The Pareto principle states that for many outcomes, roughly 80% of consequences come from 20% of causes. In other words, a small percentage of causes have an outsized effect. This concept can help you identify which initiatives to prioritize so you can make the most impact.
The principle, which was originally derived from the imbalance of land ownership in Italy, is commonly used to illustrate the notion that things are not equal, and the minority owns the majority. Examples include:
- 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
Benefits of utilizing the principle include:
- create the maximum amount of impact with the least amount of work.
- clear priorities both for you and your team
- increased daily productivity
- ability to portion your work into manageable segments
- more focused strategy
Unlike other principles, the Pareto Principle is merely an observation, not law. Although broadly applied, it does not apply to every scenario.
When used correctly, the Pareto Principle can help prioritize tasks, optimize resources, and improve overall efficiency. It provides a useful framework for understanding complex systems and identifying key areas for improvement. If not used correctly, the Pareto Principle can lead to an excessive focus on short-term gains over long-term planning and stability.
80/20 rule
Law of the vital few
Principle of factor sparsity