Big things, small steps
There’s a tendency to think, in business, that we need to tear up the rulebook from time to time - come up with new, innovative products, change our marketing entirely, reinvent our processes and “disrupt” everything. Sometimes, that’s what’s required. Usually, it’s not.
If you’ve ever read anything about investing, you’ll have encountered the term “compounding”. The idea’s simple. Invest your money and leave it where it is, and over time it will add up to an excellent return. At first, it doesn’t look like much. £1,000 generating a 10% return gets you just £1,100 in a year. After five years, you’ll be up to £1,611 - still not much to write home about. In ten years, you get to £2,594 - then something amazing happens. After 20 years, your £1,000 has grown to £6,728. After 30, it’s £17,449, then £45,259 after 40 and £117,391 after 50. As compounding kicks in, the rate of return accelerates. If you keep taking out the money you earn, that acceleration never happens.
The same is true in business. Many leaders (myself included) feel pressure to constantly come up with the “new thing” - the next initiative that will return exponential growth. We have increasingly short attention spans, and everything we see on social media tells us that the competition is moving faster, getting bigger and leaving us behind. Each time we make major changes, though, we reset compounding. The better option is often to apply a little more thought and energy to the things we’re already doing.
There are two key ways that compounding works in business. The first is exactly like the investment example above - compounding over time. Let’s say you run a sales team, and your team is booking on average 20 meetings a month. If you just focus on increasing these meetings by 10% monthly, in a year you’ll be booking 57 meetings a month, more than doubling your results. A 10% increase is unlikely to require new initiatives, but rather increased input and small tweaks.
The second type of compounding is often overlooked, but incredibly powerful - compounding by improving, slightly, each step in a process. Imagine the same scenario, where you run a sales team booking 20 meetings every month. Say 5 of these meetings lead to a second meeting, and from those, 2 proposals are generated. Today, you win 1 of those proposals.
Now, instead of aiming to increase meetings by 10% every month, you’re more conservative and aim for a 25% increase over the course of the year, taking your initial meetings up to 25. Instead of converting at 25% to 5 follow up meetings, you adjust how you pitch the second meeting and improve your conversion to 32%, meaning that from your 25 initial meetings, you now book 8 follow ups. By working on your qualification questions, you manage to convert half of your follow up meetings to proposals, instead of the 40% you’re at today, and because you add a video to the proposal, you win three out of four, rather than one in two.
With these small increases, you’re now closing three deals a month, rather than one. Improving each step in the process a little is far less challenging a task than tripling your sales numbers, but the result is the same.
One other point worth bearing in mind is that when you have good people in your team, if they keep doing the same things, they’ll naturally get better at them. Each time you ask them to do something brand new, that learning process starts again.
TL;DR? Exponential growth, on any vector, often doesn’t need major innovation or complete overhaul. Applying consistent effort to the things you already do to improve them, even slightly, can yield outsized results. It’s not as exciting, but if there’s one thing I’ve realised over the years, it’s that in business, boring is good. Boring is your friend. Boring, in fact, is where you make real progress, impact and money.
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