What is the Pareto Principle? Why is the Pareto Principle Important for Efficiency?

What is the Pareto Principle Why is the Pareto Principle Important for Efficiency
What is the Pareto Principle Why is the Pareto Principle Important for Efficiency

Issues such as time management, productivity and efficiency are very important topics for you as a business owner or someone considering starting your own business. If you have questions about how to manage your time, the Pareto principle will help you.

What is the Pareto Principle?

The Pareto principle, also known as the 80 20 rule, was put forward about a hundred years ago by the Italian mathematician and economist Vilfredo Pareto. Pareto examined the wealth distribution of the British economy in the 19th century and as a result of this analysis, he determined that 80% of the wealth belongs to 20% of the people. Afterwards, he determined that there was a similar situation in his own country, Italy and in some other countries, but he could not fully explain the reasons for this situation at that time. When George Zipf and Joseph M. Juran reconsidered this theory years later, the Pareto principle became important. kazanIt was dedicated to Vilfredo Pareto and entered the literature with his name.

So, “What is Pareto?” or in other words “What is the 80/20 rule?” The Pareto principle states that 80% of the results are due to 20% of the causes. In this principle, rates are not always 80% to 20%; It can vary as 70% to 30%, 90% to 10%. One of the aims of the Pareto principle, which reveals the imbalance, disproportion and inequality in life, is to make the time to do the work productive and to minimize it.

Why is the Pareto Principle Important for Efficiency?

Although it was introduced in the economic field, the Pareto principle can be applied to most areas of life. Knowing the 80-20 rule and putting it into practice in your life can give you the opportunity to get a lot done with little effort. In addition, the Pareto optimum is also functional in terms of identifying the underlying causes of the problems and listing these causes. It can also be used to see the ratio and severity of problems or to direct a teamwork.

If you are a business owner, you know that 80% of your customers make up 20% of your income thanks to the Pareto principle, and you can increase your income by focusing on the customers who make up this 20% and trying to satisfy them. If you are a student, by focusing on 20% of the topics you will study for the exam, you will have dealt with 80% of the issues you may encounter in the exam. You can reproduce these examples from your own life and create advantage from the disadvantages thanks to the Pareto principle.

What is Pareto Analysis?

Pareto analysis; It is used to separate the important causes of a problem from the minor causes. A chart shaped by a check chart or other data collection tool helps the person identify significant problems. This schema; Ranks the problem, information, or topic from the most important to the least important. As a result of this analysis, he can easily reach the priority issue that needs to be focused.

Pareto analysis provides serious benefits to managers, especially in detecting problems in the workflow process. Pareto data is analyzed in two ways. The first of these is the Pareto count analysis, and the second is the Pareto cost analysis. In the Pareto count analysis, it is determined which category occurs most often. The analysis is created from the categories and the frequency of occurrence of these categories. Pareto cost analysis, on the other hand, is used to determine the expensiveness of cost categories and to rank these determinations.

How is Pareto Analysis Performed?

We learned what Pareto analysis is used for. So, how is Pareto analysis done? You can find the answer to this question by following the items below, and as a result, you can create your own Pareto analysis.

  • First, the problem to be addressed is determined,
  • Information pertaining to the problem is categorized and ordered from the most important to the least important,
  • The measurement unit suitable for the problem is determined,
  • Necessary information is obtained,
  • The acquired information is listed,
  • The diagram is drawn and the evaluation phase is started.

You can take action to increase your productivity with the Pareto principle, and you can also use note-taking methods for efficiency in your work and school life. By using all these methods, you can increase your productivity and reach your target success in a shorter time.

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