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Tag Archives: pareto’s law

The Pareto Principle: Where is the top 20% in your business?

pareto principle

The Pareto principle, also known as the 80/20 rule and the law of the vital few, states that, for many events, approximately 80% of the effects come from 20% of the causes. The principle was named after the Italian economist Vilfredo Pareto, who observed in 1906 that 80% of the land in Italy was owned by 20% of the population; he developed the principle by observing that 20% of the pea pods in his garden contained 80% of the peas. Interestingly, this observation translates to business extremely well; for example, …

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