>EA and the Law of Diminishing Returns

>One of the best known economic laws is the law of diminishing returns, which states that past a certain point, the more input of something, the less additional output. While this law is typically applied to production, I believe this can also be applicable to the growth of service organizations (like those found in government or the private sectors) in that past a certain size, adding more people, funding, or whatever yields less additional benefit for the enterprise.

In the organization, size matters. In a larger organization, the diminishing returns takes the form of more complexity and less efficiency. While in a positive sense, a larger organization can do more, service more people, generate more goods, and overall accomplish more. However, as the enterprise grows, it benefits less and less, since the organization get “weighed down”. Bigger often (but not necessarily) is not better, since it can mean more stovepipes, more redundancy, more levels of management and oversight, more bureaucracy, more complexity and so on. While on the other hand, lean can often mean more nimble, flexible, and agile. To me this is similar to the story of David and Goliath, where the giant Goliath is outmaneuvered and taken down by the smaller David.

The Law of Diminishing Returns with respect to large organizations has two major implications to EA:

  • In a larger organization, the size and complexity can make executing a sound EA program more challenging. In some cases, there may actually be multiple EA programs or no viable EA programs, because “everyone is doing their own thing”, and seemingly no one can make them stop.
  • A large (unwieldy) organization can actually benefit from EA more than a smaller one, since EA is designed to help those areas that weigh the large organization down. For example, EA looks to eliminate stovepipes in the organization. EA works to reduce gaps and redundancies. EA looks to establish standards and build interoperability. EA shores up and provide support to the organization collapsing under it own weight.

So large, complex organizations can be a challenge to the EA practitioner, but they can also yield the biggest dividends.

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