Management Lesson: The Law of Diminishing Returns

Posted by: milan

Time is time. No one can buy more time. You can buy more labor if you think it will help your team do more work faster, but that’s not the same thing as adding time to a project. The law of diminishing returns dictates that adding labor doesn’t exponentially increase productivity; in fact, at some point productivity can even go backwards.

For a real-life example, consider that two hardworking and experienced programmers working on a project. In order to finish the project on time, you decide to add one more programmer. Now the programmers may be completing the code more quickly, you decide to add six more programmers so that the project can be finished even sooner. You soon realize that although adding one programmer increased your productivity, adding six more only created chaos with creating a contentious environment. You reached the point of diminishing returns when you added six programmers.

Bottom line: You can’t build a house in a single day even with 100 people.

Management Lesson: The Law of Diminishing Returns was last modified: November 21st, 2006 by milan
 

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