20-80 Principle

Who was Vilfredo Pareto?

Vilfredo Pareto (born July 15, 1848 in France - died August 19, 1923 in Lausanne, Switzerland) made several important contributions to economics, sociology and moral philosophy, especially in the study of income distribution and in the analysis of individuals' choices. He introduced the concept of Pareto efficiency and helped develop the field of microeconomics with ideas such as indifference curves. His theories influenced Benito Mussolini and the development of Italian fascism.

The Pareto family moved to Italy in 1858. In 1870, Pareto received an engineering degree from the Turin Polytechnic Institute and he took employment with the Italian state railways. In 1886, he became a lecturer on economics and management at the University of Florence. In 1893, he was appointed as a lecturer in economics at the University of Lausanne in Switzerland where he remained for the rest of his life.

In 1906, he made the well-known observation that 20% of the population owned 80% of the property in Italy, later generalised (by Joseph M. Juran and others) into the so-called Pareto principle (for many phenomena 80% of consequences stem from 20% of the causes), and generalised further to the concept of a Pareto distribution.

Who was Joseph M. Juran, the real "father" of the Pareto Principle?

Joeseph M. Juran (born December 1904 in Romania) has been called the "father" of quality. Joseph M. Juran's major contribution to the world has been in the field of quality management. Perhaps most important, he is recognized as the person who added the human dimension to quality—broadening it from its statistical origins.

In 1937, Dr. Juran conceptualized the Pareto principle, which millions of managers rely on to help separate the "vital few" from the "useful many" in their activities. This is commonly referred to as the 20-80 principle. In 2003, the American Society for Quality is proposing renaming the Pareto Principle the "Juran Principle." Its universal application makes it one of the most useful concepts and tools of modern-day management.

Dr. Juran wrote the standard reference work on quality control, the Quality Control Handbook, first published in 1951 and now in its fifth edition. This handbook is the reference for most quality departments and business improvement change agents since it provides important how-to information dedicated to improving an organization's performance by improving the quality of its goods and services.