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What is the Pareto Principle?

What’s that?  The Pareto Principle is also known as the 80/20 Rule.  We’ve all heard of this rule and it is in practice in most aspects of our lives.  Simply stated, the principle submits that 80% of effects come from 20% of causes.   Additionally, the Pareto Principle is referred to as the “law of the vital few” and the “principle of factor sparsity”. Italian economist, Vilfredo Pareto, first wrote about this phenomenon in 1906.  Pareto developed a mathematical formula to document his findings that 20% of the population owned 80% of the land.  Pareto was also able to establish that 80% of the peas in his garden came from 20% of the plants. The principle was actually coined the “Pareto Principle” by Quality Management guru, Dr. Joseph Juran.  His industrial studies in the 1930s and 1940s pointed to what he referred to as “the vital few and trivial many”.  This principle can be applied to most any subject, from the science of management to life itself. Common Examples of the Pareto Principle:
  • 80% of employee problems are created by 20% of employees
  • 80% of your sales come from 20% of your customers
  • 80% of results come from 20% of input
  • 80% of employee productivity comes from 20% of the employees
You get the message, right? Bottom line:  Focus your effort on the 20% that is important instead of the 80% that doesn’t add much value.
“Are we doing things right or are we doing the right things?” – Judy Bell
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Judy W Bell

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