Pareto Principle – 80/20 rule


The Pareto principle (also known as the 80/20 rule, the law of the vital few, or the principle of factor sparsity)[1][2] states that, for many events, roughly 80% of the effects come from 20% of the causes.[3] Management consultant Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who noted the 80/20 connection while at the University of Lausanne in 1896, as published in his first paper, “Cours d’économie politique“. Essentially, Pareto showed that approximately 80% of the land in Italy was owned by 20% of the population.
It is an axiom of business management that “80% of sales come from 20% of clients”.[4] Richard Koch authored the book, The 80/20 Principle, which illustrated some practical applications of the Pareto principle in business management and life.[5]
Mathematically, the 80/20 rule is roughly followed by a power law distribution (also known as a Pareto distribution) for a particular set of parameters, and many natural phenomena have been shown empirically to exhibit such a distribution.[6]
The Pareto principle is only tangentially related to Pareto efficiency. Pareto developed both concepts in the context of the distribution of income and wealth among the population.


Sometimes the best discoveries are the simplest observations…
Whether you know it as the Pareto Principle or the 80/20 Rule, the definition of this famous business rule simply states that,
20% of your priorities will give you 80% of your production IF you spend your time, energy, money and personnel on the top 20% of your priorities”.
Pareto : A Quick Background
The Pareto Principle was created by Management consultant Joseph M. Juran who first suggested the principle in 1941 and named it after Italian economist Vilfredo Pareto. Back in 1906, Vilfredo Pareto observed that 80% of the land in Italy was owned by 20% of the population; Pareto went on to develop his ‘principle’ after discovering that 20% of the pea pods in his garden contained 80% of the peas.
Back in 2005 I met John C. Maxwell. John is a New York Times best-selling author of over 80 (excellent) books and a leadership coach to presidents, world leaders and Fortune 500 executives. He spoke to me about the Pareto principle and he gave me some advice I’ll never forget…
“If you make a list of the 10 most important things you need to do each day (prioritised in the right order), and then concentrate only on the top 2 items, you will likely receive 80% of everything you ever want to receive out of life.”. John C. Maxwell
The Pareto Principle can also be applied to other areas of life:-TIME: 20% of our time produces 80% of the results.
  • COUNSELING: 20% of the people take up 80% of our time.
  • PRODUCTS: 20% of the products bring in 80% of the profit.
  • READING: 20% of the book contains 80% of the content.
  • JOB: 20% of our work gives us 80% of our satisfaction.
  • SPEECH: 20% of the presentation produces 80% of the impact.
  • DONATIONS: 20% of the people will give 80% of the money.
  • LEADERSHIP: 20% of the people will make 80% of the decisions.
  • EMPLOYEES: 20% of a team usually produce 80% of the work



Author: Aligninlight

Curated Blog - Ascension Library - Arts & Science

Leave a Reply