The Pareto’s Principle: The 80/20 Rule
The Pareto Principle stands for the fact that 20% of the total units driving results often account for 80% of them (Reh). The original idea generated from trying to illustrate global wealth distribution. This is, “20 percent of the people owned 80 percent of the wealth” (Reh). Curiously, it was later found that this rule is often present in multiple other cases, such as “20 percent of the defects are causing 80 percent of the problems”, “20 percent of your stock takes 80 percent of your warehouse space”, “80 percent of your sales will come form 20 percent of you sales staff” (Reh), etc. The possibilities are endless. However, when
referring to the Pareto Principle, it is important to understand that it is not set on stone. Rather, it should be used as a suggestion. As Kalid Azad puts it, it is only “a rough guide about typical distribution” (2007). The benefits that are generated from the Pareto’s principle are based on the idea that we should aim to identify the strong “20 percent” that is driving the “80 percent” of the results — and focusing on them — in order to achieve a higher optimization of your resources.
Kalid Azad. Understanding the Pareto Principle (The 80/20 Rule). BetterExplained. 2007. Retrieved June 22, 2015 from http://betterexplained.com/articles/understanding-the-pareto-principle-the-8020-rule/
Reh, F (n.d.). Pareto’s Principle — The 80–20 Rule. About Money. Retrieved June 22, 2015 from http://management.about.com/cs/generalmanagement/a/Pareto081202.htm