Before you start your business plan, you need to think of a good idea and also come up with a business case for it. The most important step in creating this case is the Pareto principle. This principle is usually applied in the fields of economics and management to get more profits out of fewer efforts and resources. In today’s competitive business environment, it is necessary to have a strategic business case that includes how to generate revenue and profit through product development, market penetration, sales, and distribution. The project deliverable should be based on the Pareto principle, which is also used in management decision-making.
If you are a project manager and if you are interested in the way in which the Pareto principle works, then this article is for you. Let’s begin with a definition:
What is the Pareto principle?
The Pareto principle is a widely used business technique, which states that 80% of your results come from 20% of your efforts. That is, 80% of the value you generate comes from 20% of the activities you undertake. The Pareto principle can be applied to any area in which there are many possible activities or products. It can be used to help prioritize and focus on activities where there is an opportunity for improvement. The principle can help you to understand why some people are more successful than others, why some projects are more difficult or easy, why some products are better than others, and so on.
For example, in your personal life, if you want to lose weight, it’s not going to happen overnight. If you have a goal of losing weight, then it’s likely that you won’t lose all of the weight at once. Instead, you need to lose some weight in the beginning and then build up momentum over time until you reach your goal weight. Similarly, if someone wants to create a new business, they first need to define their product or service and then find out how much demand there is for it in the marketplace; this will form part of their business case.
How to apply the Pareto principle in creating a professional business case for project success?
In order to apply this principle successfully, you will need to break down your project into smaller parts so that you are able to focus on each part individually as opposed to looking at the whole project as one whole thing. This will enable you to identify what specific steps could be taken within each section so that they can all be improved upon individually. Below I am going to list some steps to making a professional business case with the help of the Pareto principle.
- Identify the most important problem or issue in your business. This problem or issue should be one that is so critical that it affects the success of your business and is not easily resolved by another person or group of people.
- Based on the information you have gathered from your customer feedback and other sources of information about your business, identify the 20% of problems or issues that are most important.
- Create a plan for how you will address each of these 20% issues to solve them and create a timeline for how long it will take to resolve each problem so that you can measure progress over time.
- Based on the information you have gathered from your customer feedback and other sources of information about your business, identify the 80% of problems or issues that are less important.
- Take action on these problems by identifying specific strategies that will help you address each problem more effectively and efficiently than you currently do, and create a timeline for how long it will take before this new strategy is fully implemented so that you can measure progress over time.
When creating a business case, it is important that all the related members agree on critical facts and the causes. The Pareto principle is one of the most effective methods that can be applied in creating a professional business case. Framing a statement before preparing the project descriptive, business model or approach makes it easier to see any conflicting priorities and suggest strategies for resolving them. So it is very crucial to apply the Pareto principle in creating a professional business case while making a project successful.