Page 4 - NBIZ Magazine April 2021

Got the

20/80

Rule

... and Still Clueless?

By Leanne Hoagland-Smith, M.S.

n 1896-97, an Italian engineer, Vifredo Pareto, with exten-
sive studies in mathematics, physics, philosophy, and pol-
Iitics published his first work, Cours d'economie Politique.
He attempted to prove the distribution of societal incomes and
wealth is not random, but is actually a pattern that is repli-
cated throughout world history and societies. This published
work included a complicated mathematical formulation.
Then, in 1906, Pareto released Manuale d’economia Politica.
This work not only further deepened his theory of pure eco-
nomics but also introduced the foundation for modern welfare
economics along with the “curves of indifference” and more
importantly the Pareto Optimum. Today, the Pareto Optimum is
better known as the Pareto Principle.
Many may know the Pareto Principle as the 20/80 rule,
which suggests 20% of “whatever” delivers 80% of the results.
Pareto in his economic research discovered in Italy 20% of the
people owned 80% of the property.
The questions to be asked are why and where does the Pareto
Principle apply to one’s business even if one’s organization is just a
one-person (sole proprietor or independent contract) shop?

4 NBIZ ■ April 2021