The Pareto principle, also known as the 80 and 20 rule, states that 80% of the effects come from 20% of the causes, which means that there is an unequal relationship between inputs and outputs. The idea, named after economist Wilfredo Pareto, stems from the imbalance in land ownership in Italy. Today, it uses in businesses in various industries. For example, 20% of a company’s employees may generate 80% of its profits.
The idea works best in customer service-based businesses and has stood adopted by project management software. This principle also applies to personal development settings. For example, 80% of work-related output may come from only 20% of a person’s working time.
The Pareto principle helps individuals and organizations determine which actions have the greatest impact on outcomes. This principle is beneficial because it:
The Pareto principle can use in almost any situation. The most common business examples fall into the following categories:
While the Pareto principle is a common observation, it is not a proven mathematical rule. The best practice for this rule is to keep the following considerations in mind:
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