Knowing that if I hit “mark as unread” it would fade into other half-read emails in my inbox and I would never look at it again. So I shot back the first thing that came to mind:
I felt pretty good about that response until Bob (my much revered business mentor) sent in his response:
“Recognize the moment I’m at the ‘Point of Diminishing Returns‘ and act to change it up or drop it.”
Bob put into much better words what I have since adopted as my 2012 goal. It’s not enough to cross your fingers and hope you somehow pull of the impossible and come out unscathed. It a much more realistic to plan to practice a skill that takes time and experience to put into daily practice.
So this blog is dedicated to the principle that will be my overarching goal in 2012: the Law of Diminishing returns.
What is the Law of Diminishing Returns?
If you look at my rough interpretation of this concept, you’ll see a graph that shows a typical return on investment arc.
The basic concept here is that it is important when you are investing time, energy, money or emotions into something that you keep an eye on when the returns begin to decrease or plateau. Once you identify a plateau or a drop in return, stop. It’s that simple. Walk away and start fresh on something that will yield higher returns.
Bob is right, understanding the Point (see the “X” above) of Diminishing returns is the key to productivity and therefore success.
What does this look like in the business world?
Example 1: You have been asked to edit a report for your boss to present to his client. You dive into the project and piece together all the key points and make sure it possesses a logical flow. So far, high returns. Then about an hour into the editing, you start to get nit-picky about margins, adding cool bullet points and changing the page number placement on the page to fit slightly better than before. Warning!
You have to ask yourself: “Will the client or the boss know (or care about) the difference?” If you have to think too hard about it, you’re in a plateau and need to stop working on the report. Save it and move on.
Example 2: You own a photography company and have worked hard to afford new lens and new shooting techniques each quarter. Your following is loyal, and sales are growing. This year, as usual, you dedicate hours upon hours to researching which new lens you can add to your collection and practicing new techniques only other photographers would appreciate.
At this point, unless your breakeven is accurate and your management processes are functioning well enough to afford you the time to delve into R&D for fun, your returns are quickly diminishing. Unless your efforts will shortly allow you to charge more for your services, and therefore increase your revenue, this time is not highly productive.
How to apply the Law of Diminishing Returns to your business:
When I talked to Bob about my plans to apply the Law of Diminishing Retruns to my chronically over-committed life (not just work), he emailed me these thought provoking points:
At each planning or decision point, ask yourself: Will this particular use of my Time and Energy bring me “RETURNS” sufficient to justify their (continued) investment?(Note: “Returns” can mean the satisfaction of either “giving” or “receiving”)
Do you know which aspects of the Relationships in your life, Your Work and your Other Life Activities that are either at or beyond the point of Diminishing Returns for you? In other words, what aspects of your Life have become no longer “worth it” to you or worse, even painful?
Can you identify the Relationships that are toxic to you – those that probably will or already do bring you “down” significantly?
- Can you name the individuals?
- Are you fully aware of the “price” you pay to keep each relationship “alive”?
- Can you modify them and/or let them go? If so, how?
- In your mind’s eye, can you see a clear picture of what your “toxic relationship” decisions would create for you? Would your goals become less or more likely? What would each choice do to and/or for your “supply” of time and Energy?
How about the negative or “costly” (i.e. boring, meaningless, painful, exhausting) aspects of your current Work?
- Can you identify the elements or your work that are most depleting or detrimental to you?
- Do you have a true sense of the toll these “negatives” are having on you?
- Is there any way you can improve them…and/or let them go? If so, how?
- If you could “fix” them, what would each “fix” cost and/or return to your supply of Time and Energy? How much “fuel” would it leave in or return to your tank?
How about your Other Life Activities?
- What are the ”Top 3 things” that may be “draining your Time and Energy supply – where you’re either at or well beyond the Point of Diminishing Returns? (e.g. Golf!, T.V.?, Too much exercise?, too much debt? Too much “required maintenance”?, Too many commitments? Too much travel?, Too many “musts”?)
- Assess the impact your Top 3 are having on your Time and Energy as weighed against their real benefit, if any.
- What can you do to modify them? Or, can you let them go?
- If you could modify them – or let them go, what would happen to the level of “fuel” in your ‘tank”?
- How to Accomplish More by Doing Less (blogs.hbr.org)
- Gem of the Day: How to Accomplish More By Doing Less (nugenerationwebdesign.com)
- The Trick to Accomplishing More by Doing Less: Take Breaks [Productivity] (lifehacker.com)