Today’s video features ‘Pareto’s Law’ also known as ‘The 80/20 Principle’. It originates from Vilfredo Pareto; a cunning and controversial economist and sociologist who lived from 1848 to 1923.
His groundbreaking work, Cours d’economie politique, contained a then-unknown “law” on income distribution. It would later be named after him and is today known as “Pareto’s law” or the 80/20 principle.
Pareto’s law can be summarized as follows: 80% of output is the result of 20% of input.
Although originally the Pareto principle referred to the distribution of wealth, it can be applied to a wide variety of contexts, for instance:
- 80% of the consequences stem from 20% of the causes.
- 80% of the results come from 20% of the time and effort.
- 80% of the company’s revenue comes from 20% of its products and customers.
- 80 % of IT system crashes are caused by 20% of the Bugs
In recent years the Pareto rule has become synonymous with the principle of 80/20 distribution. It is important to notice that Pareto’s principle is more an observation than a full-fledged scientific theory. Indeed, it is applicable in a variety of contexts—but not to each and every scenario.
As always, I highly recommend reading the book, but should you feel short on time you can watch our animated summary by clicking the link below.
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