In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country. Pareto observed that 20% ...LinkedInwithBackgroundManagement&LeadershipManagementSkillsParetoPrincipleorthe80/20RuleTableofContentsExpandTableofContentsExpandingtheDefinitionOnQualityHelpProductivity20%oftheCustomersParetoUsetoEvaluateWorkloadsPracticalLimitstotheRuleByFullBioFollowTwitterF.JohnRehwroteaboutbusinessmanagementforTheBalance,andhas30yearsofexperienceasabusinessmanager.ReadTheBalance'seditorialpoliciesF.JohnRehUpdatedOctober23,2019Imageby EmilyNewman©TheBalance2019In1906,ItalianeconomistVilfredoParetocreatedamathematicalformulatodescribetheunequaldistributionofwealthinhiscountry.Paretoobservedthat20%ofthepeopleowned80%ofthenation'swealth.Hecouldnotknowit,butintimethatrulewouldbefoundtoapplywithuncannyaccuracytomanysituationsandbeusefulinmanydisciplines,includingthestudyofbusinessproductivity.ExpandingtheDefinitionInthelate1940s,Dr.JosephM.Juran—aproductqualityguruofthatera—attributedthe80/20RuletoParetoandcalledittheParetoPrincipleorParetoLaw.ThePrinciplemaynothavebecomeahouseholdterm,butthe80/20ruleiscertainlycitedtothisdaytodescribeeconomicinequity.Italsoisausefultooltohelpyouprioritizeandmanagetheworkinyourlife. OnQualityJurantookPareto'sprinciplefurther,applyingthe80/20ruletoqualitystudies.Forexample,hetheorizedthat20%ofthedefectscause80%oftheproblemsinmostproducts.Today,projectmanagersknowthat20%oftheworkconsumes80%ofthetimeandresources. That20%ismadeupofthefirst10%andthelast10%oftheproject.Otherexamplesyoumayhaveencounteredinclude:80%ofacompany'srevenues aregeneratedby20%ofitscustomers80%ofcomplaintscomefrom20%ofcustomers 80%ofqualityissuesimpact20%ofacompany'sproducts Astheoppositerule:20%ofinvestorsprovide80%offunding20%ofemployeesuse80%ofallsickdays20%ofablog'spostsgenerate80%ofitstrafficThereareanearlyunlimitednumberofexamplesthatwetendtoapplythe80/20ruletoinourpersonalandworkinglives.Mostofthetime,wearerefer