Diminishing Returns

Many change efforts reach a point where continued investment or effort simply exceeds the likely benefit. Whether its internal obstacles or simply unpredicted issues, the best course of action is often to conclude an effort and declare victory even if additional value is theoretically possible. Using an effort where consolidation of something is the goal for example, consolidating down to one of that something may be the ideal. However, fewer of that something may be all that is realistically possible. To continue to invest beyond ‘fewer’ to try to get to ‘one’ may simply not be worth the effort required in many cases.

In some cases the cost in the cost/benefit analysis is dollars - such as when a simple spreadsheet may prove to be almost as effective as a more substantial database application. In other cases however, the cost may be an individual's own political capital or reputation which is better saved for accomplishing something else instead of more from the same effort. In other cases, it’s simply the opportunity cost - time spent trying to further improve the accuracy of reporting for example may be better spent tackling a completely different problem. This is where the perfection paradox often comes in - good is often good enough when other priorities, crises, and requirements beg for attention.

Setting expectations upfront regarding the point of diminished returns is also important to ensure the organization and its leadership views the progress for what it is, a success, rather than viewing the lack of reaching nirvana as a failure. In one agency for example, a working group spent over a year trying to define an organization-wide data taxonomy. At first the effort moved smoothly with the major aspects of what the organization did fitting nicely into an easily agreeable structure. But as time moved on and the group dove deeper into the details, the effort ground to a halt as almost no one would agree on compromising their sub-categorizations that they had built their organizations around over decades. In the end the group produced a nice document but the proposed changes were never accepted or implemented and the effort’s intended benefits were never realized. An almost identical taxonomy effort took place at another agency but the group, recognizing that it was unfeasible for every organization to change their information paradigm overnight, quickly switched gears to implementing a new top level structure in their organization’s document management system. The new top-level categorization was applauded for bringing ‘order to chaos’ within the agency’s system.