80/20: The Pareto Principle and Its Application In Consulting (2024)

Last Updated on February 19, 2024

The 80/20 Principle, also known as the Pareto Principle, states that 80% of results come from 20% of the effort. This principle, first identified by Italian economist Vilfredo Pareto, can be applied in a variety of ways to improve efficiency and increase productivity.

In consulting firms, the 80/20 principle can be a valuable tool for optimizing operations and maximizing results.

This principle can be applied in many areas of business and has been particularly effective in the consulting industry. Firms such as McKinsey, BCG, and Bain have embraced the 80/20 principle and have used it to drive success and improve efficiency.

In this article, I explore the various ways in which the 80/20 principle can be applied in the consulting industry, including time management, client relationships, team management, and case interviews for applicants.

Time management

In the fast-paced and demanding world of consulting, efficient time management is critical. By applying the 80/20 principle, consultants can prioritize their efforts and focus on the most critical 20% of tasks that will deliver 80% of the results.

A typical consulting project lasts between 8 and 12 weeks, sometimes even less than that. Within that timeframe, you have no time to look into every potential lever to pull but should focus your efforts only on the most important analyses and initiatives that will move the needle for your client the most, otherwise, you are “boiling the ocean” as consultants call it.

The phrase “boiling the ocean” is often used in a business or analytical context to describe the tendency to attempt to solve too many problems at once or tackle an overwhelming amount of data and information. This approach often leads to a lack of focus and inefficiencies, as it is difficult to effectively analyze and make meaningful conclusions from such a large amount of information.

In essence, “boiling the ocean” refers to trying to tackle an enormous problem that is simply too big to solve practically and efficiently or solving many smaller problems all at once. Instead of taking a systematic and focused approach, the tendency is to dive headfirst into the data, attempting to find the answers to every question and solve every problem. This can lead to an inability to identify the most important factors and a lack of meaningful conclusions.

In the world of top-tier consulting, it is crucial to take a more focused and strategic approach. By prioritizing the most important issues and focusing on the key factors that will have the greatest impact, consultants can make more informed decisions and avoid the pitfalls of unfocused analysis. This approach can lead to more effective and efficient results, allowing the analyst to effectively solve the most pressing problems and achieve the desired outcomes for their clients, while at the same time improving their work-life balance.

Client relationships

Strong client relationships are essential in the consulting industry. By applying the 80/20 principle, consulting firms such as BCG can prioritize their efforts and focus on the 20% of clients that will generate 80% of their business. This is also the reason why the top consulting firms only consult larger organizations that can afford their high fees and always aim for repeat projects with existing clients. It is always easier to build on an existing business relationship than to create a new one.

It is crucial for a firm’s growth to successfully apply this principle by identifying its most valuable clients and dedicating resources to cultivating these relationships. This allows consulting firms to deepen their relationships with their clients and deliver better and more impactful results.

Team management

Effective team management is also critical in the consulting industry. By applying the 80/20 principle, partners can focus on developing their top consulting staff and ensure that they have a strong pool of talent to draw from. All top-tier consulting firms such as Bain embrace this principle by focusing on developing their top talent and recognizing and rewarding employees who perform at a high level. This helps firms to maintain their most important asset, their employees.

The meritocratic approach to people management can also be seen in what is known as up-or-out.

Additionally, 80/20 also is used to divide and delegate tasks on a project. For instance, firms such as McKinsey encourage more junior consultants to focus on data analysis and number crunching while senior leadership focuses on the delivery of recommendations and client management. This allows firms to optimize their resources (and use them where they are most effective) and achieve better results.

Case interviews

In the high-pressure scenario of a case interview, where candidates are tasked with dissecting a complex business issue to offer strategic recommendations, applying this rule can significantly streamline their approach and enhance the effectiveness of their solutions.

You can apply the Pareto Principle across the case: structuring and deconstructing the problem, brainstorming for impactful solutions, interpreting charts for insights, and applying quick math tricks for efficient analysis.

This multifaceted approach enables candidates to zero in on the most influential aspects of the case at hand and move through the case quickly.

Structuring problems and prioritizing

First, candidates should focus on breaking down the problem into smaller, manageable segments, subsequently identifying which segments (the critical 20%) are likely to yield the most significant outcomes. This process not only clarifies the path forward but also ensures that efforts are concentrated where they can make the most substantial impact.

Case Interview Framework Guide

Why Memorized Frameworks Don’t Work

Brainstorming for impact

Brainstorming plays a pivotal role in uncovering innovative and high-impact solutions. By applying the 80/20 rule, candidates can filter through their ideas to prioritize those that have the potential to address the core issues most effectively. This selective brainstorming encourages efficiency and creativity within the constrained timeframe of the interview.

Brainstorming Tricks for Consulting Case Interviews

Chart interpretation for insights

Charts and data visualizations are often central to case interviews, providing a wealth of information at a glance. Applying the Pareto Principle here means identifying the 20% of data that tells 80% of the story. This approach helps uncover hidden insights and trends that could be key to understanding and solving the business problem.

Chart and Data Interpretation in Case Interviews

Quick math tricks for efficient calculation

Finally, the ability to perform quick, accurate calculations is invaluable in a case interview setting. Leveraging math shortcuts and simplified approaches allows candidates to arrive at solutions more swiftly, demonstrating their proficiency in handling numerical data and their capacity to think on their feet.

Approaching Math Problems in Case Interviews

By weaving the 80/20 rule throughout these stages, candidates can present a well-rounded, strategic solution in their case interviews. This principle, particularly revered by top consulting firms for its emphasis on efficiency and effectiveness, guides applicants in prioritizing their efforts towards developing solutions that are not only viable but also impactful – in the shortest amount of time.

Employing the Pareto Principle effectively mirrors the real-world expectations placed on consultants to deliver results-driven solutions under pressure, thereby showcasing the applicant’s potential to thrive in a demanding consulting environment.

Summing up

In conclusion, the 80/20 principle is a powerful tool that can be applied in many areas of the consulting industry. From time management to client relationships, team management, and case interviews, the 80/20 principle can help consultants and applicants work more efficiently, achieve better results, and drive success.

Firms like McKinsey, BCG, and Bain have embraced the 80/20 principle and have used it to achieve great success. By understanding and applying this principle, individuals and firms in the consulting industry can improve their efficiency, productivity, and results.

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