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An article in which I discuss how to recognize your “Optimal Effort Zones” and avoid the Law of Diminishing Returns.

Nearly all of my clients are examples for work ethic. They work hard. They burn the midnight oil. One of their great challenges is trying to understand (and then accept) what “enough” looks like.

Common struggles:

• If we just put in a few more hours…
• If I just review this one more time…
• Let’s hire one more…
• We’ll just increase their budget…
• Let’s try out yet another new software/process/system…

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The Law of Diminishing Returns:  What if you are doing too much?

For a great many of my clients, their challenges are not that they aren’t trying hard enough. It’s that they are putting in too much effort to achieve the results they want. As a result, they actually accomplish less and less.

It’s called the Law of Diminishing Returns. You can’t beat it.

In my experience, this observation nearly always elicits a visceral defensive reaction. “You don’t understand my industry!” “It’s the way everyone does it!”

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What do Diminishing Returns look like?

I recently read a study in the health and fitness world. The study compared two different high-intensity training schedules. The training sessions were the same length – but one group trained 5 days a week. The other group trained for only 4.

The results? The athletes that trained 4 days a week experienced equivalent gains to the athletes that trained 5 days a week. The additional day of training provided no additional benefit. It was a cost, with no return.

That is the Law of Diminishing Returns. This happens in organizations all the time.

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For the science deniers: How working more can actually cost you more

While Freud receives a lot of posthumous attention for cigars and repressed memories, many of the early psychologists and sociologists were focused on the workplace. Well over 100 years ago, people were still asking the same question, “How do we get more done?” Some of the solutions came from new technology. Some of the solutions came from a better understanding of systems and logistics (assembly lines).

But what these scientists were interested in was the human dynamic. Specifically: “How do we optimize human productivity?”

All of that to say, there is over a century of research into this topic. Below are two research examples and a case study:

A study out of Stanford University explored women working in munitions factories during World War I. At this point in US history, labor laws were still forming. There was no 40-hour workweek.

The study compared labor records with productivity. It found that as different factories used different shift structures – the longer shifts tended to be about 10% less productive than shorter shifts.

Henry Ford is famous for the assembly line and efficiency. In 1926, he discovered that reducing the workweek would both increase productivity and decrease costs associated with fatigue-related mistakes. As a result, he reduced his workweeks from 48 hours to 40. This was before the Fair Labor Standards Act of 1938 made a 40-hour workweek the US norm. He experienced higher productivity, lower error-related costs, and significantly reduced turnover.

A recent literature review conducted by the US Center for Disease Control examined 52 separate studies. Its results mirrored the above findings but even had more detail.  Workers who worked longer than a 40-hour workweek were more likely to:

• Be less productive than those who worked a standard workweek.
• Make errors that need to be corrected.
• Get injured on the job.
• Get sick.
• Gain weight.

Not only can more effort not produce more results – but it can actually cost you.

The results of the research have been harmonious for well over 100 years. In spite of this, Gallup recently found that over 50% of the US workforce reports working a longer than 40-hour workweek.

In my experience, this can be due to a number of factors:

• The disbelief that working more is unlikely to be more productive.
• Being “busy” and “working hard” is often easier to observe and measure than productivity.
• There are often social rewards associated with being busy, working late, and being the first to come in and last to leave.
• There can be a stigma (or a fear of repercussions) for not doing the above.
• Professions that are fueled by hourly billing are incentivized to work more, not necessarily to be more productive

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Opportunity costs and diminishing returns

This isn’t just about avoiding diminishing returns.

When we invest resources, time, or energy into something that is producing fewer results, we are also losing out on the opportunity to invest somewhere else! These are opportunity costs.

We are missing out on all of the benefits that could be available to us, if we stopped investing in diminishing returns and used those resources, time or energy to invest in new opportunities.

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How do you know when “enough is enough”?

• Cause & Effect Metrics: Keep track of outputs (resources/time/effort/etc.) and outcomes. It’s very difficult to know what’s going on at all if you don’t have a simple way of tracking it.
• Avoid Industry “Bro-science”: In the gym, there is an unending amount of “bro-science.” Science based primarily on Instagram feeds, fitness magazine covers, and watching action movies.

Every industry I’ve ever been involved in (including actual scientific industries) has its own versions of “Bro-science” as it relates to what it takes to get the job done. 

Instead, a deeper look at and understanding of industry best practices (not the same as industry common practices) will help you learn from the lessons of others.

• Get comfortable with 80%: For high achievers, in most cases, in most industries, hitting 80% is good enough. It’s still honor-roll material work. Anything beyond this 80% is unlikely to actually be better or more valuable in any appreciable way. And if it isn’t better or more valuable, why do it?
• Understand your lifecycle: In the fitness world, someone can achieve massive gains very quickly. Whether that is losing pounds or lifting pounds. In the beginning, the results come fast.   Over time, the gains slow down.

Expectations and levels of effort need to adapt to best match your goals. It’s important to be able to interpret this accurately. It’s often the opposite in organizations. For most businesses, the first gains are the most difficult. But over time in a healthy business, momentum is built and gains become easier.

But this isn’t always true. A new product or service may experience high gains when it is launched. But over time, they diminish. Adjust your efforts accordingly. (In many cases this means put a lot of effort and resources into the launch and reduce this over time.)

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Questions you can ask yourself

If you are struggling to identify the point of “enough”, the following questions might be helpful:

• Are there industry standards on how much (effort, time, resources) this should take?
• If I only had one more (dollar, hour, employee, opportunity), what would be the best use of it right now?
• What am I saying “No” to when I say “Yes” to more of this?
• Will more information/deliberation tell us something that we don’t already know?
• Are there any assumptions we are making that we haven’t already challenged?
• What am I afraid will happen if I don’t invest more (effort, time, resources), and how do I know my fears are justified?
• Are we tracking our outputs and outcomes? Do they show that we are experiencing diminishing returns? What seems to be optimal for us?

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Peer Pressure, Fear, Habit, and Avoidance are the Enemy

Peer Pressure: It’s not just for kids. The primary reason people put in too much effort is not wanting to look like a slacker. At work, we tend to size each other up by the amount of observable effort. Not the amount of observable results. Start to make results more obvious and important. Effort will begin to take its rightful place.

Fear: I suspect that the second most impactful reason people do too much is the fear of, “What if I quit too early?” “What if I didn’t do enough?”. This can be a paralyzing fear. Part of the freedom of it comes from being able to recognize the opportunity costs.

Habit: Many of us are stuck in a rut. We don’t really consider if our returns justify our efforts. If you are interested in seeing if this is true for you, experimentation is a helpful approach. I wrote a free e-book called How To Accomplish More Without Doing More. It illustrates some of the techniques I use.

Avoidance: I’ve found that many leaders use their work as a way to avoid something else. Maybe avoiding something at home, or some internal question that pops up when things “get too quiet”. Avoidance isn’t the path to growth. It limits you. But it takes a pretty brave and honest person to acknowledge this.

Don’t let peer pressure, fear, habit, or avoidance be what is really consuming your time and resources

Take good care,

Christian

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Opportunities

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