13 Examples Of The Pareto Principleposted by Anna Mar, May 30, 2013
In 1906, Italian economist Vilfredo Pareto noted that 80% of Italy's land was owned by 20% of the people.
He became somewhat obsessed with this ratio, seeing it in everything. For example, he observed that 80% of the peas in his garden came from 20% of his pea plants.
The 80:20 ratio of cause-to-effect became known as the Pareto Principle.
The pareto principle has become a popular business maxim. It has been used to describe everything from economics to projects.
Common business examples of the pareto principle include:
- 80% of value is achieved with the first 20% of effort
Project teams commonly report that a task is almost completed after a short time. A long time may pass after that before they report any further progress.
- 80% of project politics come from 20% of your stakeholders
Political struggles often originate with a few of your stakeholders.
- 80% of problems originate with 20% of projects
Some projects are far more problematic than others.
- 80% of work is completed by 20% of your team
The observation that there is often a wide performance gap between your top performers and the rest of your team.
- 80% of software problems are caused by 20% of bugs
The observation that most problems are caused by a handful of serious bugs.
- 80% of customers only use 20% of software features
Most users don't use power features. In many cases, they find power features to be annoying (e.g. complex interfaces).
Sales & Marketing
- 80% of sales come from 20% of your clients
Many businesses are dependent on their largest accounts.
- 80% of sales come from 20% of your products
Product diversification may have limited impact on your business.
- 80% of sales come from 20% of your salespeople
Killer salespeople aren't easy to find.
- 80% of your complaints come from 20% of your customers
This is a commonly cited customer service rule of thumb.
- 80% of wealth is owned by 20% of people
Pareto's 1906 observation that 80% of Italy's wealth (land) was controlled by 20% of people has held up extremely well. Today, 20% of the world's population controls 82.7% of wealth.
80 percent of success is showing upThe idea that much of success is jumping through the hoops. It has a grain of truth to it. If you consider that "showing up" is 20% of effort — it's an example of the pareto principle.
~ Woody Allen
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