What is the 80-20 Rule? Definition and meaning

80-20 Rule

Definition: the 80-20 Rule or Pareto Principle is a common rule of thumb that for many events, roughly 80% of the effects come from 20% of the causes.
It is named after Italian economist Pareto noticed in 1906 that 80% of Italy's land was owned by 20% of the population.
The principle is used in folk wisdom in business, claiming that:
- 80% of results come from 20% of the time you spend
- 80% of profits come from 20% of the customers
- 80% of response comes from 20% of your advertisements
- 80% of sales come from 20% of the products
Generally, a serious Root Cause Analysis is preferable.

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