There’s a saying in the real estate industry that 20% of real estate agents do 80% of the business. Or perhaps you’ve heard when lenders loan on new construction they want no more than 20% of the value in land and 80% in the value of the house. Has anyone ever said you should focus 80% of your time and energy on 20% of work that is important?  Even Ronald Reagan has been quoted as saying: “That person who agrees with you 80% of the time is a friend or ally and not a 20% traitor”.

Have you ever wondered where that 80/20 rule came from or never knew there even was a “rule”?

In 1906, Italian economist Vilfredo Pareto (1848-1923 — his photo is at right from WIkepedia) created a mathematical formula to describe the unequal distribution of wealth in his country, observing that twenty percent of the people owned eighty percent of the wealth.

After Pareto made his observation and created his formula, many others observed similar phenomena in their own areas of expertise. Quality Management pioneer, Dr. Joseph Juran, working in the US in the 1930s and 40s recognized a universal principle he called the “vital few and trivial many” and reduced it to writing. In an early work, a lack of precision on Juran’s part made it appear that he was applying Pareto’s observations about economics to a broader body of work. The name Pareto’s Principle stuck, probably because it sounded better than Juran’s Principle.

As a result, Dr. Juran’s observation of the “vital few and trivial many”, the principle that 20 percent of something is always responsible for 80 percent of the results, became known as Pareto’s Principle or the 80/20 Rule.

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