Principle Four – The Law of Diminishing Returns
The point at which the level of benefits gained is less than the number of resources invested.
On all projects and tasks, it is important to understand where you will see the most results for your efforts (80/20), at what point the returns diminish and only small improvements can be made (trifles) and when you are
just wasting time (Parkinson’s). By trying to complete a task beyond reasonably defined “perfection” state you not only waste time and energy but may possibly do harm to the project. By understanding the law of diminishing returns you can choose the exact level of execution for your intended purpose, and give yourself and your team “permission” to not strive for an impossible outcome wasting valuable resources.
Steps For Leadership Efficiency
- Define the amount of time to spend on the project or task (Parkinson’s) – This does not have to be exact
yet needs to inform the team how much time should be spent. Example – Leader: “This process needs to be re-worked and documented in the next two weeks. It should take you 2.5-3 hours.” The staff member knows the deadline, and how much time it should take to complete. If the final deadline and recommended time are missing from the instructions, the process could take months and dozens of staff hours.
- Define the 80/20 factors (Pareto’s) – Define clearly what we feel are the 20% of resources, actions, people, and tasks that will produce 80% of the results. Confirm our estimation of these factors with leaders, peers, and direct reports. Then ensure that this 20% is communicated clearly to the frontline staff and others included in the project or task.
- Define if the project needs to be taken past the point of diminishing returns (Michelangelo’s Trifles) – For important projects that need to be refined past the 80/20, first, instruct your team to accomplish the 80/20 portion you have clearly defined. Then analyze the work and see what refinements need to be made to achieve the highest outcome possible. Understand that these refinements will take more time and energy for fewer results than the 80/20 part of the project. If you do not check in with them and redefine their priorities after the 80/20 completion, they will flounder at this stage and make little to no further progress.
- Stop at the Highest Possible Outcome (Law of Diminishing Returns) – In every project’s refinement process there is a point where you will achieve the Highest Possible Outcome. It is important to recognize this point realistically and communicate it to your team. Many good people will waste valuable time, energy, and resources trying to achieve an impossible outcome. Continuing to add resources past this point may even reduce the quality of the outcome. Example – A process has been clearly defined and documented for a daily task. If the process continues to be refined and explained deeper and deeper in the process manual it could become too complicated. Staff no longer take the time to learn the process and just do as they have always done. The extra time, energy, and resources actually produce a lower outcome as the work continues.
Periodically take a moment to consider your 2019 goals against these principles. They are simple, yet powerful in creating successful projects and happy teams.