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The Smart Solution Book by Mr. David Cotton

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Tool 42

The pareto analysis – simplified version

What the tool is

The pareto analysis is used to ensure that the first steps you take solve the maximum number of problems or eliminate the greatest number of causes.

Italian economist vilfredo pareto observed that 80 per cent of italy’s wealth lay in the hands of 20 per cent of the population and vice versa. In the 1940s, management expert Joseph Juran began to adopt the ratio in other areas of business.

Pareto’S Law (also known as the 80/20 rule) has been adopted by the business community to describe paradoxical ratios. For example, 80 per cent of the benefit from a project may come from 20 per cent of the total effort and 80 per cent of the problems encountered in a particular situation may ...

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