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Using Pareto's Principle

by John Gross

In my February column I said scorecards won’t tell you what to do—they tell you that you have an issue. So, what do you do when you see a problem?

Simple – Act. Sometimes the action is straightforward, the problem goes away by doing more of this or less of that. The rest of the time, you need to Identify potential causes before acting. Methods to identify causes range from the shotgun approach to the more disciplined approach of the Pareto Principle.

Since everyone is an expert at the shotgun approach, let’s talk about the Pareto Principle. Quality Icon Joseph Juran developed the Pareto Principle based on the work of Economist Vilfredo Pareto on Italian wealth distribution. Juran discovered that 80% of the consequences come from 20% of the causes (or vital few) holds true for most situations.

To apply the Pareto Principle: graph the frequency of your potential causes and then focus on reducing the highest frequency occurrence.

Sometimes a simple pareto will direct your focus, but sometimes you need to develop a second pareto chart for the major cause identified in the first pareto; and maybe a third pareto for the major cause from the 2nd pareto. In my experience, by the third pareto, you will clearly see what you need to fix.
The last step is to confirm you have permanently fixed the issue. If you have—celebrate! If you haven’t, review your analysis to see where you fell off course. (Typically, you have fixed contributing causes and not found the root cause.)
Using the Pareto Principle takes effort but yields results in less time with less frustration.

John Gross is an EOS Implementer who helps businesses achieve Vision, Traction, and Healthy. You can contact John at John@ or call 636.667.0579.
Submitted 1 years 2 days ago
Categories: categoryEntrepreneur's Toolbox
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