What is Pareto Principle?

Pareto Principles the heuristic rule which states that where there is a large number of contributors to a result, the majority of the result is due to a minority of the contributors.. Sometimes also known as the 80/20 rule which states that, in many cases, approximately 80% of the turnover (stock etc.) can be ascribed to approximately 20% of the customers, articles or orders.

The Pareto principle states that,

  • for many events, roughly 80% of the effects come from 20% of the causes.

  • 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

According to legend, Pareto, an economist, noticed 20% of the pea pods in his garden provided 80% of the peas.