The Law of Diminishing Returns and Managing Expectations

by Joan Friedlander

My very first year in college I took two economics classes, with a plan to be a business major. That plan died on the vine within a few months, as did most of what I learned in those two classes. However, one piece of information stuck with me for all these years, the "law of diminishing returns." It's not that I've used it ever since, but it has come to mind in recent conversations with my clients when we talk about their capacity to produce - anything - and their frustration with themselves that they can't produce more than they do in any one sitting. Unfortunately, they are among the majority who set unrealistic expectations and then chastise themselves for not meeting them.

If you have similar feelings I'd like to introduce to this most excellent law in hope that it gives you the ability to chill out a bit, to be kinder to yourself and, perhaps, to stop over promising to yourself - and others - what you will produce within a specific period of time. To help, I'll start with two visual graphs that represent the law. (While looking for a graph, I found many representations. The two below represent the picture I recall in the books, and use input factors that are relevant to small businesses.)

Law of Diminishing Returns Represented

Dramatic illustration, but you get the point. The longer you engage, the greater the likelihood there will come a point when your output will be less than the return.

I had to include this one - impact of information overload?

Here is a long-winded explanation of what these graphs say, taken from Wikipedia.

[The Law of Diminishing Returns] refers to how the marginal production of a"factor of production" starts to progressively decrease as the factor is increased, in contrast to the increase that would otherwise be normally expected." If this is not yet clear, consider this. "...later output might increase in the same proportion as input, then ultimately, output will increase less proportionately than input. (This is the part of the Law that most people try to override.)

How this Law works in a typical day

Through working with a variety of people over the years in a variety of businesses, I've noticed that we each have a normal and natural rhythm throughout the day, and that though it may vary at times, there's some consistency for any one individual. I use two terms to describe this phenomena, one's unique "energy signature," and their "personal productive capacity." The Law of Diminishing returns gives us insight into capacity, which in turn suggests a predictable beginning, middle and end.

As is often the case, I start with my own experience and then observe what happens for others. I am a writer. I enjoy the process of writing. But I don't and can't sit down to write any time I want for as long as I have time. By observing my natural behavior, and not trying to modify it (that's the trick isn't it?), I have learned that if I want to work on a project that involves creating thinking and writing that the following need to be in place.

1. It is best if I get started by 11 am. Earlier is even better.

2. I need to write and do the reading that goes with it when I have nothing else vying for my attention, or at least nothing I can't put aside for a while.

3. 90 minutes is the amount of time that I can count on to be fully engaged, creative and , in the flow. This is my personal productive capacity for writing and research projects. After 90 minutes the quality of my attention, my energy and output declines. Period.

In other words, I can try it at other times or press through beyond the 90 minutes, but what I will get back in return is less and less over time. To fill one's schedule with promises and expectations based on "shoulds" rather than can and want is not productive.

I appreciate the conditioning that is causing leaders, owners and managers to push the bounds of natural human capacity. There is much to be done, resources are short, companies are lean and there is always more to do than time in the day, always. The pressure to make promises to get things done quickly and now is enormous and unrelenting. However, may I ask you to stop a moment and ponder this question: Are we not seeing the costs of responding to this kind of pressure at a global level?

To go against the grain of conditioning takes courage. When my clients "get it" they become unstoppable. They become much more effective, realistic and happier human beings. They are doing their best work and getting their work done. Can you imagine what your day would look like if you were to measure and understand your unique energy signature and personal productive capacity for your various work projects?

 

by Joan Friedlander, © 2010. All rights reserved.