We’ve all done compounding math.
Invest $100 today and compound it monthly at 1%, and it will be worth $3,595 (35x return) in 30 years. Compound it annually at 2% and it will be worth $137,740 (1,377x return) in 30 years. And, of course, compound it at 0% and you’ll have $100 forever.
Now, apply this thinking to something you’re working to improve—it can be in your personal life or your organization. And think about getting a tiny bit better each month, say 1% or 2%.
At those rates of improvement, you’d be 30% or 60% better at this thing in two years’ time. And, let’s be honest, a 1-2% monthly improvement at anything we’re really putting our mind to feels like almost nothing.
So, what do we make of issues that we’re stuck on? Ones that feel like whack-a-mole, where we keep putting in effort and we seem to end up in the same place?
If any meaningful amount of time has passed since we started working on these problems, that means that all our efforts don’t add up to even a 1-2% monthly improvement.
There are only two reasons this could be the case, and they are two sides of the same coin:
- The things we’re doing are not effective at addressing the problem
- The thing we think is the problem is not really the problem
While this is conceptually easy to understand, coming to terms with it is hard.
If we know that slow progress compounded over time results in massive change, being “stuck” can only happen if all our effort is having almost no yield. When that happens, it’s time to go back to the drawing board.
Compounding math doesn’t leave space for any other conclusions.
