Diminishing benefits

Over the years my son accumulated dozens of Lego packs that let him construct different things (cars, planes, boats, etc). We now have probably about 10 litres worth of Lego pieces all stored in one box. Efficient to store, but painful to assemble as even building the easiest/smallest items becomes a hard work. This is because there is so much of it that we have to spend a lot of time searching for each tiny piece in a big pile – which takes the joy out of the process and sometime we end up giving up.

However, I also noticed that almost in all the projects I worked with teams tended to collect significantly more data than they needed or could process and benefit from it. My colleagues always seemed to have assumed that knowing more was good. Except we neither had capability to process that data, nor time to look at it. Yet there was always reluctance to reduce the number of variables that we needed to collect. It appears that people perceived there was a linear correlation between the number of data variables collected and the benefit they derived. However, the reality was the exact opposite. The more data we collected (plus, the more effort we spent on it) the less benefit we derived from it – something like in a graph below. In essence, too much data took the joy (if there is joy in data) out of it.

Value vs volume

In one of the studies by psychologists (who always seem to have a lot of time in their hands), they offered to two groups of people different number of options of jam jars. The group with more options was less likely to make a choice than the group with fewer options. Less seems more. In effect, it resembles – or might be a case of – diminishing returns, yet in many instances it’s not just diminishing but becoming obsolete altogether. If it’s a function of value vs volume, then maybe more volume means less value and vice versa.

This seems common in management practice more generally. In one of its articles the Economist argued that organisations (and implicitly managers within them) typically tended to do more than less, but a lot of those activities not leading to any benefit. It seemed that doing more was giving an impression of creating benefit, but in actual fact it was not. It seems that we overestimate the benefit of our number of our actions, purchases, projects, KPIs, etc and can be suckers for figuring out what amount of effort is really productive that leads to beneficial results.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s