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GLOSSARY / 80/20 Rule (Pareto Principle)

80/20 Rule (Pareto Principle)

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    80/20 rule is also known as Pareto Principle. It is named after Vilfredo Pareto who was an Italian civil engineer, sociologist, economist, political scientist, and philosopher and it was developed by Management consultant Joseph M. Juran. During the first work of Pareto, Coursd’é conomie politique, he showed that approximately 80% of the land in Italy was owned by 20% of the population. The Pareto principle is only tangentially related to Pareto efficiency.

    It is a popular fundamental which states that 80% of the results or outputs come from just 20% of the action or inputs. The Pareto principle is commonly known as the 80/20 rule, the law of the vital few, or the principle of factor sparsity. This Pareto Principle, or 80/20 rule, can be seen everywhere across sales, marketing, project management, and other areas of a business.

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