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The Pareto principle suggests that 80% of results come from 20% of effort/resources. It is not a hard rule, but a general assumption used in many fields. It can be used to make decisions about time management and improve productivity. It was named after economist Vilfredo Pareto and developed by Joseph M. Juran.
The Pareto principle is a concept often used in economics and business to improve productivity and make better decisions. The basic idea is that approximately 80% of any result is based on about 20% of the work, effort or resources used to create it. This is used as a general rule of thumb and is not expected to match reality exactly. An example would be the idea that 20% of an individual’s work accounts for about 80% of their productivity during a given day. The Pareto principle is used in a wide variety of contexts, from business management to predicting economic outcomes.
The idea for the principle came from a famous economist born in 1800, called Vilfredo Pareto. He famously remarked that about 20% of the people in Italy owned about 80% of the land. This fact helped a man named Joseph M. Juran propose the current principle. He didn’t call it “the Pareto principle”, but that name developed a certain popularity and eventually became prevalent. Juran considered the principle primarily a management strategy and a universal concept that could be applied to many fields.
Some experts emphasize that the Pareto principle is not a hard and fast rule. It is considered a more reliable assumption and in many situations it does not necessarily apply exactly. For example, a person might assume that 20% of their company’s products are likely to produce 80% of their profit, and things will likely work out that way, but any company might see results skewed in an entirely different way, such as 90% of 20 % or 40% of 50%. It is also not important that the two numbers add up to 100%.
People often use the Pareto principle to make important decisions about how to use their time. The idea is that if a person can focus most of their time on the tasks that create 80% of their results, they will have a much more successful and productive outcome. An example would be a business manager choosing to give the vast majority of the company’s bonus to the 20% of employees who make the greatest contribution to success. Many business managers choose to apply the Pareto principle as a way to improve the efficiency of a business, but if applied incorrectly, negative outcomes are often a big possibility.
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