Posted by: ahmedashfaque | April 7, 2017

Law of diminishing returns


Have to ever heard of the “Law of diminishing returns”? It is a term used in marketing. It signifies that when a  product is launched in the market then it goes through the product market life cycle and ultimately there is no market potential left for the product and so its marketing discontinues. If this law of diminishing returns can be applied to different concepts?

We often hear of new project management or software engineering concepts to increase productivity of software project teams. Some of the techniques to do that include adopting a more productive programming language, project team restructuring, introduction of team performance incentives, hiring better talent etc.

But the most common approach to increase productivity is to use best practices. Using services of a consultant who specializes in analyzing current project management practices of any organization and making suggestions to improve upon these practices; any organization can bring in better productivity. These productivity gains are generally based on adopting best practices as practiced by organizations who are performing better.

Generally most organizations adopt these practices over time. Indeed these best practices will help in improving on productivity. But when most organizations have adopted these practices then competitiveness of all of them become the same. So the gains enjoyed by early adopters start diminishing over time. The money and effort involved in changing the organization is paid off over time but the gains enjoyed in the early phases start diminishing. This situation is similar to the product market life cycle. The law of diminishing returns kicks in after some time.

When this happens; organizations start looking for better practices once over again.

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