COMPOUND INTEREST… COMPOUND HABITS

September 15, 2022

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What’s the secret to your success?

You hear questions like this all the time these days… at networking events, podcast interviews, fairy tale memoirs.

I don’t intend to sound dismissive, I find myself asking this kind of question sometimes also. Underneath this question is a terrific intention to learn from others. But it’s also often a proxy for a different question that is very wrongheaded… What’s the shortcut for me to get what you have?

There must be some hiding-in-plain-sight technique, or product, or something that will help take things to the next level.

Plenty of people will be happy to sell them something, but I have a different perspective. That I’ve learned from hard earned experience… and from mentors who, like me, spent years pounding the pavement.  

Albert Einstein once said that compound interest was the most powerful force in the universe. While that is a funny idea, Einstein was right to call out the power of compounding.

Interest rates are not the only way that the compounding effect can change our lives. Habits work the same way.

Over my many years of constantly looking for ways to improve my performance, and that of my company… habits might be the most powerful lever I have found. Just like interest piling up in a bank account, the power of habits comes from being consistent over time.

Rather than finding the most powerful or impactful action, often the best course is to find a few small things that we can do better, then repeat those improvements every day. Over time, the effects can be huge.

One key way I have applied this at Alliance is with our after-action reviews of every deal. Even if a deal was familiar and smooth, there is almost always something we can learn from our execution. The habit of always doing these reviews is a great example of how compounding works. Do the review, learn something, document it, improve the next deal, repeat. It adds up.

A more personal example is that recently I’ve been using more coaches and consultants. These professions often get criticized for being expensive outsiders who don’t also bring huge value Day 1. That may be true sometimes but I have a different perspective… because of the power of compounding.

If a coach can help me make small improvements in the way I run my business, or manage my time, or my mindset… those improvements can compound for years to come. And as a CEO, my performance and mentality have a huge impact on my entire company, so small gains benefit from that leverage.

Sometimes in life we must make big changes. But I’ve learned over the years not to discount small changes, and the big impact that small changes can make in the long run.

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