Pareto's Principle - The 80/20 Rule

In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country, observing that twenty percent of the people owned eighty percent of the wealth. In the late 1940s, Dr. Joseph M. Juran inaccurately attributed the 80/20 Rule to Pareto, calling it Pareto's Principle. Pareto's Principle or Pareto's Law as it is sometimes called, can be a very effective tool to help you manage effectively.

After Pareto's observation, many other scholars also observed the same phenomenon in their respective areas of expertise.

The 80/20 rule means that in anything few (20 percent) are vital and many (80 percent) are trivial. Juran, the quality management guru, identified that 20 percent of the defects cause 80 percent of the problems. Project managers know that 20 percent of the work consume 80 percent of your time & resources.

Pareto principle (80/20 rule) tells you to focus on the 20 percent that matters. As mentioned earlier, 20 percent is vital. Project managers need to identify that matters and focus on it. That vital 20 percent will produce 80 percent of your result.

Pareto's Principle, the 80/20 Rule, should serve as a daily reminder to focus 80 percent of your time and energy on the 20 percent of you work that is really important.