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Originally, the Pareto Principle referred to the observation that 80% of Italy’s wealth belonged to only 20% of the population. More generally, the Pareto Principle is the observation (not law) that most things in life are not distributed evenly. It can mean all of the following things:
20% of the input creates 80% of the result 20% of the workers produce 80% of the result 20% of the customers create 80% of the revenue 20% of the bugs cause 80% of the crashes 20% of the features cause 80% of the usage And on and on…
But be careful when using this idea! First, there’s a common misconception that the numbers 20 and 80 must add to 100 — they don’t! 20% of the workers could create 10% of the result. Or 50%. Or 80%. Or 99%, or even 100%. Think about it — in a group of 100 workers, 20 could do all the work while the other 80 goof off. In that case, 20% of the workers did 100% of the work. Remember that the 80/20 rule is a rough guide about typical distributions. Also recognize that the numbers don’t have to be ―20%‖ and ―80%‖ exactly. The key point is that most things in life (effort, reward, output) are not distributed evenly – some contribute more than others.
Life Isn’t Fair
What does it mean when we say ―things aren’t distributed evenly‖? The key point is that each unit of work (or time) doesn’t contribute the same amount. In a perfect world, every employee would contribute the same amount, every bug would be equally important, every feature would be equally loved by users. Planning would be so easy. But that isn’t always the case:
Of course. That cool thing/idea/person will result in majority of the impact of the group (the green line). We’d like life to be like the red line. 90/10. Knowing this. where every piece contributes equally. Out of 5 things. instead of the 80% that doesn’t add much. The examples go on. if… 20% of workers contribute 80% of results: Focus on rewarding these employees. perhaps 1 will be ―cool‖. but that doesn’t always happen. or 90/20 (remember. So Why Is This Useful? The Pareto Principle helps you realize that the majority of results come from a minority of inputs. The point is to realize that you can often focus your effort on the 20% that makes a difference. the numbers don’t have to add to 100!). It could be 80/20. where each unit of ―input‖ (effort. 20% of customers contribute 80% of revenue: Focus on satisfying these customers. . time. The key point is that most things are not 1/1. 20% of bugs contribute 80% of crashes: Focus on fixing these bugs first.The 80/20 rule observes that most things have an unequal distribution. labor) contributes exactly the same amount of output. this ratio can change.
I want to give you a real example. he could present: A single car at top quality (Level 5) A reasonably detailed car (Level 3) and a colorized wireframe (Level 2) 5 cars at a wireframe level (5 Level 1s) ―But #5 is way better than #1!!!‖ someone will inevitably shout. Please Everything is nice and rosy in the abstract. background Now. or some other combination. Take a look at this awesome video of an artist drawing a car in Microsoft Paint. Let’s say your customer doesn’t know whether they want a car. Given 5 minutes of time. It’s pretty phenomenal what can be accomplished with such a basic tool: Now let’s deconstruct this video. so each minute is about 20% of the way to completion (of course the video is sped up. This is related to the law of diminishing returns: each additional hour of effort. windshield 4:04 (Level 4) – Advanced details: shading. or a boat. let alone the color. each extra worker is adding less ―oomph‖ to the final result. a truck.In economics terms. The question is whether #5 is better than five #1s. there is diminishing marginal benefit. It’s about 5 minutes long. you are spending lots of time on the minor details. Spending the time to create a Level 5 drawing wouldn’t make sense — show . Take a look at how the car evolved over time: 1:06 (Level 1) – Wireframe 2:00 (Level 2) – Basic coloring 3:05 (Level 3) – Beginning details: rims. By the end. reflections 5:05 (Level 5) – Finishing touches: headlights. let’s say the artist was creating potential designs for a client. The point isn’t that #5 is better than #1 — it clearly is. A Fun. but we are only interested in relative times anyway). Non-Math Example.
Make decisions on allocating time. while the contribution #1 makes is quite obvious. It may be true that 80% of the Mona Lisa was painted in the first 20% of the time. In this example. or better yet. body style. a blank drawing and #1 (the time from 0:00 to 1:06). See what activities generate the most results and give them your appropriate attention. You really have to look to see the differences on the car between #4 and #5. Lastly. In the planning stage. When you are seeking top quality. Concluding Thoughts This may not be the best strategy in every case. get a general direction. This isn’t to say the details are easy — they’re not — but each detail does not add as much to the picture as the broad strokes in the beginning. The rest is ―filling in details‖ like colors and shading. spend 10 minutes on 6 outlines for a paper / blog article and pick the best topic. The point is to put in the amount of effort needed to get the most bang for your buck — it’s usually in the first 20% (or 10%. in the sense of deciding the type of vehicle. The point of the Pareto principle is torecognize that most things in life are not distributed evenly. resources and effort based on this: Instead of 1 hour on a rough draft for an article you may write. not a law of nature. These techniques may or may not make sense – the point is to realize you have the option to focus on the important 20%. don’t think the Pareto Principle means only do 80% of the work needed. When you are trying to optimize your bang for the buck. The Pareto Principle is an observation. and then work out the details. after 1 minute (20% of the time) we have a great understanding of what the final outcome will be. or 30% — the exact amount can vary). Instead of investing 3 hours on a website.some concepts. spend 30 minutes and create 6 different template layouts. It may be true that 80% of a bridge is built in the first 20% of the time. focusing on the critical 20% is a time-saver. Most of the ―work‖ is done up front. but it wouldn’t be the masterpiece it is without all the details. Rather than spending 3 hours to read 3 articles in detail (which may not be relevant to you). spend 5 minutes glancing through 12 articles (1 hour) and then spend an hour each on the two best ones (2 hours). 105 Comments . but you still need the rest of the bridge in order for it to work. you need all 100%. it may be better to get 5 fast prototypes rather than 1 polished product. The difference between #4 and #5 is not as great as #1 and #2. and perspective.
wag. not memorization. 2007 @ 4:14 am 2. Get the Premium Version of this Article Professionally-formatted PDF & ePub/Mobi ebook Screencast video walking through the key highlights Original PowerPoint slides for all diagrams Permission to re-use the article in a professional environment (corporate training. Pingback by Team Kane Street » Blog Archive » links for 2007-11-28 — November 28.) Learn More 105 Comments » Trackbacks & Pingbacks 1. 2007 @ 6:55 am 3. Develop your math sense using insights. 2007 OTHER POSTS IN OBSERVATIONS BREVITY IS BEAUTIFUL ASTOUNDING EXAMPLES OF INNOVATION FROM JAPAN COMBINING SIMPLICITY AND COMPLEXITY RSS OR EMAIL SUBSCRIPTION | PRINT THIS POST BetterExplained: Get the eBook Like the site? Take it with you.MARCH 8. » Blog Archive » Louder than words. — February 25. Pingback by Zach’s Asset Allocation Strategy : Investor in the Wilderness — May . 2008 @ 6:56 am 4. Pingback by me. Pingback by Collected Notes on Success and Happiness | BetterExplained — November 21. etc.
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have you read Mandelbrot’s book ―The (Mis) Behavior of Markets?‖ His was the first treatment I’d encountered of Pareto’s work. . Pingback by 80 20 Pareto Principle Rule – Taking Internet Marketing to the Next Level — July 26. . 2007 @ 12:26 pm 2. It exist an outdated network designer rule that’s called ―The 80/20 rule‖. Kalid — November 13. 2007 @ 7:26 pm 3. Thanks for dropping by. 2007 @ 3:06 pm 6. Pingback by Mum’s The Word . Hi Christina. My ―Strategic Management of Technology and Innovation‖ class loved this interpretation of the ―Pareto Principle‖. I’ll have to add it to the reading list Kalid — December 1. Lovely page to explain the Pareto principle … and the videos to support the . It says that 80% of the network traffic should be internal and 20% should be external. there’s many examples out there which are more interesting than ―Worker A does 80% of his work in 20% of the time‖. your site is great! Regarding the Pareto principle. thanks for the comment! That sounds like an interesting book. 2011 @ 1:27 am Comments 1. I’m glad your class liked it! Yes. 2011 @ 6:35 am 57. Pingback by Vexed By Virility « Kaleidoscopic — July 19. Today it’s more like 20/80 ^^ Megamannen — June 6. and was very enlightening. Kalid. Or is it? | THE STRATEGIC LEARNER — May 27.. Hi Bernard. Bernard McDevitt — November 29. 2011 @ 12:28 am 58. 2007 @ 9:34 am 5. It was done with a video they could relate to.56. christina hendrix — November 12. Pingback by Make The Most Out of. 2011 @ 12:36 pm 59. 2007 @ 12:04 am 4.Today : Lifestyles365 — July 8.
Matilda — January 28. and I’m glad you enjoyed it. 80% of the behavior is dictated by 20% of our emotions. Have been using this concept. It merely outlines behavior especially under negative stress. In order to clarify focus for a topic/theme for the collage the questions asked require one to seperate behavior from emotions. Kalid — December 18. example: Person acts angry all the time. 2008 @ 12:10 pm 9. Thanks Amit! I like finding different explanations for things (vs. It does not add up to 100% of who this person is.understanding are excellent. The 20% piece is unveiled. When setting up for a collage. Am I applying it properly? Thanks…. I do collage assembly for stress management issues. They are on the defensive and always in hyperdrive…Seemily ―manic‖ or ―hyperactive‖ may even be called ADHD or ADD. They snap at any correction or observation no matter how well intended. 2007 @ 12:45 am 8. Amit Chauhan — December 17. using typical ―business‖ metrics like worker productivity). the question asked is…‖What does angry look like? The collage demonstrates the truth in the 20%…and the results yield that the person is acting angry ( the 80% piece)…because of their isolation. Hi Matilda. They are short tempered and easily angered. I’ll try to keep the posts coming.I enjoyed the article. In reality they are suffering from the 20% piece which is…ALIENATION and are hypervigilant in behavior…to protect their base. thanks for the comment! It’s hard to apply this rule to things that can’t be measured (like emotions). One argument in the morning could put you . Hope to see such pages on more topics. just didn’t know it had a name…and such structure. 2007 @ 11:57 pm 7. but the general principle may apply: a few events may determine the majority of our behavior. 20% of emotions effect 80% of behavior. Therefore 80% of their behavior is run by 20% of their emotions.
I find equilibrium in the simple things of life… That is how I apply the Pareto priciple.thank you for this sense of community…it ballances out a ton of having my ideas and opinion passed over.in a bad mood for the entire day. Car #4 looks pretty stale and cartoony. It does help. Matilda Matilda — January 31. thanks! Jeffrey Garrison — February 27. 2008 @ 7:37 pm 12. Your example is actually two levels deep. but for things that can’t be quantified (like emotions). or for how long some painful situations have lasted…because ―not all things are equal‖…it only takes one smile or one act of kindness or one happy memory to ballance out a ton of sadness…at least for me. 80% of the emotional impact comes from the last fifth. while car #5 is what I’d call awesome. no matter how bad some of my experiences have been. It’s interesting. Hope this helps. 2008 @ 1:11 pm 10. that’s an interesting way of looking at this idea which is usually limited to math/financial topics @Jeffrey: Glad you enjoyed it! Kalid — February 27. The general idea behind the Pareto principle is that ―not all things are equal‖ — some contribute more than others. While 80% of the physical difference comes in the first fifth.. at least. . Thank you Kalid for that explination. I have a much better understanding of the Pareto principle after reading this article. 80/20 is a general rule of thumb. @Matilda: You’re welcome. the concept that some things count more than others is probably the key insight. 2008 @ 7:57 pm 13. Kalid — January 28. The way I translate it in emotional measure is…. 2008 @ 6:11 pm 11.
Kalid — March 14. 2008 @ 12:23 pm . the data is not independent and is significantly influenced by the employment conditions and structure of the organisation. Thanks for the comment. it’s the final 20% that brings it to life. 2008 @ 12:40 am 17. etc. @Anonymous: You’re right. 2008 @ 7:10 pm 15. The 80/20 rule is a rough estimate about how much of an effect the ―critical‖ 20% has in situations where everything is not the same. Kalid — May 23. the rule is only valid where the data items are independent of each other. 2008 @ 5:48 am 16. I have been looking for but did not find a discusssion regarding the underlying principles of the 80/20 rule. Hi Alrenous. For example. high performers and low. I had not heard of the pareto principle prior to to doing a search on time management google i tried quite a few sites but they didn’t really explain the 80 20 concept to me. 20% of the population will earn 80% of the income but if they were employed by the same organisation would this still be the case? In this instance. glad you found it useful . machines in the same factory.Alrenous — March 14. I hadn’t thought about the other types of impact operating in reverse — from a psychological point of view.from a population point of view. @Deb: Thanks. that’s a really interesting way to look at it. for items which are uniformly distributed (everyone working the same job in the same company.) then the 80/20 rule may not apply. It’s more of an observation (not law) that many things in life are not uniform — there are hot spots and cold spots. Anonymous — May 23. In Australia our capital city (Canberra) is mostly made up of senior public service personnel and I would guess that the 80/20 rule would not apply here because of the reason stateed above. 2008 @ 6:23 pm 14. For example. ie. I work in real estate and found this site very helpful it has (I hope) headed me in the right direction Deb Tuccitto — March 28. where there is no interrelationship.
that’s nice. Thanks for your explanation. Or maybe they just didn’t have a nice set of percentages to work with – in any case. Truth is …all i wanted was to u/stand 80/20 princple which gets mentioned frequently at the office. Vishal — June 13. However. I spend 20 minutes of my time going over your theory along with the rest of your comments who frequent your site AND I ended up being 80% more aware of Pareto Principle. Okay. Kalid — June 13. Thanks to you and your simple anology of the 5 steps of ―creating‖ a car. In short… many thanks and God Bless Carmichael Singh — June 23. but is not all that useful unless . By the way i just thought of spending a few minutes of my time – kind of summary reading‖ on Pareto. We need to constantly keep analyzing which are the top performing stock and major contributors to my return. 2008 @ 7:49 am 19.18. I guess before that no one knew that there are less rich people than poor people. This is a very informative article. 2008 @ 9:16 pm 21. some guy discovers that 80% of the wealth is held by 20% of the population. yet ended up spending an hour. Hope to read more on this. 80% of my portfolio�s return is from my 20% of top stocks. it’s the best I’ve found after just discovering the socalled ―Pareto Principle‖. In many ways my actions and understanding can be equated to 80/20 principle. It has helped me in analyzing my portfolio. and many others. I really think everyone’s making a big deal out of nothing. 2008 @ 11:16 am 20. *which* 20% can change over time — nice observation! Thanks for the comment. But it doesn�t mean that those 20% of stocks which were/are yielding me 80% of profit will remain constant. Hi. I think this prove the theory. Principle? So. Thanks for this article. But as you say. many things in life have an 80/20 distribution. Thanks Vishal! Yes. the information interesting. I do research on equities.
there will be interesting relationships to be discovered. 80/20 is an observation and it’s usefulness as a management or planing tool is at the best questionable. fire them. Since this is the case and people have an easier time remembering things when they have a name to invoke. I would like to proclaim here and now that I have discovered that many things do NOT exhibit an 80/20 relationship and I call this the ―Marty Principle‖. If someone is goofing off all the time. in any system. In any case. If you think you can get away with (or even want to try) only giving 20% of your employees raises or providing support to only 20% of your customers. what if you stopped work on a building when it’s 20% complete (since you figure 80% of the traffic will only be using the Starbucks on the first floor)? You can’t use this principle to your advantage like this. didn’t mean to write a book. Cheers! Marty — December 31. 2008 @ 1:41 pm 22. later on. If you then notice that there’s an 80/20 relationship in there somewhere. The way I see it is: we human beings like to put things in neat little boxes of sameness – and that’s all that’s happened here. but not very useful. Usefulness? This principle isn’t something anyone should use for managing or deciding how many bugs should be fixed – what people should use is common sense. I agree with Marty. But now. If the last 20% of bugs aren’t critical and don’t cause any data loss – maybe the product can ship with the known issues. every time that relationship is discovered to be 80/20 someone’s bound to pipe up with ―Aha! It’s another example of the Pareto Principle!‖. You have to complete work and support your entire customer or employee base. Or. I wonder how many people would feel comfortable to fly with the airline which announced that it has fixed 20% of the . you probably shouldn’t be in business. Sorry. so what? Nice to know. Then. someone notices that something else has an 80/20 relationship and we decide this 80/20 thing must be a law of nature? Of course. You should consider adding it to Wikipedia (or at least helping to rewrite what they currently have).you’re trying to start a revolution or something. thanks again for your explanation.
Oh. I think the goal is to realize that not everything is distributed evenly. free meal after 8th visit. When you go to a store and they have those cards that state. but this is a great principle to help someone realize that nothing in life is 50%/50%. Eric Eric — March 16. I agree with you that people like things packaged and handed to them on a platter. 2009 @ 12:12 am 25. Eric: Thanks for the discussion! Yes. so they offer it to everyone. Cas — February 12. You may not use them. I understand what you are saying. etc. A lot of retailers reward their main customers all the time. I don’t think that he meant ignore the 80% percent. but you will be surprise how many of their loyal customers take advantage of those discounts. Marty. service. andrew — July 13. It is a poor excuse to use the 80/20 principle not to do things right.‖ After companies review their financial. thank you again. Cas. Thanks. Some companies do fire employees that do not make their bonus more than two/three consecutive times in a row. however. thank you for the explanation it was great. or free hair cut after 10th visit. a lot of companies are already just giving rewards to the employess that are performing more than others. etc… and reward them with cash for a a job well done. 2009 @ 3:58 pm 23. they set goals to be met by their sales. He was just stating. @Marty. that most people would focus on getting that 80% and forget about the 20% that was bringing in the main money. The stores know that they can’t just offer a discount to just the 20% that bring them 80% of their income. I believe he was mentioning to keep in mind of your 20% and work on adding some of your 80% to your 20%. blindly following the 80/20 principle could lead to some very unwise decisions. as for the 20% of the people that brings you income.. if . but it is usually the 20% that just take advantage of it. A lot of us know these as ―performace bonuses. Good luck for them to find willing passengers. I just came across this site and read your comment. parts.problems with their aircrafts because those 20% caused 80% of the crashlandings. 2009 @ 7:44 pm 24. extremely easy to understand.
2009 @ 10:17 am 27. evenly distributed through the life. A revolutionary idea would be to have only 20% of education at school. Its 20% of the letters that make 80% of words. Would it be safe to take on the 20:80 ratio.you’re having a problem with your software. That certainly didn’t add up for my belly! Judith — November 12. I’m sure 20% of the guests ate 80% of the food and I went home hungry. Thanks! Sludgie — September 12. but not all of them may want it because they can get better food elsewhere. it’s about getting the best bang for your buck (or hour of work). I need to ask a question! Since the whole principle is based on maximising time and boosting efficiency. @Andrew: Glad it helped! Kalid — July 13. whatever) and have kids understand the use of it. I still have to provide some bread in the end. it might turn out that fixing the first one (20%) reduces most of the pain for people. 2009 @ 12:30 am 26. I think you’d need 80 pieces of bread! I recently went to a dinner where we all ordered the banquet. or they may want to skip breakfast. I think that Pareto principle could be greatly used in schools to compress the time needed to learn something useful. 2009 @ 1:28 am 28. I still paid 100% of my share though. and go on to conclude that for a 100 people. with the rest get acquired at later stages. . In the end. Taking even an odd example: the alphabet. focus on fixing the few issues that seem to affect the most people first. If you have 5 bugs. But you should still fix the others . even though its more applicable to time management. The meals were all delivered at the other end of the table from where I sat. 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. I only need 25 pieces of bread? Just wondering if the principle can be applied to this situation as well. but it would be unwise to buy a 100 pieces of bread because not everyone would want it. I have 2 children and am greatly obsessed with their education. can it be used in the following circumstance – I need to buy bread as breakfast for a 100 people.
FELIX SUNDAY BANYE — February 13. Very well written. Thanks! G-unit — January 10. 2010 @ 10:08 am 33. Observation has shown that people see the principle in a rigid form. adendas. 2010 @ 3:46 am 34. and priorities for business and personal areas of life. I think this is the best explanation of the Pareto principle you could find online. hi kalid. I thought this article was great! I like the way it was explain in plain english. I think in order to apply the principle in other areas of life (other than ones where it is already proven). than the short paragraph in the book and my professors atempt. 2010 @ 6:20 am 31. They do not interprete the principle in a flexable form. easy to understand. @G-unit: You’re welcome. 2009 @ 7:52 pm 29.really help me to know more about pareto principle. this is a great article. we need a mechanism to properly analyze and measure that area. unless it as been observed methodically. Thank you! Christine — June 4. thus they cannot apply it to improve their environment and work attitude. 2010 @ 8:30 am 32. I think this article is AWESOME! Very helpful in organizing your thoughts.thanks ajeng — January 20.Someone needs to find out what knowledge required for the most results. Badal — March 15. 2010 @ 9:53 pm 30. glad it helped! Kalid — January 14. I am a student and it gave me a better picture. Alex — November 19. 2010 @ 11:20 pm . We can’t to conclude which subset is approximately 80% and which is 20%.
Kalid — July 2. 80% of faults are results of the 20% common causes.35. Such a simple and efficient way to explain it! I’m seeing that about 20% of the comments are taking this article far too literally! As a network tech I find through observation that the general idea of the 80/20 to be abundant. Yes these observations vary from time to time. 2010 @ 9:37 am 40. it’s amazing! chami — December 3. 80% of the support calls are from the same 20% of users. 2010 @ 9:10 am 39. you may use a reasonable excerpt as long as you provide attribution.). load. glad it helped! Kalid — June 6. etc. 2010 @ 11:33 pm 36. @Christine: Awesome. The attribution will of course be provided. @AndyM: Glad you liked it! Yes.) account for more than their share of outputs (time. however as a GENERAL guide we know where to focus our energy and time on making things more efficient on the network! AndyM — June 25. 2010 @ 10:36 pm 38. as you say these are *general* principles. Thanks! Kalid — August 18. Thanks. not laws of nature. Kalid. 2010 @ 12:09 am 37. @Faik: Yes. May I use part of your article in a book that I am thinking of wrıtıng? Faik Byrns — August 18. Faik Byrns — August 20. etc. The Pareto principle is all about getting the best bang for the buck. 80% of the data use on the servers is from 20% of users. 2010 @ 8:01 pm . You’ve hit the key idea: some inputs (customers. Again thanks for the approval. 2010 @ 10:16 am 41. On average.
I have learnt this in college but never in detail.I have a slightly different take on it as I go for the more basic understanding of the 80/20 rule in terms of application. Thanks a lot! Cooper Kelly — July 28. 2011 @ 11:10 pm 44. Hi Further more can you send me a summary of the principle. Wanaswa Kenneth — June 11.. and fine explained. Thanks. eddy — April 1.youtube. Great explanation.com/watch?v=ElrldD02if0&feature=player_embedded . Hi I had never understood the pareto Principle but your article has helped me very much and let God Bless you for such a wonder full job.Really interesting. 2011 @ 11:11 pm 45. Wanaswa Kenneth — June 11.42. The article with the illustration really helps me grasp the concept especially when trying to do sales analysis for more than 24 000 line items. 2011 @ 8:51 pm RSS feed for comments on this post. Lifestyles365 — July 8. 2011 @ 12:06 am 43.. Tra http://www. 2011 @ 12:06 am 46.