Parkinson’s Law basically states, it is within human nature to fill the available time with work, thus if you are given one week to do a task, you will take the full week, however if you were only given one day to fulfill the task, you would likely complete it in that day. While Parkinson’s Law was specifically written about time, it applies to most things in our lives.
Did you know that dinner plates have grown by 25% since the early 1900’s? Using the same concept, Parkinson’s law, when we see empty space on a plate we tend to fill it. I am sure there is no correlation between that and our growing waste size.
As entrepreneurs we tend to see our world as plates. The larger the plate, the more we can stuff on it. The more we can stuff on the plate, the more money we will make, that is our general thinking. In taking this approach we often fail to see that the larger the plate, the larger the dinner bill, the larger the monster becomes which is required to fill the plate and pay the bill. We tend to ignore those monsters and continue to stuff our plates, thinking bigger must always be better.
Our monster is born from our desire to be the biggest and earn the most revenue. We all desire to be the big kid on the block, have many irons in the fire, deals rolling in our door, a staff, office, phones and a giant sign, glowing in the night with our names in giant red letters. We forget to pay attention that with each new phone, our monster grows a little, new office, a little more, receptionist a little more until one day, we are not being paid what we were last month because that monster must eat regardless of our sales. Soon we begin to resent the monster and all that he represents, soon we are working to feed him and have lost sight of why we became a business owner, soon we begin to dislike being a business owner and too often, we kill the business.
The true concept of Parkinson’s Law is to stop and examine the plate. Stop and look at what really makes us Profit and not just revenue, as our goal is profit. It is far better to be the little guy who brings home $100,000 per year with $125,000 in revenue than be the big guy with $1.5 million in revenue but $50,000 in profit.
Somehow in my twenty plus years in business, I forgot that the goal was profit and not revenue. I worked hard to chase every penny and I was proud that I had 100 people, 30 projects, a big office; Despite the fact that I had trouble making payroll, trouble paying my mortgage and personal bills from time to time. The fact was, I always knew that small and very large business tend to make good profit while larger (small) and medium sized business tend to just churn cash.
I recently adopted Parkinson’s Law to my various ventures and must say it has been eye-opening. Chasing the profit and not the revenue has changed the way I do business and the way I think about operating a business. My goals are no longer to be the largest company but are now to be the most profitable. I bet if you examine your business you too will find a similar result.