What is compound growth and why should you even care?
I often talk about using the “baby step” approach to achieve goals, make changes, and create new and lasting habits. I wrote a blog post on this which you can read here.
There are several particularly good reasons why I recommend embracing the baby step approach.
Breaking any goal down into a series of small manageable steps simplifies it, reduces potential overwhelm, and creates an instant plan of attack.
Using the baby step approach also means you can take full advantage of the power of compound growth.
BTW – if you prefer an audio version of this, I have included one just for you at the end of this article.
So, what exactly is compound growth?
Compound growth, also known as positive feedback, is a mechanism or process whereby any gains made are fed back into the input of the system to increase the output at an accelerated rate. The system can produce positive and negative runaway results.
Known to most as compound interest in the financial world, compound growth has made many people a lot of money over time. This is (generally) a positive desirable outcome.
The snowball effect is an exceptionally good metaphor for compounding. Imagine a perfect slope covered in wonderful pristine snow. Now imagine putting a tennis ball at the top of the slope and setting it off rolling down.
The rolling tennis ball will pick up snow as it goes until it is huge. Gravity and sticky snow created all that from a small start and a gentle push. That is compound growth.
Here is a spreadsheet progression showing the doubling effect after 70 iterations at a 1% growth rate. Increasing or decreasing the growth rate will increase or decrease the time to the doubling point in a linear fashion.
Try it out for yourself if you have access to suitable spreadsheet software – Google Sheets is free btw.
Applying compound growth to your own development
Wishing and hoping will not get the job done. In terms of emotional intelligence, you may have self-awareness that something needs to change, but it is your self-regulation and motivation which will catalyse and create that change.
You must, therefore, start with something (your “capital”) to get the full process going.
You must decide to change, then commit to change and then you must act. This is your metaphorical tennis ball at the top of the snowy slope.
The snowball effect kicks in fully when you add consistent follow-up in an iterative fashion. This is your metaphorical slope-generated gravity. Your improvement is all the metaphorical snow which sticks on the way down.
A series of small wins builds a success habit.
A series of small wins feed off each other for greater and greater returns on your self-development investment.
In my experience little and often gets the prize.
Regular small yet consistent improvement efforts can develop into significant gains surprisingly quickly when compound growth swings into action.
Theoretically, if you worked a little bit on one thing for 350 days for example and made a 1% improvement every day you would end up over thirty-two times better than when you started.
Maximising your self-development is more complex than straightforward financial compound interest growth.
I recommend you aim to equally develop all three aspects of what I term the learning trinity: Knowledge, skills, and behaviours.
This approach will ensure you create a fully rounded understanding of and competence in your chosen topic or activity in terms of the theories, skillsets, and applications.
It will also allow you to vary the type of your 1% efforts and keep things more interesting for you.
Apply your compound growth to positives
“Good and evil increase at compound interest. That’s why the little decisions we make every day are of infinite importance.”CS Lewis
Like most tools, compound growth is neutral. The system will work brilliantly on whatever you give it to work with.
So, be very aware that feeding negativity into the system will generate potentially huge returns on that negativity. An unwanted and undesirable outcome.
Think unwanted feedback say from an electric guitar held too close to a speaker for example and you’ll get the idea.
Is regular and accurate 1% compound growth essential?
No, not at all. That number was simply to illustrating the potential power of the concept.
You may not manage 1% improvement every day. Some days you might not grow at all. On others you might make a bigger step change.
The point is that each step forward, no matter the size, makes a difference. More work and more small steps lead to more and increasingly bigger results.
It’s the gift that keeps on giving.
Start on your compound growth right now
What can you do right now to kickstart your own snowball of self-development?
What is a good “tennis ball” for you?
Where is the best “snowy slope” for you?
The earlier you start the more gains you will make. The clock is always ticking.
That is all for this one
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PPS Here is the audio version of this article if you would prefer to listen.