A majestic palace looms in front of you. Having just invented the game of chess, you have been invited to show it to the emperor of India.
The emperor is so impressed by the new game, that he says that you can claim whatever reward you wish. Name it and he shall see to it.
And so you say, “Give me one grain of rice for the first square of the chessboard, two grains for the next square, four for the next, eight for the next, and so on for all 64 squares. Each square having double the number of grains as the square before."
The emperor agrees and tells his ministers to fetch the required grain. One grain of rice gets laid out, followed by two, four, eight, sixteen, and so on. After making it through a handful of squares, a bag of rice is laid out, followed by two, four, eight, sixteen, and so on. Then come the wheelbarrows filled with rice - two, four, eight, sixteen, and so on. After making it halfway through the board, the emperor becomes nervous. He's handing off a large amount of rice. A few squares later, his ministers inform him that the entire agricultural output of India could not cover the required amount of grain in millennia.
And that is the power of compounding. You underestimate the effects of how small changes, repeated again and again, can compound into big results.
Most companies would kill to have a guarantee of growing 1% per year, indefinitely. Would they steal candy from a baby in order to get it? Absolutely. Kick puppies? You bet.
Why? Because that 1% compounds. It doesn't just add up. And if you wait long enough, that 1% growth - year after year after year - will eventually make you into an absolute behemoth of a business.
Given a long enough timeframe and a decent growth rate, the sky's the limit. This is what's called the aggregation of marginal gains.
For the longest time, growing or shrinking in size by only 1% is hardly noticeable. You might even ask why you bother - where are the riches that were promised? Keep it up long enough though and you reach the rate of accelerated returns.
If Apple or Google were to grow 1%, do you think that'd be profitable? I'd sure as hell make for lots of extra revenue for them. Why? Because they're already huge, so 1% still is a massive increase in absolute terms. And they got this big precisely through making sure they're growing by X% year after year.
Small changes add up to become big ones.
If your business were to grow with 1%, would that be noticeable? Probably not. Now what if it grew with 1% per month, every month? You might get an extra customer or two. You could very easily adapt to the bit of extra work and keep chugging along, right? Now do that for the second month - still no issue.
Keep doing this every month. You'll never become super stressed about the extra inflow of orders. And despite never having to worry about that extra 1% per month, your entire business will have grown by 12 percent that year! Do that another year and it'll have grown by 27%. And 43% the year after that. You get the point.
Small, marginal improvements and gains have become a staple in the playbook of a lot of different industries and businesses.
The world of high finance and investing is obsessed with compound growth. They're well aware that if they manage to grow their assets by even a couple of percent year-over-year, they'll eventually hit outsized returns. Many a Wall St. trader deifies Warren Buffet for being able to consistently grow his company Berkshire Hathaway year after year after year.
In Japanese manufacturing, Kaizen is the daily process of spotting small, marginal improvements or inefficiencies and addressing them. A rearrangement of the tool section might make the installation of a particular part 1% faster. A different type of solder might reduce production defects by 1%. In and of themself, they're almost unnoticeable. When added together, they make for the high-quality and relentless drive for improvement that so defines Japanese products nowadays.
Small changes, compounded year after year, can make or break industries and fortunes. So why don't we pay more attention to it in our daily lives?
We're wired to think that great accomplishments come from heroic deeds. We believe that an artistic masterpiece bursts forth from a mix of alcohol, drugs and self-loathing - in a short period of whirlwind activity.
The struggling writer finds his muse and he finishes his great novel after several days of non-stop, fevered writing. The college dropout gets drunk one night and bangs out a startup that immediately gets traction and quickly grows into a multi-billion dollar business.
I hate to break it to you chief, but the road to success is not nearly as romantic. Or as quick for that matter.
Despite the fact that lots of businesses place such a huge emphasis on compounded marginal growth, this type of thinking has been notably absent when people think about their careers, self-improvement, health, learning, and productivity. We hope to be struck by inspiration or to get “our lucky break”.
For all the time spent on picturing the end-result, you could've been more effective by focus on your present reality. You could've just started. You could've opened up a new document and written down the first paragraph of your novel. It doesn't need to be world-class, it just needs to be written down. You could've thrown up a simple landing page for that business idea you have. You could've started your weight-loss journey by going to the gym for 30 minutes.
“The difference a tiny improvement can make over time is astounding. Here’s how the math works out: if you can get 1 percent better each day for one year, you’ll end up thirty-seven times better by the time you’re done. Conversely, if you get 1 percent worse each day for one year, you’ll decline nearly down to zero. What starts as a small win or a minor setback accumulates into something much more.”
Pursue small growth. Reach the next milestone - however small in the larger scheme of things. Reevaluate, make a new plan, and then execute to reach the next milestone.
In your daily habits, you shouldn't seek to become a world-class meditator overnight. Your bench press won't suddenly jump to 300lbs just because you wish it were so. Your first novel will probably flop. Just focus on being 1% better with each passing day.
As you can see, a 1% improvement per day can lead to astounding growth. And a 1% decline can be fatal. So if you just take one thing away from this post, let it be this:
1% Better Every Day: 1.01^365 = 37.78
1% Worse Every Day: 0.99ˆ365 = 0.03
Small improvements and changes add up over time:
Emphasize your trajectory and growth rate over absolute achievement. You're not going to build the next billion-dollar startup over the course of a weekend. But if you focus on making your product 1% better every day, you just might end up making it by accident.
Some of the most successful people aren't as goal-oriented as a lot of people think. They don't necessarily set out to change the world, to create the next great invention or to write a novel that wins the Pulitzer Price. They're focused on what's right in front of them. They try to make their business processes run a bit smoother or to add an extra feature. They tweak the design of their new invention a bit or try an alternative approach. They focus on writing one great, captivating paragraph. And then they write another. They keep following the process until the separate pieces - unsexy in and off themselves - add up to the great achievements they become known for.
If you don't love the process, you're probably not going to make it very far. Far-flung dreams and ambitions can only keep you going for so long. Just focus on being 1% better, day after day.
Dinosaurs experienced the power of tiny changes first-hand (or claw).
An asteroid can get nudged off-course by a tiny force, sometimes as small as a pebble. While it has next to no visible effects, its trajectory has been changed ever so slightly. With every passing year, it moves out of its original course a bit further until it's eventually in a completely new orbit. An orbit that just so happens to intersect with Earth. And so a single pebble could have brought about a global extinction event.
Now, I hope you're not planning on carrying out any extinction events. If you are, please disregard everything I've said. If you're not, then learn to be comfortable with putting in the work, focusing on the next milestone, and trusting the process. Robert W. Service said that “It's the steady, quiet, plodding ones who win in the lifelong race”. And I happen to agree. Put in the work, day after day. There's no need for the work to be flashy or news-worthy. If you're just a bit better than you were yesterday, then rest assured that your trajectory is up and to the right. Over a long enough timeframe, small changes compound and just might change the world.
Rid yourself of the idea of putting out a screenplay in 3 days like Sylvester Stallone did for Rocky. Treat it like the fluke it is. Don't think in terms of heroic acts and periods of intense motivation. Think in terms of daily habits and pride in a job well done.
Regardless of whether you want to lose weight, grow a business, learn a new skill or make a career change, taking a process-oriented approach will allow you to keep going where others have given up. It'll slowly build up momentum, unnoticed and unexpected. And like a spring coiled up with energy, it'll one day break free and show itself to the world.
Finally, I want to give a huge shoutout to James Clear, the author of 'Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones'. His book has single-handedly changed the way I think about habits and self-improvement. I genuinely believe it's one of the best books of the past 5 years and I've been recommending it nonstop since I first read it.
This article would not have been possible without his ideas and work. James, this one's for you. Thank you!