The Law of Diminishing Returns: Finding the Balance

When is enough enough? When is something quality or excellent? Is there even really such thing as perfection? Does the level of effort put into a project always have to be high? These are questions I ask myself when working projects. Unfortunately, my actions don’t always correlate with my answers. Finding a healthy balance in our efforts is probably one of the most misunderstood and unappreciated work related topics.

If you haven’t heard of the Law of Diminishing Returns, you’ve surely experienced it and been a victim of it. Quite simply, it means the more you work on a project, after a certain point, the less results you notice. At least that’s how I’m defining it for this post. Ultimately, we want our economy of effort to remain high, while still meeting the objectives of the task. We want to be prolific producers. As we near excellence or perfection, our returns are diminished while the effort is increasingly enormous, which becomes demoralizing, boring, and unsatisfying.

Though originally an economic principle, I see diminishing returns everywhere. As a stock increases in price and nears its true value, the margin of safety decreases and the chance of further gains decreases—the stock holder is simply not getting the same level of value in exchange for his risk that he had when the stock was severely underpriced. When giving a lecture to any group, the majority of listeners will comprehend, but there is always a minority that needs special help—the lecturer has to spend an inordinate amount of time with that select few, diminishing the volume of information he shares per unit of time. On practically every test I’ve ever taken, I can breeze through most questions very quickly, and then spend the majority of my time on a few very difficult questions—my ratio of questions answered per unit of time is drastically reduced during the end of a test. Last Sunday when I plowed the snow off the driveway and spread salt over the concrete to lower the freezing temperature, I noticed on the instructions that a certain amount of salt per unit area was recommended—above a certain coverage density of salt, the effort becomes cost prohibitive because the ice won’t melt any faster, or does so at a much lower rate. Every time I see a traffic accident with a couple dozen people standing around, I think how inefficient that is—a single person can address 90% of any immediate concerns like a 911 call, removing the victims from harm’s way, giving basic first aid; a second responder could cover the other 10% of desired immediate actions. Beyond the first two or three people, there is little to no value gained from others.

Let’s use truck washing as an example.  I can wash my truck in 10 minutes and have it looking great. If I spend two hours, however, I’ll be able to wash it again to catch spots I missed, scrape off any tough spots, wax it, and dry it with ShamWow. Which is a more efficient use of my time? It depends on my desired outcome, but in this case it’s easy—the 10 minute wash gives me what I need and more efficiently. Why would I put in 12 times the amount of time in order to get a finished product that barely looks any different? I wouldn’t, unless I were entering the vehicle in some car show, where details matter. What’s even more efficient? Driving through a 3-minute automatic wash at the gas station. In all three scenarios, my truck probably looks the same to a bystander. In all three scenarios, my truck will look dirty again within a few days.

One more example is in learning a foreign language. Before I moved to Italy, I purchased a set of Italian language CDs. There were 90 lessons meant to be listened to over 90 days. Well, the first lessons were easy, but around lesson 30 became more difficult for me to understand 100% of what was being taught. So, what would have been the best use of my time? To continue on to the next lesson, even though I had mastered only 80% of the prior lesson’s material…or should I repeat the lesson 2, 3, 4, maybe even 5 times until I reach 100% comprehension and understanding? The answer depends on several factors, but with limited time to study, the best course of action is probably to move ahead. If listening to a lesson once gives me 80% mastery, then listening to it again will give me far less (no more than 20%) additional mastery. This is a substantially diminished return with each subsequent listen of a repeated lesson. My reasoning in continuing to the next lesson is that in 90 days, I would much rather have completed the entire language set and mastered 80% of it, than completed, say, 60 lessons for which I had 100% mastery.

People have written books and essays on this topic. I remember reading an article in college, written by some military general, about the final 1%. He wanted to know how to get that final 1% of excellence out of a person or project, that maybe the final 1% would be the difference between someone living or getting killed in combat. I’ve heard Colin Powell talk about some of his decisions and how he’d rather make a decision now based on 80% of available information, rather than delay a decision a week to get 100% of available information. I’ve heard other leaders talk about even lower percentages, that the most important thing is to make a decision and take action now even if they understand only 30% of a situation. In other instances, I’ve heard leaders say that nothing short of perfection is the standard.

This leaves a thinking person like myself with lots of questions. Just what is quality, what is acceptable? Can I turn in a product that is based on 30% understanding of the problem as long as I turn it in now? Do I have to delay a project until I believe it to be perfect? I don’t know. It depends. And therein lies the dilemma of a professional.

One of my biggest faults, if you want to call it that, is my determination to produce quality, excellent work no matter how much effort is involved. I know I’m not alone in this fault, and yes, it is a fault. I have spent countless hours doing mundane work only because I wanted perfection. Because I put in so much time, I had quality products, but where did that leave my other projects? Looking back, I would have been better served had I put less time and effort in some projects and instead focused that leftover energy on new projects or personal goals.

We have to give ourselves room for imperfection, for error, and for “good enough.” To insist that every project and task is equal and that they are all of the highest priority and that anything less than perfect is unacceptable is an invitation to failure, and a recipe for poor morale. Don’t take my word for it. Here is what others say:

Striving for excellence motivates you; striving for perfection is demoralizing.  ~Harriet Braiker

A commander who sets a standard of “zero defects, no mistakes” is also saying “Don’t take any chances. Don’t try anything you can’t already do perfectly, and for heaven’s sake, don’t try anything new.” That organization will not improve; in fact, its ability to perform the mission will deteriorate rapidly. Effective leadership requires leaders who are imaginative, flexible, and daring. Improving the USAF for future missions requires leaders who are thoughtful and reflective. These qualities are incompatible with a “zero defects” attitude.   ~Army Field Manual

Today, I gave this topic a lot of thought. I considered how much my production is lessened due to my strong desire to produce perfect masterpieces. Thinking more about it, I believe the root cause of many people’s procrastination can be narrowed down to a need for perfection. It isn’t that all procrastinators are lazy. On the contrary, I think that many procrastinators are wholeheartedly devoted to their projects, but so obsessed with building a perfect game plan and having all the right pieces fall into place on a project, that time flies by until they are forced to produce.

Limited time is a catalyst for intense focus among productive procrastinators. I am a procrastinator when I have the time, but I am also extremely punctual. Very rarely in my entire life have I been late to a meeting, an appointment, or a deadline. Give me a time and I will be there. How does procrastination factor into diminishing returns? I think if we can create real or even artificial deadlines that we must meet, then we make ourselves much more productive during that limited time and then leave  the issue closed, even if the product isn’t perfect. I know I’m at my most productive when under intense deadlines and workloads. The ability and perceived need to focus is incredible when under the gun. Maybe this is why people say “if you want something done, ask a busy person to do it.” That busy person takes care of it right then and there, with little regard for perfection and a high regard for production, so that he can move on to his next task.

To answer the profound questions that started this post, I created a simple question set that should enable anybody to gauge the amount of time and effort a given project deserves:

1. What is the priority of this project over other things?

2. What is the desired outcome of the project?

3. What level of effort is needed to reach the desired outcome?

4. How nearly complete should the project be to reach the desired outcome?

When we ask ourselves these questions, usually answers become glaringly obvious. Back to the truck washing example, I know that 1. Washing my truck, while not urgent or high priority, might need to be washed soon, so that the paint doesn’t corrode; 2. My outcome is to have a truck that looks clean (at least temporarily) and has no tar, bird droppings, bug guts, or other gunk that could ruin the paint; 3. The effort required is probably 10-20 minutes to give the truck a good soapy scrubdown, followed by a walk around to make sure I knocked off all the sticky bugs and tree sap; 4. To reach my desired outcome, I don’t even necessarily have to wash the truck properly, and could get away with using the window squeegee at the gas pump to scrub off bug guts.

Are you a procrastinator? Do you think it’s because you are just plain lazy or do you perform better under pressure? Have you noticed this law of diminishing returns with specific areas of your life?

Full disclosure: I wash my truck every month or two and only because I don’t want bird droppings and smashed bugs to corrode the paint. Learning a foreign language is incredibly difficult and definitely can’t be done by CD lessons alone.