The Last Two Percent (Tradecraft)

The Law of Diminishing Returns basically states that your effort put into a problem will eventually far outweigh the desired results. The goal becomes getting a process far enough along, and not sweating the details. In business nowadays, "close enough" is good enough. We see this all the time in various industries.

My POS software company recently announced a version 2.1 at the same time they announced 2.0, promising to fix the 2.0 bugs with that future version. Car companies are desperately trying to increase sales by homogenizing and dumbing down their cars to the most common denominator, abandoning niche vehicles, and interesting features. Disgruntled Wal-Mart customers flee to Target to find themselves treated just as poorly there, failing to realize their embrace of discount stores comes with a hit to service. Business books suggest getting your business "good enough" so you can lie on the beach for the remaining 36 hours of your work week.

Good small business owners will tell you "good enough" is the enemy. Good enough is not good enough. It might work for your entrepreneurial MBA run business, whose goal is to be acquired or strike it rich with Other People's Money, usually within a strict time limit, but small business is about filling in that last couple percent of efficiency, of striving for perfection, of dazzling your customers. The Law of Diminishing Returns is our constant companion, not a fools errand.

I'm mostly referring to process. For example, special orders are really hard. There's a Reddit discussion about a local game store that flunked their special orders. The thing about special orders is they should be invisible to customers. We spent about $7,000 upgrading our IT infrastructure a couple years ago, primarily to address special orders. Good process and good IT should function below the surface, with no drama.

We often have 20-30 special orders in our system at any given time. Our success rate with this new system went from 95% to 98%. 95% might sound good enough, but it meant we disappointed 1 in 20 customers who placed a special order, as opposed to now, where it's 1 in 50. 1 in 50 is still unacceptable.

Today we got our new sticky notes from the printer to help with that last 2%, a process issue where we either fail to pull an incoming game, fail to notify the customer, or put aside too many games that then sit in a bin for months before they're noticed. A game that sits in a bin is lost opportunity, which costs us money.

This last, analog part of a sophisticated ordering system, a simple sticky note, addresses the last 2% of our problem. It was the end result of a lengthy discussion with other game store owners who had the same problem.

As I've stated many times, we're not special. We're not geniuses because we have a sticky note. We're just one of those game store owners in pursuit of the last 2%. We may fail on occasion and we certainly have our shortcomings, but nobody can accuse us of not trying to improve our process.

Being a store owner then is being the kind of person who wants to embrace this last 2%. You have to be bothered by that final bit of inefficiency, rather than having that "good enough" entrepreneurial mindset.