The Pareto Principle is a simple and elegant reality that is also known as the 80-20 rule, which states that, when a large number of potential causes of a given problem or condition exist, typically only a handful of those causes (20% – not exactly, of course) will affect the majority of the outcome (80% – again, not exactly). There are countless examples of the Pareto Principle at work in our personal and professional lives.
Pareto charts are used in the Six Sigma field and other disciplines for showing which factors contribute the most to a given problem. Here is a typical Pareto chart (see our Pareto chart Excel downloads) with notations explaining each piece of the chart (click on the image for a larger view):
Pareto categories -
Pareto Chart Example
Left-hand vertical axis -
Pareto Chart Example
Right-hand vertical axis -
Pareto Chart Example