Compound Effect

My boss once told me the story of the magic penny. He asked me the following question:

?If you had the choice between receiving $3 million dollars right now, or a penny which value will double every day for 31 days- which would you choose? ?

Realizing there was something at play, I went with the penny- and thankfully it was the right answer! Here’s why: consider that by day 10, the penny would have a value of $5 and by day 20, it would still be at $5200, but what happens after that? Its value will keep doubling until day 31, when the penny would have a net worth of $10.7 million dollars, over 3 times more than the original offer.

After he offered the explanation, he recommended I read the book ?The Compound Effect? by Darren Hardy and think about how it applied to my daily activities (especially the ones I liked the least and needed the most motivation to get done with).

The compound (or snowball) effect, is the ripple down effect of the choices we make. As per Hardy’s definition it is: “the principle of reaping huge rewards from a series of small, smart choices.”

For me what was most interesting about this was realizing that even though the results are massive in the long run, the steps and choices that take us there on a daily basis are very simple in nature.

And so, I decided to zoom into different areas of my life and business, identify those choices, and use this principle to boost my performance.

?  I started with the gym (I go to the gym very frequently but dislike it very much). My one gym session burns on average 500 calories. So if I made the choice to go for 4 workouts a week, and remained consistent over the year, that 500 would turn into 104,000 calories. Now that’s significantly more motivating to me. The minute I had this number in mind, I somehow made it more of a point not to miss my sessions.

?  Another example would be at work. In Multiply, knowledge building is one of our core values. Since 2004, every Wednesday a member of our team presents a new topic to the rest of us. This means that each Multiplier gains 52 hours of new knowledge a year. What started out as being a small weekly contribution, snowballed into a reservoir of interesting and varied knowledge, compiled in an effortless manner (and who doesn’t have one hour per week to hear about something new?).

And now to my last corporate example. Have you heard about the famous $40,000 olive? About 35 years ago, American Airlines calculated that if they removed just 1 olive from each passenger’s salad plate (which were usually left uneaten) – they would reduce annual costs by $40,000. And all it took was a change literally the size of an olive. 

Now going back to you.

·  How can you break down your big goals into small habits that you can incorporate into your daily life? As Hardy says: Goals = choices + behaviors + habit + compounded time.

·  What are you not doing that is compounding against your optimal performance? Make a list of all the seemingly insignificant choices that may have been compounding your result downward.

·  What subtle changes can you make that with consistence will stack up and propel you and your organizations performance into different dimensions? Start with a list of about 6-10 choices you can make every day that will orient you in a more constructive direction.

The key take away for me is that at the end of the day, the compound effect is working whether we are aware of it or not. But how can it work for us? That’s the question I will leave you with.