A:

There are a number of practical applications for the 80-20 rule in diverse areas such as the distribution of wealth in economics, quality production control, business sales and growth. The 80-20 rule was invented by Vilfredo Pareto in Italy in 1906. Pareto, an economist, discovered that 20% of the population in Italy owned 80% of the land. Pareto came up with the idea for the rule after noticing that 20% of the pea pods in his garden were responsible for 80% of the peas. The 80-20 rule’s use has since expanded beyond the humble beginnings in Pareto’s garden.

Dr. Joseph Juran applied the 80-20 rule to quality production control in the 1940s. He found that 80% of problems with products were caused by 20% of the production defects. By focusing on and reducing those 20% production defects, overall quality could be increased. Juran became an important figure in Japan after lecturing there extensively on quality control issues. His main phrase was that the vital few impacted the trivial many.

The 80-20 rule has found applications in business management. For business sales, 20% of a company’s customers are responsible for 80% of the sales. Also, 20% of the employees are responsible for 80% of the results. For project management, many managers have noted that the first 20% of effort put in on a project yields 80% of the project’s results. Thus, the 80-20 rule can help managers and business owners focus 80% of their time on the 20% of the business that yields the greatest results.

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