The Power of the Compound Effect
Become great with small steps and actions over time
Great things are not done by impulse, but by a series of small things brought together.
Vincent Van Gogh (1853-1890)
1. Seeing the Compound Effect
Here’s the bottom line: You already know all that you need to succeed. You don’t need to learn anything more. If all we needed was more information, everyone with an Internet connection would live in a mansion, have abs of steel, and be blissfully happy. New or more information is not what you need—a new plan of action is. It’s time to create new behaviors and habits that are oriented away from sabotage and toward success. It’s that simple.
Darren Hardy, The Compound Effect
You may have heard of the Compound Effect by reading such books as “The Compound Effect” or “The Slight Edge”. All great. I lead by intuition but follow through with data, logic and reason and the compound effect is mostly the latter.
The power of the compound effect is described by Einstein as, “The most powerful force in the Universe is compound interest.” This is only one application of the compound effect in the world of finance. The compound effect is a power law that can be in every facet of life.
A mathematical mind would see this as:
This is exponential growth. Can you predict the compound growth in years and in decades? Can you see it?
If you can, then it’s hard to unsee the power of the compound effect.
This is the power of the compound effect over time.
But what most people don’t realize is that there are both powerful applications of positive and negative compound effects.
Let me explain the positive first. The negative in another newsletter.
2. The Power of Positive Compound Effect
Instead of writing down what you’re going to do (chances are you’ve been doing that your whole adult life anyway, and it doesn’t make you any better at doing them), write down at the end of the day what you did do that day.
Jeff Olson, The Slight Edge: Turning Simple Disciplines into Massive Success and Happiness
Most people recognize that doing something consistently over time, improving continuously, like the practice of kaizen, eventually makes one great.
Medical students practice medicine for four years and become doctors. My friend, Kim Mijung, practiced judo for five years and won Olympic gold in Barcelona 1992. You practice proving a hypothesis and you become a Ph.D in five years. Bruce Lee practiced martial arts and became a master.
There was a young 11 year old from Italy, who moved to Philadelphia. His father was a NBA basketball player. He wanted to make his dad proud and joined the summer league. He didn’t score a single basket all season. His dad said, “Son, whether you score 0 or 60 points, I will always love you.”
He determined he would score 60 points one day and dedicated two hours of basketball practice every day when others were playing every other day. The next season he scored 20 points. The season after that he became the best player in the league. He became the youngest player drafted in the NBA at 18. He then woke up at 3 am to practice three times a day, starting at 4 am, in order to get in one more practice than every other player. Within five years, he was one of the best players in the NBA.
3. Starting Small with the Compound Effect
Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has.
Margaret Mead
Improving 1% compounded daily leads to remarkable results:
2.5 times better in 3 months
6 times better in 6 months
38 times better in a year
1400 times better in two years
54,000 times better in three years
2 million times in four years
77 million times in five years
Warren Buffet, hailed as the greatest investor, applied the compound effect by investing in companies that were value priced. He became a billionaire when he was 56 years old. His long term investments have yielded dividends (literally) and great compounding wealth. He’s now 94 and worth $150 billion.
But simply knowing this is different than applying the power of the compound effect to your life.
Let’s ask and ponder how you can leverage the Compound Effect in your life.
My Life Question:
The great Baseball Hall-of-Famer Tom Seaver put it perfectly: In baseball, my theory is to strive for consistency, not to worry about the numbers. If you dwell on statistics you get shortsighted; if you aim for consistency, the numbers will be there at the end.
Jeff Olson
What do you wish to be great at in a decade?
Determine your outcome result. Think exponentially, not linearly.
Determine the smallest first step.
Determine interval goals, either monthly or annually.
Scale your time horizons long and short and choose one that feels right for you.
Start acting on your first step now.
My Life Lessons:
Each morning, write down three things you’re grateful for. Not the same three every day; find three new things to write about. That trains your brain to search your circumstances and hunt for the positive. Journal for two minutes a day about one positive experience you’ve had over the past twenty-four hours. Write down every detail you can remember; this causes your brain to literally reexperience the experience, which doubles its positive impact. Meditate daily. Nothing fancy; just stop all activity, relax, and watch your breath go in and out for two minutes. This trains your brain to focus where you want it to, and not get distracted by negativity in your environment.
Jeff Olsen
When you start to think in decades and centuries, the compound effect becomes fascinating.
What can you do in one, two, three decades?
I try to envision when I am 100 years old, what I would have liked to accomplish and the person I’d like to be then.
Memorizing the entire 31 chapters of Proverbs. I memorize them in their original form in Hebrew.
Riding 100 km on my bike. I do monthly, sometimes weekly century rides
10 pullups. I currently do 15 pullups daily and plan to increase to 30 pullups over the decades
Touch my toes. Maybe even do the splits. I touch my toes daily.
Speak three or more languages. I am learning Hebrew.
Next week:
Just do it! Simple but Powerful
It may be a saying but it’s also a philosophy of how to live.
When I make a film, I am hoping to reinvent the genre a little bit. I just do it my way. I make my own little Quentin versions of them... I consider myself a student of cinema. It's almost like I am going for my professorship in cinema, and the day I die is the day I graduate. It is a lifelong study.
Quentin Tarantino
See you next Thursday!
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