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December 2, 2018

12 Eponymous Laws of Business

I love these. So simple, yet they explain the business world so well.

Parkinson's Law
Work expands to fill the time made available to complete it. For example, if a company sets a project deadline of March 31st, the work required to complete that project will continue until March 31st. On the other hand, if the same project had a deadline of April 15th the work required to complete the project would have found a way to expand to April 15th. Vacuous bureaucracy easily expands to create unnecessary work or make necessary work exceedingly complex so as to fill in the available time.

Peter Principle
Within a hierarchical organization, people tend to rise to their level of incompetence. If the general rule of thumb is that strong performing workers get promoted, people will get promoted until they are no longer a strong performing worker.

Hofstadter's Law
Projects always take longer than expected - even when taking Hofstadter's law into consideration.

Jevon's Paradox
Efficiency gains in resource utilization (e.g. fuel efficiency) paradoxically don't reduce total resource utilization. Instead, because increased efficiency lowers the relative cost of using a given resource, people will tend to consume more until total the dollar amount spent remains constant. For example, as cars become more fuel efficient people become more willing to drive because it costs them less.

Brandolini's Law
The amount of energy required to refute bullshit tends to be orders of magnitude greater than that required to create it.

Snackwell Effect
People consuming lower calorie food items (such as Snackwell cookies) will eat more until the weight loss benefits are eradicated.

Dunning-Kruger Effect
Individuals without the expertise or wisdom to recognize their own deficiencies tend to be more confident in their abilities.

Goodhart's Law
When a measure becomes a tracked organizational goal (e.g. number of calls per day) it ceases to be a useful measure of organizational success. This is because people will game the system to improve that one measure at the expense of other untracked measures of success within the organization.

Gresham's Law
Bad money will drive out good. In other words, if two forms of currency are in circulation people will tend to hoard the more valuable currency, leaving the less valuable form available for trade.

Parkinson's Law of Triviality
Members of a bureaucratic organization tend to spend more time discussing trivial issues than meaningful ones. For example, a company will spend more time debating the colour of a logo than on how employees can improve processes to deliver on the brand promise.

Segal's Law
"A man with a watch knows what time it is. A man with two watches is never sure."

Stein's Law
Anything that cannot continue forever will eventually stop on its own accord. In practical terms, this could refer to business expansion, population growth or a bull market.


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