The 80/20 Principle
The Pareto Principle states that for many outcomes roughly 80% of consequences come from 20% of the causes (the “vital few”). Another name for this principle is the 80/20 rule.
A rule of thumb known as Price's Law can help explain why some companies fail. Price's Law says that 50% of work at a company is done by a small number of people. Specifically, it says that 50% of work is done by the square root of the number of employees.
Normal Distribution v.s. Pareto Distribution
Normal Distribution
The chart on the left illustrates the normal distribution of data. It shows in any set of data the graph will indicate a large amount of “average” in the middle. Very small numbers will be on the left and very large numbers will be on the right. We are going to consider how these distributions relate to human ability, creativity, and their implications for society.
Pareto Distribution