Understanding the Pareto Principle (The 80/20 Rule)

[…] Yup, the old 80/20 rule. Also known as the Pareto principle, which states that for many events, 80% of the effects come from 20% of the causes. Just like in business, 80% of the sales persons comes from 20% of the clients. Well, in my portfolio, 80% of my growth will come from 20% of the assets. […]

[…] Lurkers: The lurker is a much-maligned creature. Even the name rings of someone stalking from the shadows. Forget the Paredo Princple/80-20 rule for a moment: if there were no lurkers, there’d be no audience! The lurker is an under-appreciated being (I suspect most so in environments without adequate metrics: imagine if newspapers couldn’t detect the number of subscribers and instead calculated readership based on the number of letters to the editor that they received). But in order to encourage people to continue providing information/content, sometimes the lurker has to leave the shadows. Lurkers should realize that there is value in simply thanking a poster if they find information/insight that is useful, even if the lurker doesn’t think he has something substantive to contribute. I see you lurkin'…with your lurkin' self […]

[…] Also offer special training for those who make the most valuable contributions to improving what you teach and/or who attract and lead the most groups.  Following the 80/20 Pareto Principle, your top 20 percent probably generate the most profits for you and for themselves.  I’m inclined to think it is actually your top five percent.  […]

[…] Pretend for a minute you are the top 20% delivering the 80%. If a large portion of your team has been laid off, without much credible reassurance from management, what are you going to do? […]

thank you for the explanation
it was great, extremely easy to understand. thank you again. :slight_smile:

@Marty, Cas, Eric: Thanks for the discussion!

Yes, blindly following the 80/20 principle could lead to some very unwise decisions. I think the goal is to realize that not everything is distributed evenly; if you’re having a problem with your software, focus on fixing the few issues that seem to affect the most people first. If you have 5 bugs, it might turn out that fixing the first one (20%) reduces most of the pain for people. But you should still fix the others :). In the end, it’s about getting the best bang for your buck (or hour of work).

@Andrew: Glad it helped!

[…] When we get out into the real world, we have to remember Pareto, the 80/20 principle, which tells us that reducing that last 20% of greenhouse gases is going to be 80% of the effort (others might suggest that 80% of the effort will be getting rid of the first 20%). So, when we project reduction rates out into the future we can’t assume a flat capability but a reduced capability - it gets harder to reduce the more we reduce.  What does this mean? Once again, we can’t delay getting started. […]

[…] 3. 20% of workers produce 80% of the results. […]

[…] Lastly, I’d like to quote this BetterExplained.com post on the same topic: … don’t think the Pareto Principle means only do 80% of the work needed. It may be true that 80% of a bridge is built in the first 20% of the time, but you still need the rest of the bridge in order for it to work. […]

I need to ask a question! Since the whole principle is based on maximising time and boosting efficiency, can it be used in the following circumstance - I need to buy bread as breakfast for a 100 people, but not all of them may want it because they can get better food elsewhere, or they may want to skip breakfast.

I still have to provide some bread in the end, but it would be unwise to buy a 100 pieces of bread because not everyone would want it. Would it be safe to take on the 20:80 ratio, and go on to conclude that for a 100 people, I only need 25 pieces of bread?

Just wondering if the principle can be applied to this situation as well, even though its more applicable to time management. Thanks!

I think you’d need 80 pieces of bread!
I recently went to a dinner where we all ordered the banquet. The meals were all delivered at the other end of the table from where I sat. I’m sure 20% of the guests ate 80% of the food and I went home hungry. I still paid 100% of my share though. That certainly didn’t add up for my belly!

I have 2 children and am greatly obsessed with their education. I think that Pareto principle could be greatly used in schools to compress the time needed to learn something useful.

Taking even an odd example: the alphabet. Its 20% of the letters that make 80% of words. Sure you still need the rest to use the language, but the point is that you can focus firstly on the 20% of most used letters (numbers, whatever) and have kids understand the use of it.

A revolutionary idea would be to have only 20% of education at school, with the rest get acquired at later stages, evenly distributed through the life.
Someone needs to find out what knowledge required for the most results.

I think this article is AWESOME! Very helpful in organizing your thoughts, adendas, and priorities for business and personal areas of life. Thanks!

@G-unit: You’re welcome, glad it helped!

hi kalid, this is a great article, easy to understand.really help me to know more about pareto principle.thanks :smiley:

Observation has shown that people see the principle in a rigid form. They do not interprete the principle in a flexable form, thus they cannot apply it to improve their environment and work attitude.

[…] states that generally, 80% of the effects is created by 20% of causes. It’s proven to be widely applicable, and is the reason why you should share your work and ideas with other people without fearing […]

Very well written. I think this is the best explanation of the Pareto principle you could find online.

I think in order to apply the principle in other areas of life (other than ones where it is already proven), we need a mechanism to properly analyze and measure that area.

We can’t to conclude which subset is approximately 80% and which is 20%, unless it as been observed methodically.

[…] use for estimation and prioritization purposes had been born out across a wide set of conditions (1 2 3 4). Applying the Pareto Principle to Risk Management yields the following […]

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