I have seen 80/1 distributions (fewer than one percent of words are used in common speech 80 percent of the time) and a huge variety of other ones. The distribution may be 70/30 or 90/10 or 99/1, and the numbers don’t even need to add up to 100. Rather, it is an empirical observation – one that crops up time and time again, but not very often in the precise 80/20 distribution. The 80/20 principle is derived from his work, but it is a simplification he never made. I have been unable to find this used before the 1940s. Contrary to what is asserted widely on the internet and even by many reputable authors who should know better, Pareto never used the phrase ‘80/20’.He produced an algebraic equation which was remarkably accurate whatever data he examined – the shape of the graph looked the same regardless of the subject studied. He found that most money went to a small minority of the people in his samples, and that the distribution of wealth was typically the same whatever the time period he took, and whichever country he researched. He was studying patterns of wealth and income in nineteenth century England.

The pattern underlying 80/20 was discovered in 1897 by Italian economist Vilfredo Pareto.Companies have far too many products and customers, many or most of which are unprofitable. Even more vital – a fifth of products and customers typically yield four-fifths of profits. 20 percent of products usually account for 80 percent of sales value so do 20 percent of customers. In business, many examples of 80/20 have been validated.If this is true – and it usually is – four-fifths of the effort and time is largely irrelevant. For example, it may that 80 percent of what you achieve in your work comes from 20 percent of the effort or time spent. If most results come from few causes, there is great mileage in isolating the few causes that have the greatest results.The 80/20 principle states that there is a predictable, in-built imbalance between causes and results, inputs and outputs, effort and reward. A good benchmark or hypothesis is that 80 percent of results flow from 20 percent of causes – and sometimes from a very much smaller proportion of powerful forces. The universe is wonky! The 80/20 principle tells us that in any population, some things are likely to be much more important than others.Here are the 27 things you absolutely need to know about the 80/20 principle: This time I’m going to give the essence – if you like, the 80/20 - of 80/20. My last post simplified my (and Greg Lockwood’s) book Simplify – I’m pleased that it was thought useful to many of you.

80 20 principle ppt