Pareto Principle (80/20 rule)

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Description of Pareto Principle (80/20 rule). Explanation.

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Definition Pareto Principle (80/20 rule). Description.


The Pareto Principle (80/20 rule) states that for many phenomena 80% of consequences stem from 20% of the causes. The idea has rule-of-thumb application in many places.


Some of these applications include:

  • 20% of any advertising campaign produces 80% of the response.

  • 20% of the employees perform 80% of the work.

  • 20% of the clients are responsible for 80% of all revenues / profits.

The principle was suggested by management thinker and quality control pioneer Joseph M. Juran.

Juran described the Pareto principle as the principle of 'the vital few and the trivial many' (Quality Control Handbook, 1951). He named it after the Italian economist Vilfredo Pareto, who observed in 1897 that 80% of property in Italy was owned by 20% of the Italian population.


The principle can be viewed as recursive, Tipton Cole has observed that the Pareto Principle applies to the residue of its first application, yielding a "96-36" rule.


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Recent topics

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You should also apply the 80/20 rule to your email inbox.

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To organize their working process well, and to complete tasks effectively, managers use a big variety of resources including finances, social and t...
     
 
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Some may feel this is obvious, but my experience has shown that many managers and executives may not know what is actually in the 20%. This is not a g...
     
 
  Using the 80/20 Principle for Workforce Effectiveness
Can this principle be widely applied, and include a company workforce? In regard to performance and effectiveness of personnel, e.g. if the company's ...
     
 
  Meta Pareto Principle
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