In my previous post I talked about the law of diminishing returns, the idea that the allocation of resources to a process will yield increasing output, then begin to taper off at the point of maximum efficiency and thereafter produce a diminishing rate of output for each unit of input. At some point, additional inputs may even yield negative results. Too many cooks really can spoil the broth.
For example, if you are making hand-made pies in a pokey little kitchen by yourself, every dollar you invest in resources such as additional personnel, ovens, bench tops, premises, staff training and management systems will result in increased efficiency and output (i.e. more pies), but only up to a point. Buying equipment you rarely need or hiring more staff than you can effectively use will not produce a great return on investment.
Thus the familiar law of diminishing returns:
As the curve roughly follows an S-shape and the mathematical function that describes this shape is the Sigmoid Function, they are commonly known as S-curves. This curve is an idealised representation of many phenomena of growth - the learning curve, experience curve, law of diminishing returns, and even the curve of the Dunning-Kruger effect after the initial overconfidence bubble has burst.
Not all growth phenomena follow exactly this S-shape, of course. But it is an accurate enough model to be useful. And, importantly, it represents the psychological perception of growth as well as the measurable outputs. Things seem to start slowly, then take off, then you feel like you're beginning to plateau, grow stale, reach your limits, and eventually butt your head against a brick wall.
You may be able to think of some areas of your own life or business where you seem to face the same problems over and over again, where no matter how hard you try, you just can't seem to break through. This year feels like the last. Your practise seems to be making you worse. Your business is doing alright. But just alright.
Let's go back to the pies.
Word has spread, and demand for your delicious pies has allowed you to expand. Your new kitchen is vast, spotless, and dazzlingly productive. Your staff are tireless, cheerful and efficient. Pies are flying out the door, but no matter how hard you try, you can't keep up with demand. Hiring staff who will be able to measure up is slow, difficult, and requires lots of training. And even if you had 100 more staff tomorrow, you still can't get the cost per unit below, say, $4 because each pie takes the same amount of labour and raw materials to produce, and at that cost, your margins are too low to be sustainable. You have reached maximum efficiency for this business model. What to do.
Level Up
The key insight is the s-curve applies to one frame of reference. One process, one business model, one technique, one domain. The only way to break through is to look up and start a new S-Curve into the next frame of reference. Maybe you need to invest in an expensive pie-making machine, or devise a completely new method of manufacture, or open a restaurant, or start a franchise, or go and study with the best pie chef in the world so you can make your pies even more exquisite.
Whatever it may be, as a leader it is your job to see that next step and take it. Without starting a new S-curve of growth, you are doomed to be bound by the constraints of your current paradigm.
Everything has growth constraints. You cannot optimise a process to infinity. You cannot perfect a technique into another technique. You can't become something greater without changing what you are.
The best time to level up into the next S-curve is before you pass the point of diminishing returns in your current curve. On the steepest part of the S-curve, when things are growing quickly, it is easy to get complacent, and to imagine that this growth will continue forever.
In fact, that is exactly the time when you should be looking towards your next phase of growth:
As you will be entering the unknown and leaving the world of complacency behind, it will be scary. This is good. This is what Seth Godin calls "dancing with opportunity", what Michael Bungay Stanier calls "choosing a worthy goal." It means leaving sunk costs behind, and knowing that continuing to do what you've always done will not get you to where you want to be.
In this sense, the best next step is not one of optimisation, but of strategy, where optimisation could be said to finding the best way to do things, and strategy finding the best thing to do.
Progress Is Not Linear
It is not just that life has ups and downs and that the road to success is bumpy. There is little insight in that. It's that progress follows a predictable pattern of slow exploratory growth and learning, followed by rapidly increasing progress, a temptation of complacency, a point of diminishing returns, a plateau, and then usually a decline.
The last two or three steps can be omitted only by searching for the next nested S-curve to level up to, and from which the next phase of growth can begin.
In order to achieve great things, it is also important the S-curves overlap. One builds upon the last. To bail out when things get tough and start an entirely new s-curve in an unrelated field means you will miss out on the opportunity to capitalise on your earlier achievements, and will be starting from scratch.
Cripes! They're Everywhere
Once you start to look for them, S-curves pop up everywhere there has been sustained development.
Societal Technology
Hunter-Gatherers > Subsistence Farmers > Collective Agriculture > Specialisation of Skills > Utilisation of Animal Labour > First Industrial Revolution (steam, cotton gin, telegraph) > Second Industrial Revolution (telephones, cars, radio) > Third Industrial Revolution (computers, internet) > Fourth Industrial Revolution (AI?)
One Professional Route
Apprentice > Tradesperson > Sole Trader > Contractor with Helpers > Working Company Director > Independent Business Owner
Another Professional Route
Student > Working Artist > Bandleader > Local Reputation > National Reputation > Global Reputation > Cultural Asset
Prompting Questions
Where am I on my current S-curve? - Does it feel new, scary, and exciting? (Start) - Does it feel like things are zooming along and could continue like this forever? (Middle) - Do I feel bored, frustrated, not challenged or working to my potential? (Inflection point / end) - Do I feel like I should be tackling something bigger? (Inflection point / end)
What are the leaps or step changes I would have to make to get to where I want to be? What would those S-curves look like?
Is there any next step I know I should take, but am afraid to?
What are some examples in my past where I have successfully levelled up to the next S-curve? What did it feel like? Was it worth it?
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