Internet Business changing the 80/20 model

THE BUSINESS SHRINK has a very interesting insight about how the Internet Business is changing the 80/20 rule:

In every walk of life you can find examples of the 80/20 rule. You can get very simplistic and also very complex with the examples.
Some quick examples that are spoken of repeatedly in college textbooks are things like:

20% of customers produce 80% of the profits
20% of employees produce 80% of the real results
20% of the input creates 80% of the result
20% of a sales force produces 80% of the sales

You can also get more creative and look at these rules in the life as a blogger, digger or every day events.

80% of website visitors view only 20% of the web pages
80% of Digg Front-page items are by 20% of the Digg Users
20% of program features in a program like Word cause 80% of the use
20% of blog posts will create 80% of the traffic
20% of car repairs will cost 80% of your money

A well respected MIT professor named Noam Chomsky talks about the 80/20 rule in this video on YouTube here. Chomsky talks about how big business tries to figure out who the most profitable 20% of customers are and attempt to eliminate the rest of the 80% of customers to reduce costs.

It’s hard to argue with the facts of the 80/20 rule that were discovered back in 1906. The economist that broke this discovery lived in Italy and realized that 80% of the land in his homeland was owned by 20% of the actual population in Italy. His name was Vilfredo Federico Damaso Pareto and the 80/20 rule has been labeled as “Pareto’s Principle.” Pareto expanded his theory and applied it to many other things in life. Another interesting occurrence that Pareto found was the application of the 80/20 rule to gardening with peas. Pareto found that 80% of the peas were created from 20% of the pods.

READ THE FULL Article here: The Business SHRINK

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Publicat la data de October 8th, 2007

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