Pareto Principle

<p><a class="wikilink" href="/pareto/">Pareto</a> was an economist who found that 80% of the land in <a class="wikilink" href="/italy/">Italy</a> was owned by the <a class="wikilink" href="/20%/">20%</a> of the population. Years later, people started finding this trend in other areas, and someone decided to call this phenomenon the <strong>Pareto Principle</strong>. </p> <p>A simple example: </p> <blockquote> <p>20% of the customers of a company generate 80% of the support requests.</p> </blockquote> <p>If this is really the case, you may wonder whether that 20% generates enough revenue to compensate for the support infrastructure you need to maintain. If they don't, then you may better cut them lose and keep the remaining customers. </p> <p>In the end, the Pareto principle is a rule of thumb that can be used for <a class="wikilink" href="/project_management/">project management</a>, <a class="wikilink" href="/risk_management/">risk management</a>, and potentially as a <a class="wikilink" href="/mental_model/">mental model</a> (<a class="wikilink" href="/pareto_principle_(mental_model)/">Pareto Principle (Mental Model)</a>).</p> <div class="admonition note"> <p class="admonition-title">Note</p> <p>Remember that in most cases this principle has no mathematical validation, it is really a phenomenological condensation of complex topics. For instance, 20% of the code has 80% of the bugs, or 20% of the code will take 80% of the development time</p> </div>