Using the Pareto Principle and Avoiding Common Pitfalls

The likeness of the Pareto Principle can be compared to Murphy's Law and the Peter Principle: it's a curious phenomenon. So, how did it make its way into quality? If using it to make decisions, there are some common pitfalls which can lead to delays in fixing a problem or even misdirect our efforts. So, what is it, and how can we use it for design?

Get to know the Pareto Chart. If it's built and applied properly, it can help us prioritize: root cause analysis, new design features based on user input, or to help us tackle a problem that just seems too big to even start (just to name a few examples).

We review the Pareto Principle, what a Pareto Chart is, what we need to consider when building one, and how we need to be careful when interpreting its results.

Pareto Chart Example
NSW Government & Clinical Excellence Commission. "Pareto Charts & 80-20 Rule." https://www.cec.health.nsw.gov.au/Quality-Improvement-Academy/quality-improvement-tools/pareto-charts.

To conclude:

  • A Pareto Chart is a useful tool for planning when trying to address the root cause of a problem or when prioritizing. It's been used for many years and can help us decide on the strategy of action.
  • The results of a Pareto Chart might not be textbook. It is based on a phenomenon not a proven scientific law. It's more of a compass than a statistical result.
  • We need to be careful to construct it with the right bins: low enough in a causal chain for us to act against and following the MECE Principle.
  • We need to think about and interpret its results to make a decision. We can adjust for categories that don't carry the same weight in severity or occurrence or even difficulty to resolve. Some ways we talked about addressing this is by applying weight or a factor, or creating a 3-D chart.

Extra Links and Articles to Learn More

Something just for fun "12 Fun Laws, Rules and Principles You Really Ought to Know" by Oxford Royale Academy, www.oxford-royale.com/articles/12-fun-laws-principles/

Video Harvard X introduces the basic construction and use of a Pareto. - Harvard X, & Institute for Healthcare Improvement. (2017). How to use a Pareto Chart. YouTube. https://youtu.be/ltBw6kwD3_o

Article Ms. Bhalla explores the common issues when using a Pareto Chart to make decisions. - Bhalla, Aditya. “Don’t Misuse the Pareto Principle: Four Common Mistakes Can Lead We to the Wrong Conclusions.” Six Sigma Forum Magazine, vol. 8 issue 3, May 2009, pp. 15-18. 

Presentation Mr. Stang added a z-axis to the Pareto Chart to evaluate other project parameters (like project cost and difficulty to implement) to make more informed decisions. - Stang, Eric. “Quarterbacking a Quality Risk Decision.” World Conference on Quality and Innovation. ASQ. May 26, 2021. 

Article Mr. Stevenson explores ways to multiply Pareto results by factors to address other project parameters (like project cost and difficulty to implement). - Stevenson, William J. “Supercharging Your Pareto Analysis: Frequency Approach Isn’t Always Appropriate.” Quality Progress, Oct 2000, pp51-55. 

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