Pareto Polluters
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by Richard Maltzman,
Dave Shirley
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Date
I start my first post of 2017 with - of all things - a limerick.
There was a young man named Pareto
Whose mom and dad christened Vilfredo
When you’re using his chart
You can see with a start
Where to locate the rotten tomato
Indeed, a Pareto chart is the graphic version of the Pareto Principle, sometimes called the 80-20 rule. Many of my PMP prep students are under the incorrect assumption that Mr. Pareto worked for the Project Management Institute, or the International Association of Ranked Histograms. However, it’s nothing like that. Vilfredo Pareto was an interesting man. Here is a snippet from the International Library of Economics and Liberty:
Born in Paris to Italian exiles, Pareto moved to Italy to complete his education in mathematics and literature. After graduating from the Polytechnic Institute in Turin in 1869, he applied his prodigious mathematical abilities as an engineer for the railroads. Throughout his life Pareto was an active critic of the Italian government’s economic policies. He published pamphlets and articles denouncing protectionism and militarism, which he viewed as the two greatest enemies of liberty. Although he was keenly informed on economic policy and frequently debated it, Pareto did not study economics seriously until he was forty-two. In 1893 he succeeded his mentor, Leon Walras, as chair of economics at the University of Lausanne. His principal publications are Cours d’économie politique (1896–1897), Pareto’s first book, which he wrote at age forty-nine; and Manual of Political Economy (1906).
A self-described pacifist who disdained honors, Pareto was nominated in 1923 to a senate seat in Mussolini’s fledgling government but refused to become a ratified member. He died that year and was buried without fanfare in a small cemetery in Celigny.
So, Pareto’s work was about economics, not quality or project management, or sustainability, per se. But they can certainly be applied to all three.
From an excellent article on applying the Pareto Principle, here are some great illustrating examples (by the way, remember – it’s a principle, or a rule (of thumb) and not a mathematical formula. So sometimes it’s 70/30, sometimes it’s 90/10 and sometimes indeed, it’s 80/20. The principle is the key.
The 80/20 Rule means that in any situation, 20 percent of the inputs or activities are responsible for 80 percent of the outcomes or results. In Pareto's case, it meant 20 percent of the people owned 80 percent of the wealth. In Juran's initial work applying the 80/20 rule to quality studies, he identified 20 percent of the defects causing 80 percent of the problems. Project Managers know that 20 percent of the work (the first 10 percent and the last 10 percent) consume 80 percent of the time and resources.
Other examples you may have encountered:
80% of our revenues are generated by 20% of our customers.
80% of our complaints come from 20% of our customers.
80% of our quality issues occur with 20% of our products.
Or:
20% of our contributors provide 80% of our funding.
20% of our employees are responsible for 80% of sick days.
20% of my ideas generate 80% of my traffic on my blog.
I like to use a "see saw" graphic to illustrate this. There is a "more significant" 20% that outweighs the "less significant" 80%. My drawing attempts to show this below.
To show how this is used in quality (and how it tends to appear on the PMP(R) Exam) below is an example of complaints from people staying at the Hotel Pareto – located fictionally, in the town of Turin, Italy. Here, we apply the 80/20 rule, allowing us to focus on nominally 20% of the types of complaints (room, cleanliness, and appliances) that make up 80% of the total number of complaints and with a reduced effort, we can get rid of most of the complaints from guests at the Hotel.
I think you can see what this has to do with quality and project management, and if you’ve studied for the PMP Exam, you know the Pareto Principle already, to some extent. So, what does this have to do with sustainability?
A recent article in Scientific American caught my eye. It was actually the subtitle that grabbed me:
“A small number of industrial facilities emit an enormous share of toxics and greenhouse gases”
That’s the embodiment of the Pareto Principle, right there in the subtitle. The first paragraph of the article:
A mere 100 facilities, out of 20,000, produced one third of U.S. industry's toxic air pollution in 2014. Another 100 released one third of industry's greenhouse gas emissions, among 7,000 installations that discharge the gas. And according to an investigation by the Center for Public Integrity that created the rankings, 22 “super-polluter” sites appeared on both lists (noted below). Many are coal-fired power plants, and some rank high because they are very large. This group is responsible for a significant chunk of U.S. industrial air pollution.
You can look at the figure below to see where these “Super-Emitter” facilities are located (in the US). After all, this is Scientific American. I’m sure that similar Pareto analyses have been done (or at least could be done) in China, Europe, India, Africa, Oceana and elsewhere. Here, the role of "complaints" or "rotten tomato" is played by the super polluter.
So – what’s the point? The point, just as in applying Pareto to project problem root causes, is that we can look at these facilities first as the most effective way to reduce emissions. As the article says,
The good news is that cleaning up the sites could make a big dent in toxic compounds that are implicated in respiratory illnesses and in the country's contribution to climate change. The researchers say that existing regulations are sufficient, but weak enforcement must improve.
Full article from Scientific American:
https://www.scientificamerican.com/article/the-top-22-air-polluters-revealed/
Note: if you want a more thorough listing of the facilities and the details on the quantities of emissions, you can go to this site: https://www.publicintegrity.org/2016/09/29/20248/america-s-super-polluters
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Richard Maltzman
on: December 31, 2016 11:59 AM |
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"We should be careful to get out of an experience only the wisdom that is in it - and stop there; lest we be like the cat that sits down on a hot stove-lid. She will never sit down on a hot stove-lid again, and that is well; but also she will never sit down on a cold one anymore."
- Mark Twain
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