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.


More on problem analysis: 5W2H Analysis, 8 Disciplines, Affinity Diagram, Alternative Hypothesis, CATWOE, more...


MBA Brief offers accurate and concise definitions of MBA concepts, frameworks, methods and models.

We love to keep things really short, but provide links to learn more about your subject and to similar concepts.

© 2023 MBA Brief - Last updated: 23-3-2023  -  Privacy   |   Terms