Thursday, October 27, 2005
Diminishing Returns, Local Maxima, & Saying Yes to Life
I've always been interested in how judge the goodness of something, and how we learn how to turn up the goodness knob. Like when you see a bag of snack chips that says, "Now, better tasting!" I think, "Really? How would I judge that for myself? What did they learn that made them able to produce a better-tasting chip? What secrets remain buried that will someday enable even better-tasting chips? Can chips taste 10 times better? How about 100 times?" It may sound like I'm over-thinking something that is really just a calculated bid to make a lot of gullible consumers buy their product. But there is an important phenomenon illustrated here: it's easy to tell the difference between something that's terrible and something that's kind of good. But it turns out to be extremely difficult to tell the difference between something that's very very good and something that's merely very good. As you near the asymptotic top of the curve, pouring more and more effort into goodness yields less and less perceptible benefit. This is what's known as diminishing returns. It's important because you want to realize when benefits no longer justify costs. Also, being able to distinguish between things at the top is the essence of taste. Examples abound: Is a $200 bottle of wine really twice as good as a $100 bottle? That's a tough sell. On the other hand, it will not be hard to find a $12 bottle that's much more than twice as good as a $6 bottle. Businesses need to recognize diminishing returns because if you don't, you can start working too hard to distinguish yourself not very much. What's needed in this situation is to change tracks completely, to put yourself at the bottom of a new curve. Businesses are reluctant to make this decision because it's risky. But risk is the harbinger of reward. This is important in life as well as business, by the way. More on that in a couple of paragraphs. When you get stuck working hard near the top of the quality curve, it's what mathematicians call a local maximum. It means that you may not be able to do much better where you are, but you may be able to start over and climb higher. The classic metaphor is mountain climbing: When you climb to the top of a peak, you may be able to see higher peaks around you. You will only be able to reach those higher peaks by climbing down first. People are reluctant to do this, because at first, it looks like you're doing worse. The PC started out worse that the mainframe, but ended up climbing higher. Japanese cars started out worse than American cars, but ended up dominating. We see this over and over. This is the phenomenon that makes startups powerful in the aggregate, and makes nations that encourage entrepreneurship end up doing better than the totalitarian regimes. Artists are among the people who are able to bring about the difference between good work and very good work. And while merely good artists compete for space at the top of well-known local maxima, great artists push right on through to something profoundly different. I just finished reading "Beyond Java" by a well-known Java author, speaker, and consultant name Bruce Tate. It takes a lot of courage for him to write about a sea change in the technology that has become his bread and butter. Even more so, because the prospect of such a change is going to be extremely unpopular to the very audience he's writing for. I, on the other hand, couldn't be more excited. Shakeups are always exciting (granted, though not always beneficial). They are the very shape of opportunity. And besides, the status quo is lame and boring. People tend to be very comfortable with the status quo because it's well-known and safe, but I believe strongly that safety is overrated, and that it is not consistent with being fully alive. Why is great art so invigorating? Because it demolishes our comfort zone. This is analogous to life itself: a cycle of destruction and renewal, of constantly learning, adapting, and innovating.