Sometimes the simplest of tools are also the most powerful, and this is clearly the case with Pareto Charts.

A Pareto Chart shows us how to achieve the Biggest Bang for the Buck by ranking the causes that influence a given outcome the most. Not all Causes are Created Equal This simple concept is forgotten more than it is remembered: when multiple factors contribute to a problem or goal, typically a small number of those factors (one to three in many cases) will control the desired outcome the most. This is also known as the 80-20 Rule.
Understand the vital few factors influencing your outcome, and you can exert the most leverage with the least amount of effort. The Pareto Principle in Action Here are a few examples of how the Pareto Principle applies to a number of business situations - • A manufacturer wants to reduce its cost of failure five million dollars. There are over thirty line items on the cost of failure report, but four of those line items will deliver the five million dollar goal. The manufacturer creates a Six Sigma team for each of the four critical line items, focusing their resources on these "vital few" opportunities, rather than trying to address each and every line item in the report.

An undergraduate student wants to secure a good job after graduation. There are countless books published on the subject, listing all of the success factors that can help a student secure a position after graduation. Fortunately the student finds a mentor who is also a hiring manager, and learns that only three factors are necessary to secure a position in most cases: good grades, prior work experience, and good interviewing skills. By focusing on these three factors, the student lands a job (fortunately she learned of these factors early in her college career, and had time to do something about them!). • An internet publisher wants to increase traffic to her website, and is overwhelmed with the volumes of information showing how to improve search engine rankings.

After interviewing two highly successful publishers, she learns that three primary factors will drive traffic to her website: proper keyword usage, links from other websites, and outstanding content.