Glossary
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Product Management

Pareto Principle

What is the Pareto Principle?

The Pareto Principle, or 80/20 Rule, refers to a theory that 80% of the consequences come from 20% of the effort. The Pareto Principle is named after the Italian economist Vilfredo Pareto, who observed in 1896 that 20% of his pea plants generated more than 80% of the usable pea pods. Pareto went on to apply the 80/20 connection to his work in other areas.

Why is the Pareto Principle important?

The Pareto Principle is a very useful tool for maximizing the efficiency of your time and resources. It's not uncommon for people to lose sight of what's going to have the biggest impact on their results when they're being dragged into the long tail. Instead of scattering your efforts, focusing on the areas of your product with the most impact on its performance or influence over customer perception will net much more powerful results than chipping away at everything indiscriminately.

What is a Pareto chart?

A Pareto chart is a bar chart that shows the frequency of occurrences or their cumulative impact, ordered from highest to lowest. It is one of the seven basic tools of quality, which are different ways to view data that relate to the quality of a product or service. The example below is based on issues found in beta or delta testing.

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