The Pareto Principle also known as the 80/20 rule is a theory that 80 percent of the output from a given situation is determined by 20 percent of the input.
This is often used in meetings to describe such generalities like 80 percent of our complaints come from 20 percent of our customers or 20 percent of our employees account for 80 percent of our sales.
The principle is name for Vilfredo Pareto, an Italian economist, who in 1906 noted that 20 percent of the population in Italy owned 80 percent of the property. He followed this up by observing that 80 percent of the peas in his garden were produced by just 20 percent of the pods.
If you are in a meeting, and someone references the 80/20 rule as part of the basis for making a decision – ask for the underlying results. Does the evidence support the 80/20 rule in this situation? Has commentator even gathered the data to support the 80/20 conclusion or was the statement made without any supporting data?
If you hear someone reference the 80/20 rule, it is likely that person does not know it was derived from Pareto’s study of land ownership or garden peas, and it is equally likely that the person has not even gathered empirical evidence to support the statement.
Don’t be among the 80 percent of the people who blindly believe the 20 percent of leaders who cite this rule.
Ask for supporting data.
And then make an educated decision based on the data.