80/20 Rule (Pareto Principle)

The 80/20 rule is a popular business management principle that states that for many events, roughly 80% of the effects come from 20% of the causes. In other words, you can get most of your results from only a few things. 

It's also known as Pareto’s Principle, named for Vilfredo Pareto, an economist who noticed that 20% of the people in Italy owned 80% of the wealth. The rule has been used to understand and predict human behavior across many industries and disciplines, including business management, engineering design, marketing research, quality control monitoring processes and project management.

The principle of Pareto can be applied to businesses in many ways. You can use it to identify which customers or products contribute most to your business' income and then focus on them more than others. In addition, you can apply this principle when prioritizing tasks by focusing on those that will bring you the most value per hour spent working on them.

Pareto’s 80/20 rule is an extremely useful tool for companies that want to improve the way they do business. It can be used to identify which tasks are the most important, which customers are the most valuable and so on.

The principle of the Pareto principle is based on two types of analysis:

• Asking yourself what you spend most of your time doing
• Looking at your company's productivity data

In business, this concept can be used to identify areas for improvement, such as by identifying which customers account for most profits or which products generate most revenue (or which processes use up a majority of your time). The principle of Pareto can help you to understand your business better and make more effective decisions.