and puts all human beings on the same platform. If Pareto would have been alive he would have been happy seeing all humans enjoying the equality of life today and his principle has evolved for something better.