Compounding for the Win

This isn’t a new concept by any stretch of the imagination, but it’s worth re-iterating again and again – small efforts, repeated in the right direction build up to big gains. And it applies across many fields – compound interest, fitness, learning and so on. I find that playing a musical instrument gets big gains out of constant small efforts – and these small efforts outweigh a single large effort of a proportional time. Why? It seems to come down to small gains don’t just add up in a 1:1 fashion, but in a larger way. It’s not exponential but more like a 1:1.15 or 1:1.25 type way.

Working on this blog is an example. I try to make a little effort on it each day – recording an issue or thought piece that has been with me for a while. I get that idea out of my head and then it invariably leads to the next thing I want to talk about. Eventually it begins to build a momentum of its own (that’s the .15 or .25) and blog posts become easier to write and (hopefully) easier for you, gentle reader, to read. It also prompts me to consider my writing style, keeping it tight and minimising irrelevancies and tangents, even if the best fun is down those tangential paths…

Compound interest is a well understood and well loved function of wealth development, and is the idea spring for this post. Putting a little bit of effort in each day, just like our compound interest does, will yield significant results over time. Imagine the runner who makes the time to run a bit every day. Eventually over time that time will expand and their capabilities will theoretically expand. Playing an instrument can be a cruel mistress and it’s important to give it time, preferably every day, so that said mistress is happy and won’t hurt you. I play bagpipes and they are a very cruel mistress if you don’t pay attention to them. They can and will hurt you down the track. But a little bit of work each day yields excellent results and that is always encouraging, leading to more work without effort.

Without, or less effort is a key feature of compounding activities. Compound interest takes no effort, as you get fitter the running takes less effort. As your writing improves and the idea flow is fuller it takes less effort – even as the results improve. If you ascribe to Jim Collins’ notion of the flywheel then it’s the same thing (see here: https://www.jimcollins.com/concepts/the-flywheel.html for more details. It’s quite fascinating and Collins’ books are excellent). I hadn’t heard of this until recently and I read the book “Good to Great” for the first time. He has since released a monograph exploring this further and I’ve added that to the “To Read” list. It’s potentially because of the flywheel concept that I was prompted to write this – even though I heard about it some weeks back. Being able to apply such a concept to real life is important for me to being able to understand it. Writing is such an example – I’ve been writing stories or journal entries for years, but now I am writing for an audience (of initially me only), all those little bits of effort are helping to build something I’m pretty happy with.

In daily life we see the effects of compounding everywhere – the plant watered daily and cared for will bloom and provide fruit or beautiful flowers. The child we read to daily will develop an appreciation for books and read/comprehend better at school (which makes all other aspects of learning easier) and so on. It’s an important idea and one that we can harness to build a better life*.

*of course, the concept of wheel of doom is important to consider – compound negative activities will also lead to a massive failure or horrible outcome. Jim Collins writes about that too at the aforementioned link in the “Comparison Companies” paragraph at the bottom of the page. Its worth having a check of some type built into your compound activities to avoid this!

Photo by Just Another Photography Dude from Pexels

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