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The law of diminishing returns.

The law of diminishing returns.

When I was growing up, the expression too many cooks spoils the broth was very common. It might still be, but I don’t hear it as much.

Now it is called the law of diminishing returns.

I am going to put this concept into perspective with an actual scenario. There used to be a very successfully company in Kitchener. For years, they made a quality products at an affordable price. Competition came into the picture and the management team were looking for ways to become more efficient.

One of them must have taken a course where they heard that using measurements can help improve your organization. They put together a team to measure and then put into practice the recommendations.

It worked! The changes they did made a difference. Yet like everything else it only lasted for short while. More and better competition came and this company created another group to help with the reporting and measurements. They had success but not as big as the first round of implementation. Even more competition came and the company created even more groups.

When this Kitchener company started the measurement practice there were 30 administrators and 300 workers. After 5 years, they had 300 administrators and 300 workers.

They were great at reviewing, measuring and reporting. Unfortunately they went out of business. Not because of the competition. But because their management did not understand the law of diminishing returns.