The 80/20 rule
In: Culture
80% of the outcomes in a system will be a result of 20% of the potential causes.
this rule appears in chemistry, physics, language, mathematics, societal studies etc.
it just seems to be an efficient biological algorithm for selecting norms, trends and eliminating inefficiencies. there is nothing special about it; its just our observation of it which seems to break our intuition.
Just to add in the good answers that have already been posted, here’s a real world example.
Let’s say you have a bad habit of running late to work. You could list out all of the reasons why you could be late – you overslept, there was bad traffic, you lost your keys in the morning, you had a flat tire, your car battery was dead, etc.
All of those are legitimate reasons you could be late for work. But for most people (myself included), the reason you are late is usually because you overslept or there was bad traffic. So those are the items you should focus your solutions on. Wake up when you alarm first goes off and build in a little extra time in your commute for bad traffic.
Sure, every now and then you might wake up to a dead battery or flat tire, but those cases are rare and not worth that much of your attention. This is especially true in a business environment when you only have limited resources to attack an issue or defect.
Last thing to point out is that it’s not so much of a “rule” as it is an idea. So I wouldn’t take the 80/20 split too literally, but use it more as a tool focus your attention on the solutions that will give you the most bang for your buck. Fixing every tiny defect in your life, business, process, etc. is usually not realistic nor worth your time.
For me personally, 20% of my clients account for 80% of my work. Also in business, 80% of sales come from 20% of your customers.
I wonder if the natural log “e” is somehow involved with this. It has to be.
It’s a rule of thumb that can be applied to a number of fields. I can give you the application of this rule, also called the Pareto Principle, to the field of process improvement. You can then figure it out for your context as a homework assignment.
It all starts in Italy in the early 20th century (or late 19th century), where Pareto, an economist, calculates that 80% of all land in Italy is owned by 20% of the population. Since then, people use that example to state that when you have multiple causes bringing about an effect, 80% of the effect is caused by 20% of the possible causes.
An example from process improvement: let’s say you manage an assembly line. Each year, there are hundreds of defects being produced, and it’s your job to reduce that number. You take a look at the data: hundreds of defects, and multiple causes attributed to them. Which “cause” do you tackle first? Which problem do you fix to give you the biggest impact on quality? This is where the 80/20 rule comes in. You run through the defect data and you tally how many defects were due to each possible cause. What you generally find is that a small amount of causes (the “20%”) are triggering a large amount of defects (the “80%”). So you go after those 20% to give you the biggest bang for your buck.
Is it always 20% and 80%? No. It’s just that 80/20 is a nice mnemonic to remember.
You can totally apply this to any other field. 20% of employees account for 80% of sick days. 20% of menu items account for 80% of daily sales. 20% of clowns account for 80% of clown-related crime.
Hope this helps!
Edit: those damn, pesky silent letters!
The Pareto principle (also known as the 80/20 rule, the law of the vital few, or the principle of factor sparsity)[1][2] states that, for many events, roughly 80% of the effects come from 20% of the causes.[3] Management consultant Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who noted the 80/20 connection while at the University of Lausanne in 1896, as published in his first work, Cours d’économie politique. Essentially, Pareto showed that approximately 80% of the land in Italy was owned by 20% of the population.
It is an axiom of business management that “80% of sales come from 20% of clients”.[4]
Mathematically, the 80/20 rule is roughly followed by a power law distribution (also known as a Pareto distribution) for a particular set of parameters, and many natural phenomena have been shown empirically to exhibit such a distribution.[5]
The Pareto principle is only tangentially related to Pareto efficiency. Pareto developed both concepts in the context of the distribution of income and wealth among the population.
Which 80/20 rule? There are many
In regards to what? Human sexuality? The general rule is that 80% of women compete for the top 20% of men, which is generally true. No one wants a weak, broke, unbearable mating partner.
Latest Answers