The 80/20 Rule and How It Can Help Your Business
“All improvement happens project by project and in no other way.” — Joseph Juran
More commonly known as the 80/20 rule, the Pareto Principle has widespread applications across many different fields such as mathematics, economics, health, and business. So what exactly is it and how can it benefit your organization?
Several variations of the 80/20 rule apply to multiple business areas ranging from project management and quality control to time management and leadership. The 80/20 rule states that 20% of our efforts affect 80% of the results.
In 1906, Italian economist Vilfredo Pareto observed that 80% of land in Italy was owned by just 20% of the population. In 1937, American engineer Dr. Joseph Juran, recognized for his research in quality management, identified this ratio in other areas of interest and named it the Pareto Principle. Seeing universal applications, he first described it as “the vital few and trivial many” but later changed it to “the vital few and the useful many” so as not to exclude opportunities for improvement within the “many” — an important distinction acknowledging that no improvement in any aspect should ever be considered trivial.
