perfect productWhile doing my BA Economics, I was exposed to a concept called ‘Law of Diminishing Marginal Utility’ also known as ‘Law of Diminishing Returns’, proposed by Economist Alfred Marshall.

Here is the law, not in as many words:

During the course of consumption/use, as more and more units of a commodity are consumed/used, the utility every successive unit provides is at a diminishing rate. Though the total utility increases.

Let me explain this with the example of apples as my Microeconomics professor had done years ago.

Let us say you have bought seven apples, and you are going to eat it one by one and each apple will help you reduce your hunger by x units. According to the theory, with each successive apple the rate at which your hunger will reduce will diminish. See table below:

theory of diminishing marginal utility

Note: After the Point of Saturation (where the hunger reduced is zero – at the 6th Apple, in this case), there may even be negative impact. For example, you may throw up after eating the 7th Apple …and then feel hungrier than before.

Now that we have understood Law of Diminishing Marginal Utility, let us see how it applies in product management.

I know …it is hard to believe…but this Law of Diminishing returns, explained above with Apples also kicks in with Products that Product Managers or entrepreneurs like you and me build.

As a Product Manager, most of us tend to aim for perfection – this is a wrong approach to product management. It is OK if your product is NOT 100% perfect. In fact, the guy who built the most popular online product – Facebook – believes in it (Mark Zuckerberg is also known to keep a poster saying “Done is better than perfect” across his desk).

Any product/feature that handles 95% of the use cases it is good enough to rock the World. It is a myth that to be a billion dollar product, it has to be perfect. To make it 100% perfect, you will have to spend exactly the same time that you had to spend to reach a 95% perfection level. Is it worth it? I don’t think so.

Note that the diminishing returns that we get when we continue to work on all the edge cases of a feature/product also have their opportunity cost. Not just startups, even for big companies this opportunity cost is huge since one is always working with less time & resources.

This theory of diminishing returns can apply to your whole product, a feature within your product or to the customer service you are providing for users of your product.

So when you try for that perfection, always ask your self…is the juice worth the extra squeeze?