The Power of Incremental Gains

The Power of Incremental Gains

A few weeks ago, I was fortunate enough to be invited as a guest on a leadership podcast. One of the questions that came up was around my background in Psychology and if this has given me an advantage in my business career, which got me thinking about many of the things that we have implemented at OnTheMarket over the past couple of years. And the more I thought about it, the more I realised that many of the principles and theories that I learned many years ago are being used right now in our business.?

The podcast host also asked me about what inspires me, or if I have a mentor or coach. Whilst I am very lucky to have the benefit of a few close industry friends who offer support and guidance, I take my inspiration from the world of elite sport. ?In particular, as a huge petrolhead, I have always been fascinated by the tiny margins in motorsport and the effect these seemingly subtle changes and gains have on the overall performance of the team.?

For those not familiar with Formula One, please indulge me for a minute. Every car on the grid is completely bespoke with the exception of some standardised electronics components and the tyres. This means that, way before the final race of the season, the teams have already started working on the following year's car. Each F1 car is made up of around 14,500 individual components and every item is created from scratch, designed either on a drawing board or via CAD; models are created, tested in the wind tunnel, parts are made in-house and go through rigorous testing and homologation to ensure compliance with the rules.

Following a couple of test sessions, the cars arrive at the first race of the season, usually in early March and start the free practice and qualifying sessions, before the opening round of the Championship on the Sunday.

So, think about this; 14,500 components, each bespoke with different design concepts and ideas, different engines, different aerodynamic and mechanical parts. And yet, as the cars lined up on the grid in order of qualifying position for the Bahrain Grand Prix in March of this year, there was only 2.473 seconds between pole position and last place.

The concept of this is mind-blowing. Yet it’s a well-known and well discussed theory. The concept of ‘marginal gains’, as Sir Dave Brailsford, former performance director of British cycling, called it.

Put simply, this is what we do at OnTheMarket. And in the spirit of the podcast host's question about my Psychology background, I thought I would dust off the research papers and the textbooks and explain why this is not just a logical concept, but a scientifically proven one.?

In today's fast-paced and ever-evolving business landscape, the pursuit of success often conjures images of ground-breaking innovations, disruptive technologies, and overnight transformations. While such stories capture our attention they often overshadow the true driving force behind sustainable success; incremental gains.

Research in psychology and organisational behaviour has proven that the significance of small, continuous improvements is the fundamental basis for business success. By embracing the concept of incremental gains, businesses can unlock their full potential and mitigate the threat of competition.

At its core, incremental gains refer to the consistent and deliberate progress made through a series of small, manageable steps. Rather than chasing trends or making risky jumps into the unknown, this approach focuses on optimizing existing processes, products, services (and in our case, functionality) to drive gradual yet impactful improvements. By prioritising small wins over big victories, businesses create a culture of innovation, efficiency, and adaptability.

Research conducted by Amabile and Kramer (2011) highlights the significance of small wins in promoting employee motivation and creativity. When individuals experience a sense of progress and achievement in their work, it positively influences their intrinsic motivation and encourages them to contribute actively to their tasks. By breaking down larger goals into bite-sized tasks, we can empower employees to take ownership of their work and foster a culture of ideas. This not only boosts morale and engagement but also nurtures a work environment where everyone is inspired to constantly seek improvement.

In addition, the cumulative effect of incremental gains can be very powerful. By consistently enhancing processes and refining strategies, businesses accumulate marginal advantages that compound over time. Research has shown that small improvements, when sustained over extended periods, can lead to significant results. These gains, often referred to as the "aggregation of marginal gains," (also a financial principle) create a robust foundation for success and set businesses apart from their counterparts. Whether it's enhancing operational efficiency, streamlining customer experiences, or improving product quality, these small wins add up and give businesses a competitive edge.

Incremental gains also foster a culture of innovation, where experimentation and learning become part of the DNA of the business. Research by West and Farr (1990) suggests that companies that encourage experimentation and provide a safe environment for employees to take calculated risks are more likely to foster innovation and adaptability. By encouraging employees to explore new ideas, test hypotheses, and learn from failures, we create an environment that embraces change and thrives on continuous improvement.

Regardless of industry or business size, this approach can be applied across the board. Research by Cao et al. (2009) highlights that incremental gains are particularly effective in dynamic and uncertain environments, as they allow businesses to adapt and respond to changing circumstances. By systematically identifying areas for enhancement and leveraging data-driven insights, businesses can fine-tune their strategies and outpace their competitors, one incremental gain at a time.

Let’s face it, the temptation to pursue big wins is greater than the pursuit of small ones. I constantly have to sense-check my own strategic roadmap to make sure that my vision for the business is built upon a solid foundation of continuous improvement rather than always searching for the next ‘game changer’ (a phrase used way too often in our industry). It requires patience - a virtue which I have never successfully developed. But, looking back on our journey over the past two years, I believe we have been successful in creating a culture that celebrates progress and innovation. And staying true to our mission statement of Listening, Innovating and Delivering.?

To be less technical, the proof of the pudding really is in the eating; the approach I’ve just described has meant that for the first time, OnTheMarket has been voted as one of the best places to work in the UK in the recent Sunday Times Best Places to Work survey.?A testament to the power of consistent, incremental changes that all add up to create something really powerful.

In conclusion, psychological studies emphasise that the path to sustainable success lies not in one giant leap but in a series of incremental gains. By prioritising continuous improvement, businesses can unlock their full potential, foster innovation, and stay ahead of the curve. These studies remind us that the most enduring achievements are the result of small steps.?

Just in case you have no interest in F1 at all, you might say that the close times between all of the teams apparent from the first race of the season probably dissipate over the course of a few races, and I can see why you might think that way.?So, I’ll ask you this; at the last qualifying session of the 2022 season, after 22 gruelling races over 9 months and numerous upgrades from all teams, both large and small, what was the time difference between first and last on the grid?

Just 2.23 seconds.

Incremental gains are therefore essential.?Without them, you find yourself moving to the back of the grid, very quickly indeed.

JT

References:

Amabile and Kramer (2011) https://hbr.org/2011/05/the-power-of-small-wins

West and Farr (1990) https://psycnet.apa.org/record/1991-97989-000

Cao et al. (2009) https://www.elsevier.es/en-revista-journal-innovation-knowledge-376-articulo-the-in-congruence-effect-exploitative-explorative-S2444569X22000956

Formula One Statistics https://www.formula1.com/en.html

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