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Vilfredo Pareto
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Dr. Juran's observation of the "vital few and trivial many", the principle that 20 percent of something always are responsible for 80 percent of the results, became known as Pareto's Principle or the 80/20 Rule. You can read his own description of the events in the Juran Institute article titled Juran's Non-Pareto Principle.
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Pareto's rule states that a small number of causes is responsible for a large percentage of the effect, in a ratio of about 20:80. Expressed in a management context, 20% of a person's effort generates 80% of the person's results. The corollary to this is that 20% of one's results absorb 80% of one's resources or efforts. For the effective use of resources, the manager's challenge is to distinguish the right 20% from the trivial many.
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To create a Pareto diagram, the operator collects random data, regroups the categories in order of frequency, and creates a bar graph based on the results. This type of chart can easily be made in Microsoft Excel or any graphing software.
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In 1889, after the death of his parents, Pareto changed his lifestyle. He inherited the marchese title, but he never used it. Instead, he quit his job, married a penniless Russian girl from Venice, Alessandrina Bakunin, and moved to a villa in Fiesole. From his retreat, he began writing numerous polemical articles against the government and gave public lectures at a working man's institute. He was quickly targeted as a troublemaker by the authorities. Trailed by police, intimidated by hired thugs, his lectures were often closed down and his applications for teaching jobs blocked. (incidentally, being well-trained with the sword, a crack shot with a pistol and equipped with an aristocratic sense of honor, Pareto never let himself be physically intimidated).
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With some imagination you can make Vilfredo Pareto an unpaid consultant to your business, and increase your bottom line. It may not help in all cases, but hopefully it will work for you at least 80% of the time.
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Virtually any spreadsheet software may be used to construct a Pareto chart. The first step is to divide the data into categories. A study of product returns, for example could include these categories:
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Vilfredo Pareto