Diminishing returns

The speed improvement in cross-Atlantic communications by the invention of the telegraph in the mid-1800s was a factor of around 2500 over the steamship.

By contrast, the internet has only increased speed (versus the fax machine) by a factor of 100 or so. Thus, the internet is arguably a less profound technological leap than that of the telegraph. (See “23 things they don’t tell you about capitalism” for more)

The lesson? Often, the biggest impact comes from the earliest technological advances, and the latest offer only diminishing returns. However, sometimes the latest inventions have large, unintended effects which turn out to transform the world in unexpected ways.

Likewise, if we look to improve law firm performance by implementing more technology, we are likely to see diminishing returns over the original effects of introducing computers and telephones.

The important points are:
1) don’t look to technology to only improve efficiency, as there are limits to the impact – indeed, diminishing returns
2) the major benefits of new technology are most likely to allow new things to be done, rather than make the old things more efficient

Telegraph - photo copyright Smithsonian
A telegraph machine (c) Smithsonian Institute, 1992

Look to introduce new products, services and business models that could not be offered (or at least not offered economically), built on the back of technology. Reinvent yourself, don’t just improve.

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