“Efficiency is doing things right; effectiveness is doing the right things.” – Peter Drucker.
As Product Managers, we strive for efficiency. But what if this pursuit backfires? The Jevons Paradox could be at play. Read on to uncover this hidden puzzle in Product Management.
Understanding the Jevons Paradox
The Jevons Paradox suggests that improvements in resource efficiency often lead to increased overall consumption.
It was coined by economist William Stanley Jevons in the 19th century.
“Efficiency without considering broader system effects can be counterproductive.” – Tim O’Reilly, Founder of O’Reilly Media.
Across Industry and Not Just in Tech
While we may associate this mostly with tech sectors like SaaS and HealthTech, the Jevons Paradox has been observed across industries, including the Retail, Manufacturing, and Energy sectors.
Why it Matters to Product Managers
Efficiency drives are commonplace.
The paradox poses a risk to these initiatives.
“The road to unintended consequences is often paved with good intentions.”
Real-Life Example: Google’s Data Center Dilemma
Google achieved a 30% reduction in energy use per task but witnessed a 45% increase in total energy consumption within a year.
Learning from Real-world Lessons
- Dropbox’s Space Race
Dropbox granted additional free storage for new student signups, which led to a surge in storage consumption.
Probable Reasons:
Users uploaded large files they were previously hesitant about.
No initial financial commitment amplified usage rates.
- Netflix’s Transition to Super HD Streaming
Advanced compression algorithms led to skyrocketing overall bandwidth consumption.
Probable Reasons:
Enhanced viewing experience increased watch times.
Optimizations made higher-quality streaming accessible, thereby increasing consumption.
- Uber’s Impact on City Traffic
Despite optimized routing algorithms, cities where Uber operates have seen an increase in overall traffic congestion.
Probable Reasons:
- Ease and lowered cost increased Uber utilization over public transport.
- Higher service efficiency led to higher service utilization, increasing traffic volumes.
Practical Steps to Navigate the Paradox
- Anticipate: Forecast impacts.
- Measure and Adapt: Continual metric monitoring.
- Strategic Rollout: Selective feature launching.
- Embrace Complexity
“The Jevons Paradox reminds us that complexities abound in the real world. Tread cautiously.”
There’s no straightforward solution. It is a delicate balancing act.
For those keen to learn more, here are some resources:
- The Jevons Paradox and the Myth of Resource Efficiency Improvements
- Unintended Consequences: A TED Talk by Edward Tenner
Have you experienced the Jevons Paradox? Share your stories!