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The plateau effect is a tendency for what works today to be less effective with time. It is a widely observed phenomena that has implications for strategy, quality of life, design and economics. The following are a few hypothetical examples.AdaptationA new jogger finds that a 1 mile jog helps them to burn calories to the point that they can eat more cake while maintaining their weight. As the jogger's body adapts to the routine the effect slowly declines. ImmunityA farmer finds that a scarecrow keeps crows away. With time, the crows figure it out and begin to return for corn snacks. The farmer moves the scarecrow around and gives it new costumes to reset the process.
CompetitionAn investment bank develops an algorithm that earns superior profits trading a particular class of equities. Within a few weeks, the competition notice the algorithm's behavior and start imitating the strategy. Given the new competition, the performance of the algorithm declines.ExpectationsA popular mobile device company wows customers with new features with each new release. With time, customers have such high expectations that it is difficult to impress them.|
Type | | Definition | The tendency for a successful strategy to be less effective with time. | Related Concepts | |
Business Strategy
This is the complete list of articles we have written about business strategy.
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An extensive list of business strategies.
A reasonably comprehensive guide to strategy.
The difference between a baseline and a benchmark.
A definition of strategy vs tactics with two examples.
A few sources of competitive advantage for businesses.
A list of macro environment components.
The difference between competitive advantage and distinctive capability.
An overview of a common business strategy.
A definition of restructuring with examples.
A list of common business risks.
The five things that can be done about risk.
A metric for measuring risk management.
The potential that you'll achieve too much of a good thing.
Any risk that people have a strong aversion too.
The definition of risk taking with examples.
A list of risk examples by type.
The two main factors in modeling a risk.
A definition of calculated risk with an example.
How to calculate relative risk with examples.
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