Pareto analysis is a simple way to figure out the major causes for a problem. Though it’s mostly used by quality assurance people, pareto analysis is also useful for organizational development, because it is common in manufacturing (so many people are used to it), and because it is a clever system.
Typically, Pareto analysis is used both to kick off problem solving by helping to identify root causes (the basic, underlying issue which is causing the problem, as opposed to the “apparent” issue which may, in itself, be caused by something else – for example, replacing a defective voltage regulator which is allowing batteries to be damaged, rather than simply replacing the batteries).
Pareto charts are useful because most problems tend to come from one or two processes or components, rather than from a large number of causes. It is, simply, a histogram, laying out categories (process or material problems) versus the number or proportion of problems, with a (rather unnecessary) curve showing the cumulative percentage of incidents.
The hard part is collecting the information, and distilling it into useful categories — that is, categories that make it easy to figure out how to resolve the problem. Categories are shown in descending order, so that the most common issue or process shows up first. The categories should be specific enough to be actionable. In our quick-and-dirty example, “employee error” isn’t elaborated on because it’s not a major issue, compared with the first three items — two of which could be considered employee errors on their own.
If no clear cause appears, you can change the categories to see if that works. Otherwise, the first few bars should generally be targeted.