Tuesday, February 14, 2017

80/20 rule: Pareto principle

Pareto principle - Wikipedia

"It is a common rule of thumb in business; e.g., "80% of your sales come from 20% of your clients." Mathematically, the 80/20 rule is roughly followed by a power law distribution (also known as a Pareto distribution) for a particular set of parameters, and many natural phenomena have been shown empirically to exhibit such a distribution"

  • 80% of problems can be attributed to 20% of causes.
  • 80% of a company's profits come from 20% of its customers
  • 80% of a company's complaints come from 20% of its customers
  • 80% of a company's profits come from 20% of the time its staff spent
  • 80% of a company's revenue comes from 20% of its products
  • 80% of a company's sales are made by 20% of its sales staff[10]

Quintile of populationIncome
Richest 20%82.70%
Power law - Wikipedia



pareto_graph.png


The 80-20 Rule Explained (Pareto Principle) - YouTube

How to Use The 80/20 Rule For Goal Setting @BrianTracy
"If you have a list of ten items to accomplish, two of those items will turn out to be worth more than the other eight items put together.
The sad fact is that most people procrastinate on the top 10 or 20 percent of items that are the most valuable and important, the “vital few,” and busy themselves instead with the least important 80 percent, the “trivial many,” that contribute very little to their success."


80/20 Rule for Goal Setting - YouTube by Brian Tracy


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