Diminishing Returns
Pizza Hut buffet was a pretty big deal during the 80s and early 90s. On a very low budget, I could eat as much as I wanted, and I was a growing teenager who wrestled, among other things. You can bet I brought my appetite with me every time.
Besides the pizza, I really liked the Caesar salad, and I’d even eat some of the (admittedly sub-par) pasta dishes they put out there alongside the pies. Of course, the pizza was the main attraction, and I could astound people with the number of slices I could put down.
That first slice was always the best one. I was as hungry as I was going to be, and the perfect combination of flavors hit me like a thunderbolt every time. The second slice was still really good, and so was the third.
By the time I got to the sixth or seventh slice, I was typically pretty full. They still tasted really good, though, and they didn’t cost me any more money! The following question always came up:
How many more slices should I eat?
This is a great example of the law of diminishing returns. This is the idea that there is a point where adding more of something to a system simply isn’t worth the cost. At some point, my teenage gut will feel more discomfort from the addition of one more slice than I’ll feel pleasure at chewing, tasting, and swallowing that little wedge of heaven.
You might think that this experience with buffets thoroughly ingrained this concept in me. I think you’d be mostly right, but diminishing returns can really sneak up on you.
The reason the pizza conundrum was so difficult every time is because pizza is delicious. Every piece is fun to eat, so teenage Andrew was very incentivized to eat slice after slice. At some point, it wasn’t really in my best interest to keep going, but I often wouldn’t notice when that line had been crossed since I was laser-focused on enjoying the experience.
If you run a small business, you’ve probably run ads. Your first few dollars might have brought in some much-needed customers, so the next month, you decided to double down on your ad spend. It works, and more customers come in! Maybe you spent $100 that first month and got 10 new customers, so you spend $200 the next month and got 20 new customers.
But after doubling your ad spend to $400 for that third month, you start to notice that you’re only attracting about 25 new customers. After a very painful fourth month where you spend $800 and get 26 or 27 new customers, you throw your hands up in the air as you realize that you’ve been a victim of the law of diminishing returns once again.
Lesson learned, you lick your wounds and scale back your ad spend to $200 for the rest of the year.
I think every small business owner has to have moments like these for the idea to really stick. In a perfect world, we all learn from the mistakes of others, but I’ve noticed that the biggest improvements we’ve made over the years have been after making some sort of painful mistake ourselves.
The business I’ve been in now for most of my adult life is jiu jitsu, and it’s not just the owners of the business that need to be aware of the concept of diminishing returns.
Brazilian Jiu Jitsu is delightfully fun. It’s immersive in the same way a video game can be, but you’re using your entire body, and so is someone else.
It’s easy to get caught up in training, both during an individual training session and over larger periods of time. It’s enticing to try to stay for longer than is truly in your best interest—for one thing, you’re having a blast and you’re probably in flow state.
In a sport as physically demanding as jiu jitsu, your body needs lots of rest and time to recover. Too much training can cause injuries that can be nagging at first, but eventually can cause longer issues that will hinder your training down the road. Neglecting recovery time means you might sneak another session in, but the value of adding that session is lower than your time to recover.
Trust me when I say that I speak from experience here.
How about you—do you have experience from your own life with diminishing returns? Have you ever fallen into this trap with a sport or other activity, or maybe with a job or business?
Understanding and sharing what we’ve been through may just help us to avoid making the same mistakes again! Share a few of these moments in the comments if you can.
The Stoics focused on the balance before the diminishing.
"...the idea that there is a point where adding more of something to a system simply isn’t worth the cost...."
Hollywood keeps fucking up perfectly good film and television franchises by making new versions or adding sequels to old ones. They need to tell their venture capital investors to fuck off and start making new material again.
My family has avoided buffets for a long time, thanks to being exposed to excesses of it during a U.S. visit. Generally, Canadians don't eat the same amount as Americans, though mainly because there are far less of us than there are of you.