"Mastering the 80-20 Rule: Leveraging Pareto Charts for Data-Driven Insights"

The 80-20 Rule, or Pareto Principle, reveals that 80% of results come from just 20% of causes. Pareto Charts visually highlight this by showing which factors have the most significant impact. Bars represent individual data points in descending order, and the cumulative line illustrates their combined effect. This helps prioritize efforts and focus on key areas for improvement.

1. The Pareto Principle Jonathan Solanki 80/20 Principle Post Graduate Diploma Hospital Administration (PGDHA)

2. What is 80/20 rule? The 80-20 rule, also known as the Pareto principle is an aphorism which asserts that 80% of outcomes (or outputs) result from 20% of all causes (or inputs) for any given event. Although the 80-20 axiom is frequently used in  business & economics , you can apply the concept to any field—such as wealth distribution, personal finance, spending habits, and even infidelity in personal relationships.

3. Origin of the 80/20 rule The 80-20 rule—also known as the Pareto principle and applied in Pareto analysis was first used in macroeconomics to describe the distribution of wealth in Italy in the early 20th century. It was introduced in 1906 by Italian economist Vilfredo Pareto , best known for the concepts of Pareto efficiency. In the 1940s, Dr. Joseph Juran , prominent in the field of operations management, applied the 80-20 rule to quality control for business production.

4. Learnings from pea pods! Pareto noticed that 20% of the pea pods in his garden were responsible for 80% of the peas. Pareto expanded this principle to macroeconomics by showing that 80% of the wealth in Italy was owned by 20% of the population.

5.  "the vital few and the trivial many" Dr. Joseph M. Juran stumbled across the work of Pareto and began to assert widely the Pareto Principle to quality issues. (For example, 80% of a problem is caused by 20% of the issues.) This was also known as "the vital few and the trivial many”. The 80/20 Rule means that in anything a few (20%) are vital and many (80%) are trivial . 3 Simple steps Identify your 80/20 goal. Identify your 80/20 path. Identify your 80/20 actions. Remember the 80/20 rule “A few causes lead to many defects many causes lead to few defects” Get to the biggest problems first –Solve the vital few rather than trivial many. Goal Path Actions

6. Where & how does 80/20 rule apply? 20% ACTIONS = 80% RESULTS MORE ACTIONS = MORE RSULTS Examples 20 % 80 % (20% criminals are responsible for 80 % crimes ) (Because of 20% drivers 80% accidents occur) (20% marriages result in 80% divorces ) YES NO

7. (Because of 20% roads 80% traffic ) (20% cloths we wear 80% times ) (20% land gives us 80% food and minerals ) (20% scientists discover 80% things )

8. How 80/20 apply in Organization? In the workplace, the Pareto principle  means that 80% of the responsibility and work are shouldered by only 20% of your employees . Meaning, most of the work and effort are from the minority of your staff. They are the floor leaders, managers and other key thinkers in your organization . Another way to interpret the 80/20 rule when it comes to employee management is this: most of the problems in your organization are caused by a small number of employees. They simply don’t work, work poorly, and commit many mistakes, leading to wasted time, energy and resources. (20% of your clients will be a part of 80% Profits ) (20% of y (20% clients will have 80 % complaints )

9. Core Principles & Misinterpretation At its core, the 80-20 rule is about identifying an entity's best assets and using them efficiently to create maximum value. 80% of a project's benefit or results are achieved from 20% of the work, or conversely, 80% of problems are traced to 20% of the causes. The 80-20 rule is a precept, not a hard-and-fast mathematical law The 80-20 rule is misinterpreted often. Sometimes the misunderstanding is the result of a logical fallacy—namely, that if 20% of inputs are most important, then the other 80% must not be important.

10. Conclusion Learnings Most of what we do is low value. Some small fragments of our time are much more valuable than all of the rest. If we make good use of only 20% of our time, there is no shortage of it . Keep the vital few in the front of your brain at all times . The best people generate enormous surpluses, usually far beyond what they are allowed to take out. “80% of the effects come from 20% of the causes” - VILFREDO PARETO