Rewarding a Positive Delta (Change)

My daughter’s school in Zurich had awards for those who made the maximum positive change in their curriculum subject scores year on year; she got an award for her language German at the end of the second year she studied there as her improvement was most noteworthy among a class of students who had German as a second language for many more years than my daughter. Quite naturally a student learning a language for the first time would be more likely to show maximum progress.

Showing maximum change in progress is increasingly becoming the barometer of success than the absolute level achieved.

I realized somewhat later that while the olden times cared for the absolute results, current times are more hinged on the positive delta we achieve in many areas of life. Business for example almost entirely runs on the concept of marginal change instead of the absolute number of any parameter, but we will come to this later.

If you wanted to bet on awards, if the criteria like this (Marginal Change Vs Absolute) is known to you, you would rather search for new comers, entrants, debutants, ordinary people but with an insurgent mindset to succeed than the grandmasters and old timers sitting on their past laurels. No pun intended for chess players as there it is always the other way round that every year new entrants enter the scene with new additional abilities to displace existing talent. World Chess No.1 Magnus Carlsen, 27, regularly loses to new comers, you can never say how long he would remain number one.

Markets for Superstars beware that the digital world allows entry of new comers that much easily and for all you know the guy completely unknown would be the most likely one to make a mark.

Take content for example and the old world monopoly of the media is already long lost to individual achievers who can reach higher number of recipients directly. Much more of communication is becoming direct. President Of United States reaches several millions each day directly through his tweets, he does not need news media coverage. Many ordinary mortals reach out to people in great numbers through digital platforms, thanks to blogging.

There is a lot of talk about Super Stars, who remained in their pinnacle forever in the past, but not quite anymore; there could be absolute unknowns who make headlines, thanks to a more inter-connected world. Who would have imagined Luis Fonsi making it to more than 5.3 billion views of his song Despacito on You tube. The second highest viewed song is a shade 3 billion lower!

The world of business thrives on the concept of Delta change. The highest bidder aims for the biggest change that an achiever is achieving.

The stock markets measure the positive delta more than the absolute. It makes no sense to bet on levels of income streams than to look at the positive delta change in the income streams. Think of your quarterly results, the markets will cheer for those who make a differential change over the last quarter and does it better than the others in the same industry.

If every company in the same industry has the same set of macroeconomic headwinds and tailwinds to deal with, the question invariably hinges on who created the maximum delta change in cost and revenue and income streams.

As long as quarterly reporting will thrive as the basic metric, the focus on the positive delta will rule supreme.

India makes the headlines globally because of the same positive delta that it achieves on income growth year on year, which is now the highest in the world at 7%. No one cares what the absolute level of income is or even the per capita income, as long as the positive delta in growth rates remains firmly grounded there are reasons to cheer.

Positive delta drives financial flows as well. It continuously seeks an yield that has a higher propensity to grow.

This also means that culturally you move to a different paradigm- the culture of creating improvements Quarter on Quarter.

This must start with a new mindset of believing the impossible, that every time an improvement is made it is just a way of discovering a part of the puzzle, never the whole. It would also need an agile mind looking for new questions and their answers.

Sometimes innovation will give some boost to this state of being; it would come in form of a welcome relief as otherwise incrementalism would creep in.

It is also a leadership challenge to sustain this culture of making constant improvements, retaining the urge in people is also not a small matter; incentives must be aligned as well.

Some have found solution in creating such aspirational goals that could never possibly ever be achieved, the journey to the goal itself was the reward.

Steve Jobs was the first one to discover this, later the others followed him.