The 80/20 rule
In: Culture
It’s a rule of thumb that can be applied to a number of fields. I can give you the application of this rule, also called the Pareto Principle, to the field of process improvement. You can then figure it out for your context as a homework assignment.
It all starts in Italy in the early 20th century (or late 19th century), where Pareto, an economist, calculates that 80% of all land in Italy is owned by 20% of the population. Since then, people use that example to state that when you have multiple causes bringing about an effect, 80% of the effect is caused by 20% of the possible causes.
An example from process improvement: let’s say you manage an assembly line. Each year, there are hundreds of defects being produced, and it’s your job to reduce that number. You take a look at the data: hundreds of defects, and multiple causes attributed to them. Which “cause” do you tackle first? Which problem do you fix to give you the biggest impact on quality? This is where the 80/20 rule comes in. You run through the defect data and you tally how many defects were due to each possible cause. What you generally find is that a small amount of causes (the “20%”) are triggering a large amount of defects (the “80%”). So you go after those 20% to give you the biggest bang for your buck.
Is it always 20% and 80%? No. It’s just that 80/20 is a nice mnemonic to remember.
You can totally apply this to any other field. 20% of employees account for 80% of sick days. 20% of menu items account for 80% of daily sales. 20% of clowns account for 80% of clown-related crime.
Hope this helps!
Edit: those damn, pesky silent letters!
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