Pareto’s Principle. How effective?

Pareto’s principle states that, for many phenomena, 20% of input is responsible for 80% of the results obtained. It is also known as 80–20 rule. Italian economist Wilfred Pareto created a mathematical formula in 1906 to describe the unequal distribution of wealth in his country. He observed that twenty percent of the people owned eighty percent of the wealth. Dr. Joseph M. Juran called the 80/20 Rule to Pareto, calling it Pareto’s Principle. Pareto’s Principle or Pareto’s Law as it is sometimes referred can be an effective tool to help you manage effectively. It is a common rule of thumb in business, for example “80% of your sales come from 20% of your clients.” In business 20 percent of your staff will cause 80 percent of your problems, but another 20 percent of your staff will provide 80 percent of your production. It reminds you to focus on the 20 percent that matters. Of the things you do during your day, the only 20 percent really matters. Those 20 percent produce 80 percent of your results.
Pareto’s principle is also applicable in science, math, software, sports, health etc.


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