Your Innovator’s Toolkit: The Law of Diminishing Returns

During November, we explore four mental models related to transformation and change. By the end of this month, you will have strengthened your innovator’s toolkit with these new principles and ideas. The law of diminishing returns is the first mental model for us to get our teeth into.

Your Snapshot

A quick synthesis of this issue to share

💡 The law of diminishing returns is the economic principle that investing more resources is no longer worth the return after a point.

💡 We can place our projects and innovations on an S-curve which helps us consider the phase of growth and the decline in impact.

💡 Using the law of diminishing returns enables us to be more precise, watchful and strategic in measuring success over time.

#290 | November 4, 2022​ | Tom x Midjourney​

What is the law of diminishing returns?

The law of diminishing returns is the economic principle that after a certain point, additional investments in a business or venture will yield progressively smaller increases in output or profits. In other words, there comes the point where investing more resources is no longer worth the return.