What is the Pareto Principle - The 80 20 Rule? PM in Under 5 | Summary and Q&A

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April 19, 2018
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Online PM Courses - Mike Clayton
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What is the Pareto Principle - The 80 20 Rule? PM in Under 5

TL;DR

The Pareto Principle, also known as the 80/20 rule, states that 80% of outcomes come from 20% of causes, and it can help project managers prioritize effectively.

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Key Insights

  • 🛩ī¸ The Pareto Principle, also known as the 80/20 rule, suggests that a small number of causes account for the majority of outcomes.
  • 👨‍đŸ’ŧ It originated from Vilfredo Pareto's study on wealth distribution in Italy and was later applied by Joseph Juran in business settings.
  • *ī¸âƒŖ The principle can be used in project management for prioritizing tasks, identifying key problems, mitigating risks, and satisfying crucial stakeholders.

Transcript

in this video I want to answer the question what is the Pareto principle the Pareto principle is also sometimes known as the 80/20 rule and it crops up in a lot of places extremely long rivers are very rare but there are a lot of very short rivers some words appear very often in our conversation and our writing others appear hardly ever this is bec... Read More

Questions & Answers

Q: What is the Pareto Principle?

The Pareto Principle, also known as the 80/20 rule, states that 80% of outcomes are caused by 20% of factors. It suggests that a small number of causes have a significant impact on the overall results.

Q: How did Joseph Juran contribute to the understanding of the Pareto Principle?

Joseph Juran applied the Pareto Principle to improve various aspects of business, such as pay inequalities and production line faults. He demonstrated that a small percentage of causes, around 20%, were responsible for a majority of the problems.

Q: How can project managers benefit from the Pareto Principle?

Project managers can use the Pareto Principle for prioritization. By identifying the vital few problems, risk sources, and stakeholders, they can focus their efforts on resolving the most critical issues and gaining significant leverage over the project.

Q: What are some examples of the Pareto Principle in different fields?

Examples of the Pareto Principle can be found in various domains. For instance, a few rivers provide most of our fresh water, a few corporations make most of the profits in business, and a small number of criminals commit the majority of crimes in criminology.

Summary & Key Takeaways

  • The Pareto Principle, or the 80/20 rule, is a concept that explains how a small number of causes account for the majority of outcomes.

  • It was initially discovered by Vilfredo Pareto, an Italian economist who observed that 80% of Italy's wealth belongs to 20% of its citizens.

  • Joseph Juran, an American quality guru, popularized this principle in business settings, demonstrating that the rule applied to various areas such as pay inequalities and production line faults.

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