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Hello everyone. Welcome to the Five Minutes podcast. Today I like to talk about diminishing returns in projects, and I don't want to talk about the economic aspects of the law, but I want to talk to you about your efforts to manage a project and how they relate to the law of diminishing returns that we see in the economy and other topics. First, we all are really seeking to make a balance between the effort of management and the results. So what we love, we love to simplify everything we can and get the best possible results. However, this is not an easy task. Most of the time, if you do not manage absolutely anything in your project if you just let it go and know many times the concept of entropy that I already explain to you in several other podcast episodes, it's like winning a lottery that your project will succeed. Why? Because if you manage, there is a good chance you will have challenges. Imagine if you do not do anything, it will be really winning a lottery if your project succeeds. But basically, what we see, we see that if we increase our management effort means if you put in place governance, if we put in place a structured decision-making process, we will spend more effort in managing. However, we will improve the chances of success and the chances of results, and how the results will look like. But this is not a line, a straight line.
For example, if you spend unlimited resources, managing the results will be unlimited. This is not true. There is a point when you start adding management layers that you start adding management processes, and nothing happens. This is the point that will call the point of diminishing return. After that point, every single management artifact you increase in the project will not improve the results. Maybe if it improves, it will improve marginally until you reach what we call the maximum yield means there is no way you will improve your project more. And then, after that point is only lost because the project will become so bureaucratic and it's so paranoid in managing everything that the results will be contaminated. What is our challenge is to understand what management level will be the most effective for our project is? Because many times we start very lean, very light, and over time this is typical in any organization. You start creating levels, and you start creating bureaucracy; you start creating reporting lines, plus reporting lines, plus reporting lines. And in the end, you just hurt your ability to really deliver the value because the value of your project is not your management. The value of your project is the result that your project will produce. And we can see this so clearly in many incumbent large companies. We can see this so clearly in many governments that struggle to deliver even a simple project because their governance model and their management style are so cumbersome, it's so heavy, that pretty much nobody can do anything.
And then you just drag the results of your project to the trash can because most of the time, you will not be able to deliver the project, not because you don't have management, but because you only have management. You do not have any flexibility for innovation and proper management. We see this in the government many times that people must have 25 signatures to proceed with any decision. And at this point, things just do not happen. And you cannot reach out to results, to the results you want. And what is the challenge for me that I want you to think is that there is no mathematical formula that will say, oh, do this. And this is the perfect level because it depends on your business. It depends on the type of your organization and it depends on the type of your project. But you need always to be mindful of access to management, access to templates, and access to filling, filling, filling. Boards and meetings all the time. They are so dangerous as doing nothing. And this is a very important point. And I want just to finish by mentioning an article I read recently about digital products, and I'm not saying I agree. Okay. But I just want to explain that the author did exactly this analysis. He challenged you and myself in the article by saying, would you accept to have 50% of the expected returns on your digital product but deliver it tomorrow? Or do you prefer to wait until the end until your project is absolutely perfect and get 100%? And when I read the article, I said, Wow, this is powerful because maybe 50% compared to one day of a 41 day of management can be a much better deal than having 100% in this case and taking three months to do it.
And look, I'm not saying I agree with 50, I agree with tomorrow, but the concept I want to share with you is that the law of diminishing returns will help you to understand that it's not a straight line where you put the effort in managing, and the results will appear after a certain point when you put more, things will not only stop improving, but they will become worse because of the bureaucracy, because of all the process, because all this cumbersome that everybody will be hidden behind a process that just does not work and a process that is in place to slow things down. Think always about that and take a look more at this law of diminishing returns and try to see how you can apply this in your management and the meetings you do in your project, in the paperwork you produce, in your project, the reports, etc. to find the perfect balance to succeed and deliver your project. I hope you enjoyed this podcast. See you next week with another Five Minutes Podcast.
