What is the Pareto Principle - The 80 20 Rule? PM in Under 5

The Pareto Principle, or the 80-20 Rule. It articulates a fundamental aspect of nature, which also applies to projects. So, what is the Pareto Principle?
Here, Dr Mike Clayton, founder of OnlinePMCourses.com, answers this question, in under 5 minutes.
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My basic introductory book to Project Management is How to Manage a Great Project (published by Pearson): geni.us/4Iz6M (affiliated link).
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[@MohamedAhmed-gh6cs]

''Prioritization: _Find a vital few problems and resolve them ; -Find a vital few sources of risk and mitigate those; _Find your vital stakeholders and satisfy them. *The law of the vital few tell us: -If we prioritize ruthlessly, we can find a small number of points of control and use those points of control, to Gain Significant leverage over our Project.'' thank you very much for the practical explanation.

[@Onlinepmcourses]

You're very welcome, Mohamed.

[@PacificBruva]

Mike Clayton you are the best. I consider you the Sir David Attenborough of the MBA field and PRoject manangement field. May God to continue to give you the strength to continue sharing this knowledge. Best regards from Hargeisa, Republic of Somaliland.

[@Onlinepmcourses]

Thank you very much. A great compliment to be linked in any way with Sir David.

[@goratamokwena1269]

Wow that was truly helpful. Thank you for the information.

[@Onlinepmcourses]

Glad it was so helpful!

[@PrincessMindorena]

Very thoughtful and succinct. Thumbs up b to this presentation.

[@Onlinepmcourses]

Thank you.

[@tiddybagel]

I work in the semiconductor industry and see this with contributions made by individuals.

[@Onlinepmcourses]

That makes sense - it's what I have seen in a number of contexts.

[@montyi8]

Could you elaborate more please.

[@tiddybagel]

@@montyi8 There's a vital few in the talent pool that keep things afloat. More likely than not this is less exaggerated at seasoned companies like TSMC and Samsung

[@matthewlebel7686]

Great video, connected some concepts for me and helped with an assignment. Thanks!

[@MikeClayton]

Matthew Lebel you’re very welcome. Thank you for your comment.

[@Onlinepmcourses]

ditto

[@realtalk3567]

Check your subscription list. Notice that you mostly watch 20% of those you've subscribed to 80% of the time.

[@Onlinepmcourses]

Nice example! Thank you.

[@dion6146]

This principle applies to intelligence, desire to work at a very high level, physical strength etc.

[@Onlinepmcourses]

The Pareto Principle has huge application. However, I am fairly sure most measures of general intelligence follow a normal distribution, rather than the sigmoid curve of the Pareto distribution. So, I'd be interested in what sense you mean, for intelligence. 🤔

[@dion6146]

@@Onlinepmcourses You are correct. I should have written more clarity that the abilities that seem to be required in order to succeed in business follow a Pareto distribution rather than a Gaussian. In any sufficiently large group 80% or so of the work will be accomplished by 20% of the workers. Certainly, something very close to this was true in a R&D facility I worked in as well as the engineering groups I've worked in. It didn't cause upset with anyone, it was just how it was.

[@Onlinepmcourses]

@@dion6146 I can certainly agree that, in many contexts, 80% of the delivery, creativity, inspiration... comes from 20% of the people. And not necessarily from the people at the top of the intelligence curve!

[@dion6146]

@@Onlinepmcourses Agreed. I have noticed that with different projects the 20% changed somewhat within a given fixed group (not complete change). I think that this reflects differences in skills, comfort, motivation, and inspiration that varies with the challenges presented.

[@mqureshikmnr]

Beautifully described 🥰

[@Onlinepmcourses]

Thank you, Muhsin

[@innertubez]

Thanks! I wonder if this can help with personal finance, too. Such as, 80% of expenses come from 20% of "causes" (that is, things people spend money on).

[@Onlinepmcourses]

There are a lot of things that conform to the Pareto Principle. So, maybe. But I am fairly sure you’ll get 80% of your happiness from 20% of your purchases!

[@Johan-gg6gq]

Thank you for your explanation. I am looking for examples from nature which would support your remark that the 80-20-rule is a nature's law. But I cannot find them, perhaps you can name a series within the life of plants and animals? Thanks!

[@Onlinepmcourses]

Well, maybe 80% of biomass comes from 20% of species. That's not a fact, but I'd bet the statistics give a Pareto type split. Maybe not 80 and 20. I say it's a natural law, because it stems from a power law which is also found throughout nature (and human endeavour). Power laws give the widely known 'long tail' effect. That is, there are a few really big rivers and many, many small ones. So, there will be a Pareto like figure for a small number of rivers carrying a big proportion of global fresh water.

[@Johan-gg6gq]

Well, to be honest I think those examples I would merely call 'searched for' instead of the result of nature power. When we see nature's growing power at work, like in plants and animals in the wild, one could say that man can mirror his growth to that. When a small amount of seeds always leads to a big amount of flowers, that would be 80-20, but I doubt it is. When 20% of born animals stays alive and forms thereby 100% of the population, I'd say it's 80-20. And so on.

[@Onlinepmcourses]

I think you are misunderstanding the pareto principle. There is nothing special about the numbers 80 and 20. It just happened that in Pareto's original observation, 20% of people held 80% of wealth. He might have observed another phenomenon and found 18% of the population accounted for 87% of something. The fact they add up to 100 is coincidental, not fundamental.

[@Johan-gg6gq]

I am wellknown to that fact, thanks. Still just looking for real fundament for calling it a law of nature.

[@cnmg7121]

Speed play x2 to make it watchable

[@Onlinepmcourses]

That's absolutely fine. Remember, I have a global audience with varying experience of business English. English may be your first language (I assume from your City of London crest icon) - it is not for many of my viewers. But I want them to be able to follow along too.

[@kkk2323111]

@@Onlinepmcourses slower means more time for digesting the concept behind

[@Onlinepmcourses]

@@kkk2323111 Indeed!

[@totalrobot]

Gotta hit that time mark cutoff for monetization! Irksome, isn't it?

[@ehinmitantimilehin6617]

👏

[@Onlinepmcourses]

🙏

[@DorianPaige00]

similar to Price's law

[@Onlinepmcourses]

Indeed - similar but not the same. They each tend to hold in different circumstances. But I am not familiar enough wit the statistical underpinnings to know where each one is more likely.

[@DorianPaige00]

@@Onlinepmcourses Price's law gives an accurate assessment of the number of players in a creative domain. It says that half of the work is done by the square root of total players. So if you look at the Billboard charts, 50 of the 100 songs would be affiliated with 10 production teams/labels. Price's law doesn't say why that is but efficiency of major players is one and another is that smaller players can't devote full time since they are not earning enough to survive/thrive.

[@Onlinepmcourses]

Thank you.

[@kerschwynnvalentyn3626]

the oom made me very confused with the story telling 🤦🏻‍♂️...I taught he would get straight to the point of wat it is but so he didn't 😏.

[@Onlinepmcourses]

oom? What? You get the whole point and examples in 5 minutes. Straight to the point: 5% of stuff gives 50% of value. But to get to 80% of value, you may need to suffer 20% of the stuff.

[@kerschwynnvalentyn3626]

@@Onlinepmcourses now that makes more sense than all the story telling before explaining what it is but thanks btw and oom means uncle

[@Onlinepmcourses]

@@kerschwynnvalentyn3626 Thank's nephew.

[@joopsmit6910]

"Oom" is a term used in the Netherlands and South Africa to describe an uncle. In South Africa however it can also act as a form of respect and when a younger person addresses an older, wiser person. Even if a remark is aimed to be derogatory, merely using the term "oom" still indicates an innate form of respect, even though the user might deny the fact. Thank you for the storytelling, stories convey much wisdom and history to often complex principles.

[@treebeardtheent2200]

👎 have to give thumbs down for unethical censorship of comments. If it was applied to trolls or comments constituting ad hominim attacks or such, then the censorship would be justified (maybe debateable), but censoring well reasoned applications of the Pareto principle using well articulated comments is simply unethical (at best).

[@Onlinepmcourses]

I have not censored anything. Comments were left, but I made it clear that off-topic comments are not appropriate. This channel is for project managers and other professionals. It's not a political or philosophical forum. My channel. My rules. Feel free to hit the thumbs down a second time, if you don't like this answer!

[@PussyDevourer69]

You seem gonna cry.

[@Onlinepmcourses]

😢

[@Grumbledookvid]

satisfying stakeholders is for cowards

[@Onlinepmcourses]

I think that's a little didactic. Sometimes it's the wrong thing to do, I'll grant you. Other times, satisfying your stakeholders isn't just the right thing... it's your job!

[@raukouy]

for the love of god! learn to pronounce Pareto

[@Onlinepmcourses]

I'm terribly sorry.

[@georgexm2032]

a-pareto