Pareto's Principle~~


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Pareto's Principle~~

  1. 1. Pareto's Principle~~ 20/80 Rule Daily reminder that 20% of your work is really important in any given moment; therefore, focus 80 % of your time, energy and talents that 20 percent. Don't just "work smart", work smart on the “right things”.
  2. 2. How It Can Help You <ul><li>The value of the Pareto Principle is that it reminds us to focus on the 20% that matters. </li></ul><ul><li>Of the things we do, only 20% really matters, in any given moment. </li></ul><ul><li>Those 20% produce 80% of the results. </li></ul><ul><li>Identify and focus on those things. </li></ul><ul><li>When the crisis drills of the day begin to sap our time, energy and patience remind yourself of the 20 % you need to focus on. </li></ul><ul><li>If something in the schedule has to slip, make sure it's not part of that 20% </li></ul>
  3. 3. The Superstars! <ul><li>20 % of people produce 80 % of the results. </li></ul><ul><li>Therefore, helping the good become better is a better use of time than helping the great become terrific! </li></ul>
  4. 4. The Vital Few: What It Means <ul><li>The 80/20 Rule means that in anything a few (20 %) are vital and many (80 %) are trivial. </li></ul><ul><li>In Pareto's case it meant 20 % of the people owned 80 % of the wealth. </li></ul><ul><li>In Juran's work he identified 20 % of the defects (error types) causing 80 % of the problems. </li></ul>
  5. 5. Where It Came From <ul><li>The original observation was in connection with income and wealth. </li></ul><ul><li>Pareto noticed that 20% of the population owned 80% of Italy's wealth. </li></ul><ul><li>After Pareto made his observation, he created a formula. </li></ul><ul><li>Many others observed similar phenomena in their own areas of expertise. </li></ul><ul><li>Quality Management pioneer, Dr. Juran, in the 1930s recognized a Universal Principle he called the “Vital Few & Trivial Many&quot;. </li></ul><ul><li>As a result, the principle that 20 percent of something always are responsible for 80 percent of the results. </li></ul><ul><li>You can apply the 80/20 Rule to almost anything, from the science of management to the physical world. </li></ul>
  6. 6. Let’s Take a Look! <ul><li>20% of stock takes up 80% of space. </li></ul><ul><li>20% of your suppliers provide 80% your stock. </li></ul><ul><li>20% of staff account for 80% sales. </li></ul><ul><li>20% staff will cause 80% of problems AND </li></ul><ul><li>Another 20% staff will provide 80% of production. </li></ul><ul><li>It works both ways. </li></ul>
  7. 7. The principle is reflected in the Human Gestation period. The embryonic period constitutes 20% of the whole, with fetal growth taking up the rest of the time. <ul><li>20% of carpet accounts for 80% of wear. </li></ul>20% of the time spent on a project accounts for 80% of the results.
  8. 8. The sizes of human settlements. (few cities, many hamlets/villages) <ul><li>The values of oil reserves in oil fields. (a few large fields, many small fields) </li></ul>Sizes of meteorites. (a few large, many small)
  9. 9. Microsoft noted by fixing the top 20% of most reported bugs, 80% of the errors & crashes were eliminated. <ul><li>Mundane …W e wear our 20% most favorite clothes about 80% of the time. </li></ul>Perhaps, we spend 80% of the time with 20% of our friends.
  10. 10. Global Income Distribution <ul><li>Distribution of global income is very uneven. The richest 20% of the world's population controls 82.7% of the world's income. </li></ul><ul><li>World Gross Domestic Product Population Income </li></ul><ul><li>Richest 20% controls 82.70% of the world’s income </li></ul><ul><li>Second 20% controls 11.75% </li></ul><ul><li>Third 20% controls 2.30% </li></ul><ul><li>Fourth 20% controls 1.85% </li></ul><ul><li>Poorest 20% controls 1.40% </li></ul>United Nations Development Program Report
  11. 11. Wealth <ul><li>20% of criminals account for 80% of the crimes! </li></ul><ul><li>If we take the ten wealthiest individuals in the world, we see that the top three, Warren Buffett, Carlos Slim Helú, & Bill Gates, own as much as the next seven put together. </li></ul>
  12. 12. Customer Service <ul><li>Focusing one's attention on those 20% of clients that contribute to 80% of the income. </li></ul><ul><li>20% of clients take up the majority of one's time & may cause the most difficulty. </li></ul>
  13. 13. Quality Control <ul><li>It is one of the key tools used in total quality control & Six Sigma. </li></ul><ul><li>The purpose is to optimize the good. </li></ul><ul><li>Minimize the defects. </li></ul><ul><li>20% of causes are responsible for 80% of after effects. </li></ul>
  14. 14. Revenue <ul><li>20% of time (effort) accounts for 80% of results. </li></ul><ul><li>20% of clients are responsible for 80% of sales. </li></ul>Results Effort
  15. 15. Cause and Consequences <ul><li>20% of causes are responsible for 80% of consequences. </li></ul><ul><li>80% of consequences flow from 20% causes. </li></ul>
  16. 16. Bell Curve Relationship <ul><li>All Life Fits a Bell Curve! </li></ul>
  17. 17. Bell Curve Quiz Scores <ul><li>20% will earn a C out of the 80% who take the quiz. </li></ul><ul><li>20% will earn a B out of the 80% who take the quiz. </li></ul><ul><li>20% will earn an A of the 80% who take the quiz. </li></ul><ul><li>40% will fail the quiz! </li></ul><ul><li>Some instructors who ‘grade on the curve’, force the scores to fit the Model. </li></ul>
  18. 18. Medications and Errors <ul><li>20 % of Medications account for 80% of Errors. </li></ul><ul><li>20% of Types of defects account for 80% of Errors. </li></ul><ul><li>20% of Effort account for 80% of the Results. </li></ul>
  19. 19. Adaptability to Change <ul><li>Later Late Immediate Early Laggards </li></ul><ul><li>Comers Comers </li></ul><ul><li>Balk, it Reluctant Embrace, Step Back, Destroy </li></ul><ul><li>will not 1 st no then + spin, but open, Momentum </li></ul><ul><li>work. will try. help others will do it. </li></ul><ul><li>come around, </li></ul><ul><li>Innovators. </li></ul>
  20. 20. Workload Efficiency <ul><li>20% of the staff completes 80% of the workload. </li></ul><ul><li>Don't just &quot;work smart&quot;, work smart on the “right things”. </li></ul><ul><li>Train Up! </li></ul><ul><li>Better to help the Good become Better to Create and Empower more Superstars! </li></ul>
  21. 21. Collaborative Process <ul><li>Identify Shared Goals </li></ul><ul><li>Clarify Common Values </li></ul><ul><li>Identify Underlying Issues & Causes </li></ul><ul><li>Determine Stakeholder Impact & Response </li></ul><ul><li>Correct Any Knowledge Imbalance </li></ul>
  22. 22. Time to Plant, Grow, Harvest & Replant